Delta, Union Ordered to Start Negotiating

The head of an arbitration panel on Thursday ordered the management and pilots union at Delta Air Lines Inc. to immediately begin negotiating for an agreement to avoid a collapse of the 77-year-old airline.

In a strikingly impassioned statement at the end of nine days of hearings before the three-person panel, its chairman Richard Bloch chastised both sides and warned them that "time is very much of the essence and failure ... is not an option."

The pilots union has promised to strike if Delta, which is operating under bankruptcy protection, is allowed to void its contract and impose up to $325 million in pay cuts. Company executives say that a strike would spell the demise of the nation's third-largest airline.

"Make no mistake: you both are responsible for this proceeding," Bloch said in the hotel meeting room where officials of Delta and the pilots union, and their attorneys, sat on opposite sides. If the two sides fail to reach accord and the panel is forced to rule on whether Delta can toss out its contract with the pilots, he said, "This will be an abandonment of responsibility that will, and should, haunt all of you."

"This is a shameful exercise by two groups who it appears have bargained successfully in fat times; but in hard times, the talk turns to nuclear options ...," Bloch said. "You need to begin today, tonight ... you need to get down to this privately now."

Each side, he said, "has within its power the ability to destroy this company."

They didn't plan to sit down immediately, but Delta's chief financial officer, Edward Bastian, said he expected negotiations to begin in a day or two.

"We're hoping to be able to get back to the table," Bastian told reporters after the hearing. "I would hope in the next few days we could start."

"We need to get this done. ... But it won't be easy," he said.

The head of Delta's pilots union, Lee Moak, said: "The ball is in the company's court. It takes two parties to negotiate and they haven't negotiated to this point. We'll see if the panel's words can bring them to the table willing to negotiate in good faith."

Unlike a court, the arbitration panel does not have the legal authority to order the two parties to negotiate, but Bloch said they should consider his statement - agreed upon by the entire panel - "an interim order of this arbitration panel."

The two sides had signaled earlier a hardening of their positions. Bastian rejected in his testimony Thursday the union's notion that the difference between the two sides' views - pegged at $165 million - is marginal and should be overcome.

Delta's troubled relations with its labor unions deepened, meanwhile, as its regional carrier, Comair Inc., planned to go into bankruptcy court Monday to ask a judge to throw out Comair's contract with its flight attendants so it can impose $8.9 million in pay cuts.

"We are in serious trouble as a company," Bastian said. Unable to borrow any more money to cover its mounting losses, without assets to pledge, any "event risk" such as a terrorist incident, spike in fuel prices or outbreak of bird flu could push the airline over the precipice, he warned.

"We're looking in every corner of this company to reduce costs," he testified, insisting that the pilots were not being unfairly singled out for sacrifice. "This battle for Delta's long-term success is going to take every dollar that we can find."

His remarks stood in contrast to Moak's testimony on Wednesday in which he said, "We should be working together. We shouldn't be fighting over a couple hundred million dollars."

Bastian called that "a very significant" amount, given that the airline has only "a razor-thin margin for error."

The company says that its plan for restructuring the airline calls for up to $325 million in long-term pay and benefit reductions for the pilots - part of $3 billion in projected cost savings. Management has agreed to lower that to $305 million if the pilots union reaches an accord with the company. The union's plan for cost savings is valued at $140 million.

The Teamsters say that the proposed reductions for the Comair flight attendants would mean an average $10,500 loss per worker on an average salary of about $28,000 a year.

Comair, based in Erlanger, Ky., near Cincinnati, says the union representing about 1,000 flight attendants is the only labor group that has not agreed to concessions with the regional airline. Comair says it needs to cut costs by about $70 million overall to remain competitive.

Also Thursday, Delta said it will be offering nonstop service from Atlanta to Wilmington, Del., to become the only carrier to offer service to all 50 states. Starting June 29, Delta Connection carrier Atlantic Southeast Airlines will add two daily nonstop flights between Atlanta and Wilmington.

___

AP Business Writer Harry R. Weber contributed to this report from Atlanta.

__

On the Net:

Delta Air Lines Inc.: http://www.delta.com

Pilots Union: http://crewroom.alpa.org/dal/DesktopDefault.aspx

News stories provided by third parties are not edited by "Site Publication" staff. For suggestions and comments, please click the Contact link at the bottom of this page.