Pilots say Delta seeks cuts

Northwest set to hire mechanics

Moves come as airlines strive to head off bankruptcy proceedings

September 13, 2005|By NEW YORK TIMES NEWS SERVICE

Delta Air Lines Inc., which is said to be on the brink of filing for bankruptcy protection, asked its pilots for a second round of wage and benefit cuts late yesterday, according to the Air Line Pilots Association.

The move came as Northwest Airlines Corp., which is seeking more cuts from employees to try to fend off its own bankruptcy filing, considered giving permanent jobs to some substitute mechanics starting today.

Delta's request for cuts was disclosed in a message that the pilots union put on its phone line, addressed to its 6,500 members. It said negotiators for the airline and the union met yesterday at Delta's request. "The company presented the negotiators with a comprehensive, deeply concessionary contract proposal," the message said.

The message did not disclose the size of the cuts sought by Delta, which obtained $1 billion in wage and benefit concessions a year ago, including about a one-third cut in pay. Delta did not give details but said it had made proposals that were "necessary to address the severe financial problems that the company and its people are facing."

People who have been briefed on the proposal said it would cut pilots' wages and benefits to about the levels of their counterparts at low-fare airlines. But pilots at those airlines, such as Southwest and JetBlue, receive bonuses and other compensation because their companies are profitable. Delta, by contrast, has lost nearly $10 billion this decade.

The pilots' message said that leaders would meet Monday to discuss whether to hold formal negotiations. But that may come after a bankruptcy filing, which could occur late this week, according to people with direct knowledge of Delta's plans. Delta's share price fell 25 cents yesterday, to 85 cents.

Delta is close to arranging the financing that it would need to operate under bankruptcy protection. Many of its assets were pledged last year to arrange financing from GE Corporate Finance and American Express. Cooperation from those companies, and other lenders, would be needed for the airline to retain its assets.

Companies operating under bankruptcy protection are allowed to petition a judge to set aside contracts and impose wage and benefit cuts, if no agreement is reached. By disclosing its cuts to the pilots union, Delta is apparently giving the pilots a preview of what could be in store if it files for protection.

Agreement deadline

Northwest, meanwhile, had given members of the Aircraft Mechanics Fraternal Association until today to reach an agreement; otherwise they could see their jobs given away.

The union went on strike against Northwest Aug. 20 over the airline's demand for $176 million in cuts, including elimination of 2,000 jobs.

Northwest replaced 4,430 union members with 1,900 substitutes, including supervisors, contractors and 1,200 licensed mechanics. The airline has not said how many permanent workers it planned to hire. Under the Railway Labor Act, Northwest would not have to give the jobs back to striking mechanics, even if it reaches a deal with the union.

That appeared unlikely anytime soon. Late last week, union leaders told members that Northwest increased its demand for cuts to $203 million. The airline told the union it would need to fill about 1,080 positions, about 3,100 fewer than members held before the strike.

Union bargainers walked away from talks early Sunday and no meetings have been held since. In a memo to union members, negotiators said they had offered cuts valued at $203 million and had accepted Northwest's lower job levels.

Severance pay

But the union wanted 20 weeks of severance pay for laid-off workers, while Northwest would agree to only 16 weeks, union leaders told members. By contrast, the union had demanded 32 weeks of severance before the strike, and Northwest had offered 26 weeks.

The cuts originally sought by Northwest were part of its effort to obtain $1.1 billion in wage and benefit concessions, which it said it needed to avoid a bankruptcy filing. This weekend, Northwest increased that demand to $1.4 billion, union officials said.

All airlines have been hit hard by the spike in the price of jet fuel since Hurricane Katrina damaged oil operations on the Gulf Coast. Even before that, airlines had spent 50 percent more this year on jet fuel than they spent a year ago.

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