Delta Pilots Union Chiefs to Fight for Smaller Cuts

Washington --- Delta Air Lines' pilots will begin presenting their case to arbitrators today in hopes of halting the carrier's efforts to impose more than $300 million in pay cuts and other concessions.

The testimony by the Air Line Pilots Association marks the first time the group will be heard since Delta petitioned the U.S. bankruptcy court in New York last year for permission to reject the pilots' labor contract.

It also could provide a spark to proceedings this week at a hotel near the White House that have largely been a replay of hearings late last year in bankruptcy court. In those earlier hearings, Delta executives and financial advisers argued that the pilot pay cuts are necessary to the airline's survival.

Under an agreement in December that suspended Delta's motion to void the pilots' contract in bankruptcy court, the panel of arbitrators will decide whether to reject the pilots' contract. They have until April 15 to decide.

"I believe we have a very strong case," said ALPA Chairman Lee Moak.

He said the union plans to call several witnesses today and next week to support its argument that Delta needs smaller concessions because its pilot-related costs are already lower than most of its competitors'.

"We're the most efficient of the national network carriers," said Moak.

He said Delta wrongly claims that its costs must match those of discount rivals, even though it plans to shift half its operations to more profitable but more costly international routes as part of its restructuring plan.

"We don't see [discounters] flying to Paris," Moak said, referring to carriers such as Southwest and AirTran that run smaller, lower-cost networks focused on domestic destinations.

Delta's experts testified earlier this week that although the airline's unit costs are lower than other big hub-and-spoke carriers, it needs further reductions because its unit revenues are also lower than competitors'.

Delta is asking for $305 million in annual concessions for four years, including an 18 percent pay cut, or $290 million a year if the pilots' pension plan is terminated.

If the plan is taken over by a quasi-government agency --- which Delta this week said is likely --- the carrier has also offered pilots a $330 million long-term IOU after the airline emerges from bankruptcy.

ALPA has proposed concessions that it says average $140 million annually. Delta says ALPA has asked for a $1 billion note if the pilots' pension plan is terminated, but the union says the value hasn't been determined.

Neither side appears to contend, however, that pilot job losses are likely to result from the concessions Delta is seeking.

The airline said it doesn't expect to furlough pilots, even though it is seeking rights to shift more flying to regional carriers and is shedding about 200 jets as part of its restructuring --- almost half from its mainline fleet.

"We do not anticipate any furloughs over the course of this proposed agreement," said Delta spokesman Bruce Hicks.

He said no job losses are expected because the airline has lost hundreds of pilots who took early retirement, and because the airline is expanding international flights, which generally require three pilots per flight instead of two.

Moak said 472 Delta pilots are currently furloughed because of earlier job cuts.

"I haven't seen any information that would lead to pilot furloughs," he said, but he added that the contract changes Delta wants "could lead to furloughs."



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