Delta and pilots reach interim deal on wage cut

Delta and pilots reach interim deal on wage cut

	Published : Fri, 30 Dec 2005 02:05 By : Amy Watts Print this Story

NEW YORK: The pilots of Delta Air Lines Inc. Wednesday ratified by majority an interim arrangement accepting pay and other cuts in order to help the bankrupt airline stay afloat and to pave the way for detailed negotiations towards a final deal.

The deal reached between the airline and the Air Line Pilots Association earlier this month includes a 14 per cent hourly wage reduction and cuts in other pay and cost items equivalent to another 1 percent. Delta is under bankruptcy protection since September and is trying to come out of it through a financial and operational restructuring.

The union said 58 per cent pilots voted to ratify the deal, which will help the company save about $143 million a year. The airline had sought $325 million a year in paybacks.

Delta's chief executive Gerald Grinstein said in a statement that the company greatly appreciates the additional sacrifices made by the employees, including the pilots, to save the company.

The management and the union will meet again to discuss and reach an agreement by 1 March on a permanent pay package, which the pilots would vote by 22 March. If there is no agreement, the issue will be referred to a three-member arbitration panel.

The airline's management is seeking $3 billion in cost cuts and revenue increases in addition to $5 billion in annual cuts and improvements, which are expected to be completed by end-2006. These cover staff cuts, wage and benefit reductions and a reduction in the fleet.

This is the second time in a year that the airline's pilots have agreed to accept concessions. About a year ago, the union had agreed to a collective $1 billion-a-year reduction in compensation, or 32.5 in percentage terms. In spite of this, the company could not avoid bankruptcy filing.

Delta would have sought the bankruptcy court's intervention if the pilots had not ratified the wage cut. In that event, the court would have imposed higher cuts. But, on the other side, the pilots could go on a strike as the court would have voided the work contract to impose cuts, an eventuality, which would have made the airline's very existence doubtful.

In the last five years, the airline had lost nearly $11 billion and slashed 20,000 jobs to stay on.