UPDATED: 2:41 p.m. June 25, 2008
Pilot deal paves way for Delta, Northwest merger


The Atlanta Journal-Constitution
Published on: 06/24/08

Leaders of Delta's pilots union are meeting Wednesday on a tentative agreement that would pave the way for them to work under the same contract and seniority list as Northwest pilots.

If the plan is approved by Delta's pilots union leadership and, later this week, by their counterparts representing Northwest pilots, the airlines would clear a major hurdle toward their proposed merger.

DELTA NEWS
Latest Headlines:
More Delta news
Business news
Business photo galleries

It does not spell out how the pilots groups — both units of the Air Line Pilots Association — would integrate, but it sets up a process on agreeing to such details. If the pilots unions did not reach agreement on the details within a set time period, then the details would be worked out through arbitration, to be completed by mid-November, according to a person with direct knowledge of the tentative agreement.

Executives of Atlanta-based Delta and Eagan, Minn.-based Northwest had hoped to get the pilots group to agree to a single contract before they announced plans to merge. But the unions were not able to come together on merging seniority lists, so the companies went forward with announcing their proposed deal in April.

Delta's pilots union eventually did reach its own agreement with Delta, one that did not cover Northwest pilots.

While the joint contract would be different from the labor agreement ratified by Delta's pilots in May, it is based on that agreement, according to the Delta pilots union.

That agreement included annual pay raises of 4 percent to 5 percent and a 3.5 percent equity stake in the combined company.

The joint contract, if ratified, would become the pilot contract for the combined carrier. The unions declined to provide details on the tentative agreement, which was reached Monday.

Seniority — a key sticking point up to now — is a thorny issue for pilots because it determines a variety of factors, including which planes pilots qualify to fly and can affect pay rates.

Delta's pilots generally have lower seniority than their counterparts at Northwest because many senior Delta pilots retired to protect pension benefits before the carrier field bankruptcy. But the Delta pilots are better paid than those at Northwest.

Delta chief executive Richard Anderson said in a written statement Tuesday that the pilot groups have "outlined a process for seniority integration that will allow us to move forward with a unified pilot group."

"Achieving a joint contract and combined seniority list in advance of the closing of the merger is something that has never been done in this industry," Anderson said.

The Northwest pilots union has stressed that it wants pay parity in any joint contract.

Delta pilots spokesman Buzz Hazzard said Tuesday, "We have supported pay parity for Northwest pilots, and we have consistently done that throughout the process."

The pilots agreement could allow the merged airline to avoid the problems still faced by US Airways and America West. Their pilots did not work out a joint contract before merging in 2005 and continue to work under separate seniority lists and contracts, complicating operational integration.

Even if the Delta and Northwest pilots agree to a joint contract, the airlines have work to do to get their proposed deal done by the end of the year, as executives expect.

Regultors must give the OK. Delta Northwest filed Tuesday for European Union regulatory approval of their proposed merger. The European Commission, the EU's antitrust authority, listed a July 29 provisional deadline for its ruling on the deal. The merger is also being reviewed by the U.S. Department of Justice.

And shareholders must approve the deal, which has lost about half its value since first announced on April 14. Delta's all-stock purchase of Northwest fell to a value of $1.73 billion on Monday. The deal calls for each share of Northwest to be exchanged for 1.25 Delta shares.

Delta pilots' leadership met Tuesday and are meeting again Wednesday on the tentative agreement. The Northwest pilots group leadership meets Thursday and Friday.

If the governing bodies at each union approve the agreement, it is subject to ratification by pilots of each airline. That process could take a month or longer, including road shows to give details on the contract to pilots, followed by voting.

— Staff reporter Russell Grantham contributed to this article.

Vote for this story!


Kudzu Services » Find the right people for the job