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Delta Pilots May Strike Over Pay ; Airline Says It Can Cut 19.5% on Dec. 16

Posted on: Thursday, 8 December 2005, 18:00 CST

By TOM BECKER, BLOOMBERG NEWS

Delta Air Lines Inc. pilots said they may strike if the bankrupt carrier tries to impose a 19.5 percent pay cut on Dec. 16.

Delta, the No. 3 U.S. airline, said it has a legal right to cut pilots' pay if a U.S. bankruptcy judge doesn't rule on its request to impose a new contract by Dec. 16. The Air Line Pilots Association, the pilots union, said it doesn't believe Delta can impose the changes, which would reduce the average pilot's salary to $136,362 from $169,393, according to the airline.

"While our preference would be a negotiated settlement, should management commence imposing their conditions on the 16th, we will consider all legal options to defend our contract," said John Culp, a representative for the pilots union.

The disagreement over the legal question arose as hearings on Delta's request to drop the contract and impose new terms entered its ninth day Wednesday. Delta has been putting on its case since the hearings began Nov. 16. The union has yet to offer evidence, which means a decision by U.S. Bankruptcy Judge Prudence Carter Beatty may not come before the Dec. 16 deadline.

Under bankruptcy law, a judge has 30 days from the start of a hearing to rule on a request to scrap a contract and issue new terms. Delta and the pilots disagree over whether the airline has the authority to impose the cuts if the matter isn't settled by the 30th day.

Beatty has said she will try to use her influence to extend the hearings beyond Dec. 16. It isn't clear whether she can force an extension.

U.S. bankruptcy law provides that if the court does not rule on the motion within 30 days, the company "may terminate or alter any provisions of the collective bargaining agreement pending the ruling of the court on such application."

"If the company felt it would facilitate reaching a consensual agreement in time to save the company, we'd be open to it," Delta spokesman Michael Freitag said of an extension. If the judge feels an extension is appropriate, "we would actively consider it," he said.

Culp said it appears Delta is trying to hinder the union's ability to present its case prior to the Dec. 16 deadline, citing "management's line of questioning and endless delays."

Delta has said the pay cuts are essential to its survival. The Atlanta-based airline has devoted much of the time during the hearings to offering evidence that its pilots are among the highest paid in the industry. The pilots agreed to a 32.5 percent pay cut last year.

Timothy Coleman, Delta's financial adviser, testified that the cuts, which are part of a plan to shave $3 billion in expenses, are necessary to allow Delta to exit bankruptcy and continue operating.

"We would love not to be in bankruptcy, and we would love to be able to pay them, but that's not the reality," John Gallagher, a lawyer representing the airline, told Beatty on Wednesday.

Delta shares rose 0.5 cents to 53 cents in over-the-counter trading. The airline's 7.9 percent notes due in 2009 fell 0.54 cents to 19.71 cents on the dollar, according to Trace, the bond-price reporting system of NASD.

Source: Record, The; Bergen County, N.J.

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