Delta Pilots: Pay Cuts Not Fair

Washington --- A demand by Delta Air Lines for more than $300 million in contract concessions probably wouldn't be ratified even if negotiators agreed to it, a pilots union official said Wednesday at an arbitration hearing.

Tim O'Malley, head of the negotiating committee for Delta's unit of the Air Line Pilots Association, also said the company plan imposes more paycheck pain on pilots than on other workers.

He said the proposed 18 percent wage cut, on top of a 32.5 percent cut negotiated in late 2004, would mean a total wage cut much larger than other workers have endured.

"It's not possible that I take a 46 percent compound cut in my pay and lose my defined-benefit plan, and non-contract employees take an 18 percent compound cut and keep their defined-benefit plans, and have those two things be proportional. It's not possible," O'Malley said.

Delta contends its proposal is fair because pilots --- the industry's highest-paid until the 2004 cut --- account for 35 percent of payroll and would contribute 35 percent of overall labor cost savings under the company's plan.

The unusual hearing before a panel of three arbitrators was triggered by the two sides' failure to meet a March 1 deadline for a new long-term contract deal. The deadline was part of a temporary deal in December that cut pilot pay 14 percent.

The union has offered a package valued at about $140 million annually.

The arbitrators have until April 15 to decide whether to void the contract, allowing Delta to impose its terms. The union has vowed to strike if the contract is voided, but both sides have said concession talks can continue after the hearings wrap up, and even after a ruling.

Delta spent most of last week presenting witnesses. The airline has noted that pilot pay rose sharply from 2001 to 2004, before it inked a $1 billion-a-year deal, including the 32.5 percent pay cut, to help cope with a financial skid that became a nose dive after 9/11.

But the 2004 deal and other moves were swamped by higher fuel costs in 2005, leading to a bankruptcy filing in September. The airline sought new pilot cuts about the same time.

Meanwhile, Delta has cut non-pilot pay twice in the past two years, with an across-the-board 10 percent cut and another round averaging 9 percent.

O'Malley said many pilots don't think the cuts are fair, and he noted that the interim December deal passed by a small margin, 400 votes.

Delta's new proposal, which would supersede the December deal, would have little chance of being ratified because it eliminates protections against pilot furloughs while allowing the airline to shift more flying to contract carriers --- both factors that would alienate younger pilots, O'Malley said.

He also said the plan doesn't do enough to compensate pilots for savings Delta will realize if it terminates their traditional pension plan, shifting responsibility for payouts to the federal Pension Benefit Guaranty Corp.

"The structure of this agreement is such that it wouldn't be ratified," O'Malley told the arbitrators.

Delta executives recently said it's likely the pilots' pension plan will be terminated and taken over by the PBGC. That means smaller payouts for the typical pilot because of PBGC caps, although Delta is offering a fund that ALPA could use to offset such cuts.

Lee Moak, chairman of Delta's ALPA unit, testified briefly at the end of Wednesday's session and was expected to be back at the hearing for cross- examination today. Meanwhile, Delta said it will expand service on 22 high-volume routes from Hartsfield-Jackson International Airport this summer, boosting peak-day departures to more than 1,000, including regional affiliates.

The additional flights go to major destinations such Los Angeles, which is getting two new flights for a total of 13 daily, as well as to secondary cities such as Bloomington, Ill., where Delta will add one new flight for a total of four daily.

Delta is cutting overall capacity as part of its Chapter 11 restructuring plan, but it has added flights and routes from its giant Atlanta connecting hub. The airline is also shifting more capacity onto international routes.

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