• E-mail
• Print
• Comment
• Font Size
• Digg
• del.icio.us
• Discuss article

Delta Managers Overreaching for Givebacks, Pilots Union Officials Say

Posted on: Monday, 20 March 2006, 15:00 CST

By Russell Grantham, The Atlanta Journal-Constitution

Mar. 18--WASHINGTON -- Current and former pilots union officials indicated in testimony that Delta Air Lines' managers are partly to blame for stalled concession negotiations in 2004 and are overreaching for more pilot givebacks now.

In the fifth day of arbitration proceedings on Delta's efforts to win more than $300 million in concessions from pilots, the Air Line Pilots Association's witnesses said the union willingly helped with Delta's past turnaround efforts. But they said a side agreement that was part of a 2004 concession deal limited Delta's rights to seek more cost savings from pilots.

A so-called bankruptcy protection letter from the $1 billion-a-year pay cut deal limited Delta's ability to seek more concessions if Delta later got into more financial trouble, said former ALPA negotiating chairman Don Wykoff, now head of the union's strategic planning committee.

"We would not have a complete second bite of the apple," said Wykoff, a captain with Delta. He said the side agreement bars Delta from seeking larger pay cuts than it needs to restore its cash reserves to certain levels. ALPA says the agreement remains in force.

Delta countered that it's ALPA that dragged its feet during the airline's push for concessions in 2004, and that the bankruptcy protection letter's provisions no longer apply. Delta argues that events and agreements prior to Delta's bankruptcy filing are irrelevant to the current proceedings, which are governed by the bankruptcy code.

ALPA began presenting its case Friday after four days of testimony from company executives and financial advisers who argued that Delta needs pilot pay cuts to survive. ALPA's witnesses interspersed their testimony about arcane contract provisions with stories of pilots' heroic efforts to land military or airliner jets in emergencies.

The hearings, which may last another week, resume Monday.

"We absolutely appreciate our pilots. There are none better," said Delta spokesman Bruce Hicks. "But that doesn't change our absolutely critical need to get our costs to market [levels], and that includes our pilot costs."

Delta, which filed for Chapter 11 six months ago, is seeking $305 million in annual concessions for four years, including an 18 percent pay cut, or $290 million a year if the pilots' pension plan is terminated. If the plan is taken over by a quasi-government agency, which Delta this week said is likely, the carrier also has offered pilots a $330 million long-term IOU after the airline emerges from bankruptcy.

The concessions would be on top of a 32.5 percent pay cut under the 2004 concession pact.

ALPA has proposed concessions in the latest round that it says average $140 million annually. Delta says ALPA has asked for a $1 billion note if its pension plan is terminated, but the union says the value hasn't been determined.

Under an agreement in December that suspended Delta's motion to void the pilots' contract in bankruptcy court, the panel of arbitrators will decide whether to reject the pilots' contract. They have until April 15 to decide.

Delta can impose its own terms if the contract is rejected. ALPA says it will strike if that happens, but Delta says such a labor action would be illegal. Legal experts say the law is unclear in the case of an airline union whose labor contract is rejected.

In Friday's testimony, retired Delta Capt. Kim Welch said Delta's managers were slow to react to changes in the airline industry after the Sept. 11 terrorist attacks that ultimately led to Delta's Chapter 11 filing in September.

Welch said concession negotiations stalled in 2004 as Delta missed a number of self-imposed deadlines for an in-depth strategic review ordered by Delta CEO Gerald Grinstein.

"We were very concerned... about the pace of negotiations," said Welch, then a top administrator at ALPA's Delta unit. "We needed for this review to be done before we could get into substantive negotiations."

But at a meeting in August 2004 with Mike Palumbo, then Delta's financial chief, "Palumbo said, 'The last thing we need to deal with right now is the pilots,' " said Welch.

"That's ridiculous," Delta's attorney, Jack Gallagher, said after Welch's testimony. "We were bending over backwards, giving them financial information."

-----

To see more of The Atlanta Journal-Constitution, or to subscribe to the newspaper, go to http://www.ajc.com.

Copyright (c) 2006, The Atlanta Journal-Constitution

Distributed by Knight Ridder/Tribune Business News.

For information on republishing this content, contact us at (800) 661-2511 (U.S.), (213) 237-4914 (worldwide), fax (213) 237-6515, or e-mail reprints@krtinfo.com.

DALRQ,

Source: The Atlanta Journal and Constitution

More News in this Category