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Northwest, Delta talks fail to yield a deal

Thursday, March 2, 2006

By JOSHUA FREED and HARRY R. WEBER

Two of the nation's largest airlines, Delta and Northwest, failed to reach new contract terms with their pilots on Wednesday after marathon negotiations.

Without a deal, Northwest's pilots waited for a judge to rule on whether that carrier could throw out their union contract and impose its own terms. In Delta's case, arbitrators will decide that issue after a hearing set to begin March 13.

Northwest Airlines Corp. did reach a tentative agreement with flight attendants on Wednesday, the day a New York bankruptcy court had set as a deadline.

The same judge, Allan Gropper, could rule at any time on Northwest's request to reject its pilot contract. It wasn't clear when that would happen, but Northwest said a ruling was expected "in the near future."

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 in New York on Sept. 14.

Attorneys were set to meet with the judge Wednesday night in New York, said Wade Blaufuss, a spokesman for the Northwest branch of the Air Line Pilots Association.

Absent a ruling, the law appeared to give Northwest the right to impose its terms on pilots. Blaufuss said the union doesn't believe Northwest could do that.

But some experts disagreed. Minneapolis bankruptcy attorney George Singer said he believes Northwest could impose its terms after Wednesday if the judge doesn't rule. But he said it wouldn't be productive.

"That would strike me as something that wouldn't foster ongoing negotiations," he said. "I don't see as a practical matter that it would play out that way."

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. Delta's pilot union has threatened a strike, too, though members have not voted on one.

A prolonged pilots' strike could be enough to sink either airline. Atlanta-based Delta has described a strike as "murder-suicide." Deadlines like those Wednesday have prompted wage-cut deals in other airline bankruptcies.

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.

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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