Friday, December 5, 2003

Pilots, Delta appear far apart in talks



By James Pilcher
The Cincinnati Enquirer

The union for Delta Air Lines' pilots have submitted its first proposal to reduce pay as the airline continues to seek concessions, while it appears that Delta is asking for deeper cuts than it did earlier this year.

And the two sides look to be far apart in what one analyst Thursday said could be a protracted negotiation.

In Wednesday's meeting between the union and management, the first since previous talks broke down this summer, Delta's branch of the Air Line Pilots Association said it would be willing to take a 9 percent pay cut and extend the amended contract until 2008.

But in a note to pilots, union negotiators also said that the company was now seeking an immediate 30 percent pay cut, plus a 4.5 percent cut in the future by eliminating future scheduled raises.

This spring, the company had said it was seeking a 22 percent cut, while freezing raises for the next two years for its 8,500 pilots. That includes nearly 900 that are stationed at the Cincinnati/Northern Kentucky International Airport - Delta's second-largest hub.

Delta spokesman John Kennedy would not comment specifically on either the union's proposal or on ALPA's assertion that Delta had raised its request.

But he said that with the pilots actually giving their own counterproposal, the company remained "hopeful that an agreement can be reached quickly."

The union's note to pilots was not so hopeful, saying that the two sides remained "hundreds of millions apart."

"Your negotiating committee does not view the current table positions as a starting point from which we will ultimately 'meet in the middle,'" the negotiating committee said in the note.

Delta is desperately seeking to lower labor costs, especially among its lone major union, as it continues to lose hundreds of millions. The nation's No. 3 carrier has the highest per-seat operating cost in the industry and has lost more than $2 billion since the Sept. 11 terror attacks.

Last week, Delta's chief executive officer and chairman Leo Mullin, who earlier this year drew the pilots' ire when he received a huge bonus package while calling for more cuts and laying off more pilots, announced he would retire as CEO. He is giving up his slot to Delta board member Gerald Grinstein on Jan. 1 and his chairmanship next April.

Grinstein has pledged to continue to push Delta's case with the pilots, especially since the company has warned that it would lose upwards of $415 million more this quarter - double the previous estimate - primarily because it was paying out so many pensions to a large amount of retiring pilots.

Wall Street airline analyst Jamie Baker of J.P. Morgan Securities said in a research note issued Thursday morning that the pilot counteroffer was not nearly enough to solve Delta's financial woes.

"While the market may respond positively to the simplistic notion of labor progress at Delta, the inadequacy of the pilot's proposal highlights that serious, protracted negotiations lay ahead," Baker wrote. "At least it is a start - as with any negotiation, it stands to reason that management has swung for the fences with its initial request and the pilots have responded with a bunt."

Shares in Delta closed at $11.69, down 15 cents.

E-mail jpilcher@enquirer.com



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