Delta Air Lines Inc. asked a U.S. Bankruptcy Court judge Wednesday to void its contract with Delta's pilots' union so the beleaguered airline can impose deep wage and benefit cuts and avoid further financial erosion.
With several uniformed Delta pilots looking on in a standing room-only courtroom, Delta attorney Jack Gallagher said the airline valued its pilots and tried to negotiate reductions, but ultimately failed.
Faced with rising fuel costs, Delta is seeking to slash $325 million from its collective bargaining agreement with its pilots, saying the money is needed to keep its operations running. The ALPA, which has offered $90.7 million in concessions, has threatened to strike if the court grants Delta's request.
"The need is $325 million of cash. That is what our investment bankers tell us. That's what our creditor committee tells us," Ghallager said. "ALPA is fervently urging the court to say it isn't so. We're telling them it is so. We wish we didn't need $325 million of cash. But the need is real."
The hearing started with union attorney Bruce Simon asking U.S. Bankruptcy Judge Prudence Carter Beatty to remove herself from deciding on the union contract, claiming Beatty showed bias through comments in earlier court hearings in which she said pilots wages were "hideously high."
Simon cited a Nov. 10 Associated Press story in which Beatty was quoted as saying: "What's really weird is that anyone agreed to pay them that much money to begin with."
Beatty denied Simon's request, saying that her comments, made in jest, were misinterpreted.
Beatty could decide immediately on the company's request to void the contract, although it's considered likely she will give the sides up to 30 more days to reach an agreement before deciding on her own.
In Atlanta Tuesday, 800 pilots' union members and spouses rallied in support of the union's position, insisting the threat of a strike was not a bluff, although Delta maintains a strike would cripple the company and force a shutdown.
In court papers filed Monday, Delta called a potential strike a "murder-suicide" that would eliminate every job at the company. The airline also argued that, under the Railway Labor Act, a strike would be illegal.
Delta pilots currently earn an average of $169,393 a year, according to a company bankruptcy court filing. The document says the figure is a projection based on year-to-date actual earnings by people employed throughout last year and up to Sept. 16 of this year. It does not include proposed pilot pay rate reductions. Junior pilots make considerably less, while senior pilots in some cases make more. The type of aircraft a pilot flies also is a factor in the pay scale.
If the court approves the 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.
Delta, which filed for Chapter 11 on Sept. 14, has recorded losses of more than $11 billion since January 2001 and over that period has announced it would cut up to 33,000 jobs. Its loss in the third quarter, reported Thursday, was $1.13 billion.
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AP Business Writer Aleksandrs Rozens contributed to this report.
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