ATLANTA_The union for Delta Air Lines Inc. pilots warned Thursday that court approval of as much as $14 million in severance payouts to officers and directors terminated because of the company's reorganization could hurt efforts to reach an agreement on more pilot concessions.
The Air Line Pilots Association said the Atlanta-based airline's Feb. 8 bankruptcy court request for the severance plan would be bad for employee morale and would threaten the company's reorganization process if approved.
The union said the nation's third-largest airline is "tone deaf" to the effects that a severance program for a select group would have on the remainder of the work force.
"At a time when Delta is proposing deep cuts in pilot wages and benefits, deep resentment and anger over a soft landing program for officers and directors can neither be understated nor should it be ignored," the union said in an objection filed with the court.
Delta has been seeking $325 million in new concessions from its 6,000 pilots. It recently offered to lower the request to $315 million. The pilots are currently offering about $115 million in new annual concessions.
The cuts would be on top of $1 billion in concessions the pilots agreed to in a five-year deal reached in 2004.
The pilots union said in its objection Thursday that approval of the company's severance proposal could hurt negotiations over the new pilot concessions.
"The ability of ALPA to garner the necessary support among its membership for a negotiated agreement if the pilots view the process as tainted by special benefits awards for a select few while they bear the brunt of cost-cutting will be severely hampered," the union said.
A Delta spokesman has called the severance proposal "conservative by industry standards." On Thursday the company issued a statement saying the proposal has the support of the official committee of unsecured creditors in the airline's bankruptcy case.
"To protect employees and their families from having no financial safety net if they are let go, severance rights are a standard part of most companies' basic human resource strategy, and have long been in place for most of the work force at Delta," the airline said.
A judge has not yet ruled on Delta's severance plan request, which the pilots union is asking be denied.
In its proposal, Delta asked the bankruptcy court's permission to reinstate its pre-bankruptcy severance practices for 144 officers and director-level employees.
The company said that under the program, severance pay of six to 12 months would be granted to certain employees whose jobs are terminated because of specified organizational or business changes. Employees who quit or are fired for cause would not receive severance.
If all 144 employees were terminated under the program, the cost to Delta would be $14.2 million, the company has said. CEO Gerald Grinstein and Chief Operating Officer James Whitehurst would not participate in the program.
The company said failure to implement the severance plan could increase unwanted attrition among upper-level employees.
Meanwhile, if negotiators for the pilots union and company can't reach a comprehensive deal on new concessions by March 1, a three-person arbitration panel would decide the company's request to reject the pilot contract so Delta can impose the cuts it is seeking unilaterally.
The pilots union has said it will strike if the contract is thrown out.
