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Wednesday, September 29, 2004

Delta praises pilots' union for ratification



By James Pilcher
Enquirer staff writer

The most immediate threat to Delta Air Lines' ability to avoid Chapter 11 was quelled Tuesday when the airline's pilots' union ratified an agreement dealing with early retirements.

But the fate of the financially struggling airline still lies in the hands of those who fly its planes, experts said.

"They hold a major piece of it, along with the debtors and the bond holders," said airline analyst Ray Neidl of Calyon Securities.

Many observers were encouraged that a permanent deal could be reached because, among the 76 percent of the members who voted, 90 percent approved the deal.

The Delta pilots' union has nearly 8,000 members, including 800 based at the Cincinnati/Northern Kentucky International Airport.

"Today's ratification by the pilots is a positive example of what we can do when we work together to find mutually acceptable solutions to our problems," the company said in a statement. "But it is also a stark reminder of the severity of our financial situation. The same sense of urgency and spirit of cooperation needs to be applied to now reach an agreement on the $1 billion in permanent annual cost savings Delta needs from its pilot group."

Karen Miller, spokeswoman for Delta's branch of the Air Line Pilots Association, said the union has always been willing to sacrifice, pointing out it has an offer on the table worth as much as $705 million.

"I really don't see a correlation between the two," she said.

Talks on an overall agreement resume this week. Delta management has warned that without the concessions it could declare bankruptcy, but has not given a deadline. Neither the company nor the union would discuss the talks.

The plan approved Tuesday allows the company to rehire recently retired pilots in return for a promise from management not to alter the pilots' pension plan until February, even if bankruptcy is declared before then.

Delta had warned that because more pilots were retiring than normal, it could leave it understaffed on specific types of planes - possibly forcing some lucrative overseas flights to be cancelled.

That would hurt cash flow, officials said, triggering a possible bankruptcy as early as next week if the situation was not resolved.

Delta on Tuesday also announced its plans for cutting non-union worker pay by 10 percent and trimming benefits as well.

Neidl said that those cuts could be a sign to the pilots that the company is serious.

"The pilots have said they were not going to make a sacrifice on their own," said Neidl. "This is showing that the company is willing to have everybody take their cut, and now it is up to the pilots to save the company."

E-mail jpilcher@enquirer.com




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