Spotlightingnews

Delta And Pilots Reach Deal On Cuts

Hourly Wages Will Get A 14% Cut

On Sunday, Delta Air Lines, after talks with the Air Line Pilots Association (ALPA), made a draft for an agreement regarding pilots' pay-roll cuts. Hourly wages will get a 14% haircut, and another cut will lead to an additional 1 percent reduction in hourly wages (equivalent).

This will benefit passengers as well as Delta, as pilots threatened they will go on strike during holiday season. This agreement is seeking pilot ratification by Dec 28, latest.

Delta, the nation's third-largest carrier, filed for Chapter 11 bankruptcy protection in September. It is currently looking to fit into the $325 million pay and benefit cuts it set to obtain.

This would have been realized by cutting into pay-rolled by an average 19 percent, with unions agreeing only to a 9-10 percent cut, taking into account the fact that Delta staff agreed in 2004 to a $1 billion cut in wages.

Cost-cutting starts Thursday, Dec 15, while a long-term agreement with Delta's 6,000 pilots is set to be finalized by March 1, 2006. Delta is also seeking to terminate the pilots' pension plans, also part of trying to salvage itself.

Delta said achieving pilot labor cost reductions is an important element of its restructuring plan, which calls for an extra $3 billion in annual cost reductions and revenue improvements by the end of 2007.

The $3 billion improvement target is in addition to the approximately $5 billion in annual financial benefits the company says it is on track to deliver by the end of 2006, as compared to 2002.

Edward H. Bastian, Delta's CFO: "This [interim] agreement reflects the resolve of Delta people to work together to help save the company."

Lee Moak, chairman of Delta's pilots union, said yesterday's agreement is in the "best interest" of the airline and its pilots: "With a lot of hard work and dedication, I believe we have crafted an agreement that contributes to the restructuring plan and recognizes our value to the company."