By James Pilcher
The Cincinnati Enquirer
Delta Air Lines executives and the new leaders of the carrier's pilot union held an introductory meeting Friday in Atlanta. The meeting was supposed to be a friendly "get-to-know-you" session, but future prospects of any possible concessions from the pilots also came up.
At the same time, the company is presenting some blunt facts and making some strong moves publicly that some experts say is another way to put pressure on Delta's only unionized work group.
For example, Delta executives pointed out last week, when they announced a $164 million loss for the third quarter, that the airline spends about $1 billion more annually than its largest competitors on operations, and that most of that difference comes from differences in pilot pay and productivity.
In addition, the airline said it was halting any new deliveries on large jets for its main line, selling 11 planes it was supposed to receive in 2005 to an unnamed third party. And Delta is the only major carrier thus far to report a loss for the third quarter.
Pilots could decide to take cuts now, or push off any negotiations until their current contract is up for renewal in about a year and a half.
"The company is in no danger of going into bankruptcy in the short to intermediate term unless the economy goes completely negative," said Ray Neidl, airline stock analyst Blaylock & Partners. He said that the sale of the jets could be seen as both a cost-cutting move as well as a signal to the pilots about the future of the company. "But they do have a big cost difference with the other carriers, mainly because of the pilots.
"So the pilots do have a choice: work for really high wages but with a smaller employment base for a company that continues to slowly bleed away, or they can cut now and get paid less but maybe have more jobs in the future."
The 8,500-member union includes just fewer than 900 based at the Cincinnati/Northern Kentucky International Airport. The current contract, which makes Delta's pilots the highest paid in the industry, does not open for renewal until May 2005, and the union is not required to discuss any concessions before then.
In July, the carrier's branch of the Air Line Pilots Association ceased preliminary talks aimed at opening up the contract early. At the time, the company was asking for a 22 percent immediate pay cut and to cease any future raises while asking pilots to work more.
While acknowledging that Delta needed to cut costs, the union said that for negotiations to continue and if the contract were to be changed, that the company would have to extend the life of the current contract. It also said that cuts would have to come elsewhere as well as with the pilots.
"We're not going to carry the load on our shoulders, and we can't be compared to American or the others, because Delta is in a much different situation than that," said ALPA spokesman Chris Renkel, a Boeing 767 first officer who lives in Cleveland. "And we know that if any adjustments aren't made now that management would be very aggressive when official talks do start up. That's why we would want an extension of the contract."
At Friday's meeting, no specifics about negotiations were discussed.
"This was not a negotiating session," Delta spokesman John Kennedy said. "But the meeting was constructive and Delta remains hopeful that there will be opportunities for further discussions on how Delta and ALPA work together to achieve a competitive cost structure for the long term."
Union officials said that while no requests for negotiations were made Friday, they fully expect them to come again soon while reiterating their position on extending the contract and other issues.
"This is not a small thing for the pilots," analyst Neidl said of the Delta situation. "This would be a major event for them if they were to agree to the cuts. But they could be faced with more down the road if they don't do it now."
Comair, Delta's Erlanger-based regional subsidiary, also is asking its pilots and flight attendants for concessions, but neither union has made a decision whether to open contracts early.
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