Northwest, Delta Talks Fail to Yield Deal

March 2, 2006
Under the bankruptcy law, that leaves Northwest free to impose its terms. Delta's pilot union said it would conduct a strike vote after talks failed and the matter headed to arbitration.

Strike threats loomed at two of the nation's largest airlines on Thursday after talks with pilots did not yield agreements.

Northwest Airlines Corp. has the power to force the pay cuts and work rule changes it wants on pilots, which would almost certainly prompt a strike. The company kept talking anyway.

And the pilot union at Delta Air Lines Inc. said it would conduct a strike vote after talks failed and the matter headed to arbitration.

Delta Air Lines Inc. and Northwest, the nation's third- and fourth-largest airlines, have said they need long-term pay cuts so they can emerge from bankruptcy protection. Both filed for Chapter 11 protection on Sept. 14 in New York.

To get those concessions, both carriers asked bankruptcy judges to let them reject some union contracts. In Northwest's case, that process led to a court-imposed Wednesday deadline and a tentative agreement with flight attendants.

But not Northwest's pilots. Wednesday's deadline came and went without a deal and without a ruling from Judge Allan Gropper on whether Northwest can impose its demands on pilots. Under the bankruptcy law, that leaves Northwest free to impose its terms, the pilot's union and bankruptcy experts said.

Gropper indicated to attorneys "that would not be wise. (That) if they had that intention to advise him first," said Wade Blaufuss, spokesman for the Northwest branch of the Air Line Pilots Association.

Northwest spokesman Kurt Ebenhoch wouldn't comment directly on whether, or when, the company would impose terms on pilots. But he did say, "It's our intention to continue negotiations until the judge makes his decision."

More than 92 percent of Northwest pilots voted to authorize a strike if the airline imposes its terms on them. Northwest said a strike would be illegal and that it would seek an immediate injunction to stop one.

A prolonged pilots' strike could be enough to sink either airline. Atlanta-based Delta has described a strike as "murder-suicide."

Delta said in a memo circulated among employees Wednesday that it has offered to increase its pilots pay 1 1/2 percent at the end of 2008 and another 1 1/2 percent in 2009. Delta is now offering its pilots a $330 million note instead of $300 million if it terminates the pilots defined benefit pension plan. The pilots are asking for a $1 billion note.

Delta also said it has offered its pilots equity in the company once it emerges from bankruptcy. Its memo didn't say how much.

The arbitrators will hold two weeks of hearings at a downtown Washington hotel starting March 13 to decide whether to grant Delta's request to throw out its contract with its pilots so the airline can impose up to $325 million in cuts unilaterally. The union is currently offering about $115 million in average annual concessions.

Nothing precludes the sides from continuing to negotiate up to and through the hearings.

The two sides agreed to arbitration instead of letting the bankruptcy court make the decision.

In late 2004 pilots agreed to a five-year deal that cut pay and benefits by $1 billion annually. It included an immediate 32.5 percent pay cut.

In December, Delta and its pilots reached an interim deal on pay cuts that would be replaced by the long-term deal the sides are currently discussing.

According to the company, the average pay of pilots last year who worked the full year was more than $157,000.

The arbitrators would have several weeks from the end of the hearings to make a decision, and rank-and-file pilots have not yet voted on a strike authorization, meaning no strike is imminent. However, Lee Moak, a pilots union leader, said late Wednesday the pilots would vote on strike authorization due to "management's continued intransigence at the negotiating table."

He said voting would begin on Monday and last four weeks.

Eagan, Minn.-based Northwest said the tentative deal with flight attendants gave it the $195 million in annual savings it sought, toward a goal of $1.4 billion from all its workers. The union said Northwest dropped its demand to use more non-U.S. flight attendants on overseas flights, which had been at the core of its strike threat.

"That was a big stand, because Northwest (was) the first carrier trying to get foreign nationals, foreign workers on the airplane," said PFAA President Guy Meek. "Everybody was watching us, and PFAA was successful in keeping them off."

The flight attendant deal still must be accepted by union leaders and approved by a vote of the 9,700 members of the Professional Flight Attendants Association. Northwest ground workers are also voting on a tentative agreement.

He declined to discuss details, but said the pay cut is "pretty close" to the 20.7 percent temporary cut flight attendants took earlier in the bankruptcy process.

"At least it's a deal that can go out and the members can speak," Meek said after the all-night bargaining session. "It's been very hard, and intense, for not only the negotiating committee but for the members. They go to work every day not knowing what's going to happen. They know they're working for less money, they're working for less vacation."


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