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Delta pilots ratify contract

Posted on: Wednesday, 31 May 2006, 11:35 CDT

NEW YORK (Reuters) - Pilots at Delta Air Lines Inc. have approved a new contract with the carrier, clearing one major hurdle in the company's restructuring plan, the airline and the union said on Wednesday.

But the deal, which saves Delta about $280 million a year, must now be approved by the U.S. Bankruptcy Court, where it is being opposed by the federal pension insurer. A hearing is scheduled for later on Wednesday.

The pilots, who are represented by the Air Line Pilots Association, voted 61 percent in favor of the deal that will save Atlanta-based Delta about $280 million a year. The union said 95 percent of the pilots voted on the agreement that was reached last month.

Delta, which filed for bankruptcy protection from creditors in September and is restructuring its operations, is seeking $3 billion a year in revenue increases and cost cuts.

The airline said it was on track to achieve about 70 percent of the target by the end of the year and expects to emerge from bankruptcy in the first half of 2007.

"The additional pilot savings are a significant, necessary and appreciated component of Delta's restructuring plan," Chief Executive Gerald Grinstein said.

"This agreement provides a framework for Delta to successfully reorganize and emerge from bankruptcy ready to win in today's competitive marketplace," union Chairman Lee Moak said in a separate statement.

If the court approves the deal, the contract will become effective on June 1, 2006, and is amendable on December 31, 2009, Delta said.

But the federal pension insurer, the Pension Benefit Guaranty Corp., has objected to the pilots' deal, saying the contract could cost the government billions of dollars.

The airline said it had reached an agreement with another opponent -- DP3 Inc., the organization representing retired Delta pilots.

Source: REUTERS

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