Judge Wants Facts in Delta Case in Context

If the court approves Delta's proposed cuts, they would be on top of $1 billion in annual concessions the pilots agreed to in a five-year deal reached in 2004.


On the fifth day of hearings focused on Delta Airlines Inc.'s request to break a collective bargaining agreement with its pilots, Judge Prudence Carter Beatty hinted at how she may arrive at a decision on this hotly contested aspect of the airline's bankruptcy case.

Amid testimony Wednesday by a Wall Street financier who advocated a plan seeking wage cuts from pilots, Beatty said that given the complexities of the carrier's business, she wanted to examine the facts in context.

"I really think the facts can be misrepresented unless you know more about the context," Beatty told the court. "I actually think in a case like this, the facts are much more important than the law."

Atlanta-based Delta, which filed for Chapter 11 bankruptcy protection on Sept. 14, has about 50,000 employees of which some 6,000 are pilots. It is looking for $3 billion in annual cost savings overall.

Delta wants $325 million in concessions from the pilots, saying it needs to cut labor costs to make itself competitive with other carriers who operate at a lower cost.

The Air Line Pilots Association, the union representing the pilots, has offered $90.7 million in concessions and has threatened a strike if the court grants Delta's request. Delta maintains such a walkout would violate the Railway Labor Act.

If the court approves Delta's proposed cuts, they would be on top of $1 billion in annual concessions the pilots agreed to in a five-year deal reached in 2004. That deal included a 32.5 percent pay cut and has been held up by the union as a sign of their willingness to negotiate.

Delta has for five days presented testimony from an industry specialist, its own chief financial officer and a Wall Street investment banker arguing why it needs to break the collective bargaining agreement to survive.

Throughout the testimony, Beatty has extensively quizzed them about industry practices and has parsed through different company financial statements aloud, asking for explanations of Wall Street and accounting jargon.

Delta is slated to bring another expert to testify on its behalf.

The airline pilots have yet to present testimony supporting their argument before the court, which means that the hearings likely will go on into next week.

Beatty on Wednesday also said: "I don't need 25 case books on my desk. I can explain orally why I want to go one way or another. I don't like decisions to be written. ... You'll get more oral (decisions) than written ones."

Attorneys from both sides welcomed the judge's detailed examination of different bits of testimony and exhibits.

"It may be that the judge's expressed intention to thoroughly examine the facts will extend the hearings somewhat but, given how deeply Delta believes in its case, that's just fine with us," said Marshall Huebner, partner with Davis Polk & Wardwell, the law firm representing Delta.

"She has been taking the time to read the documents and research the case," said Capt. Lee Moak, chairman of the Delta Air Line Pilots Association. "We stand ready to present our case."


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