UPDATED: 7:46 p.m. April 09, 2008
Delta working with pilots to make NWA merger work


The Atlanta Journal-Constitution
Published on: 04/09/08

Delta Air Lines and Northwest Airlines could roll out their long-delayed merger as early as next week if the Atlanta carrier works out a related agreement with its pilots union, according to one person familiar with the talks.

However, the situation appeared to be fluid. Some people suggested Delta and Northwest could go ahead with earlier merger plans whether they reach an agreement with the pilots or not.

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The carriers have been trying to revive their merger, which seemed close to an announcement in February until a feud between the carriers' pilots unions stalled the pact.

They want to do a deal quickly because they feel increasing pressure from high fuel costs and growing signs of a recession. Three smaller airlines have filed for bankruptcy and shut down in recent weeks. As if to underline the bleak outlook, the spot price of jet fuel shot to another record Wednesday, rising 13 cents per gallon to $3.43. Each penny-per-gallon rise boosts Delta's annual fuel bill by roughly $25 million.

Executives at Delta and Northwest also hope to get a deal done soon because they believe it will have a better chance passing regulators' scrutiny this year, before a Democratic administration possibly takes office, people familiar with the talks said.

To get around an impasse that developed, Delta and its pilots are trying to work out a side deal that would allow the merger to move forward while shelving an unfinished pact on how to blend the Delta and Northwest pilots' seniority lists.

Delta's pilots want to work out a separate agreement with the Atlanta carrier to push the merger forward in hopes of receiving some incentives, said a senior Delta pilot who requested anonymity because he is not authorized to discuss negotiations.

The Delta pilots are being offered pay raises, equity stakes and a seat of the board of the merged carrier to agree to labor contract modifications to give the airlines more flexibility, people familiar with the talks said. Two people said the carriers hope to announce a merger agreement as early as next week.

Such an agreement could also give Delta CEO Richard Anderson a face-saving way to proceed with the deal after making a commitment in a memorandum to employees to not do any transaction unless it preserves workers' seniority. Anderson's commitment didn't extend to Northwest's pilots.

The Wall Street Journal said Wednesday that Delta and the pilots hope to reach a decision by the end of this week.

Delta's directors met last week after Northwest broached the idea of going forward without a side deal between the two carriers' pilots unions on how to integrate their work groups. By getting their pilots to agree ahead of time on how to merge seniority lists, Delta and Northwest had hoped to reduce potential employee and political opposition and speed up the process of combining the two airlines.

The combination of Delta and Northwest, the nation's third-largest and fifth-largest carriers, respectively, would create the world's largest airline company, with routes stretching from Asia to Africa. Air France-KLM, which is an alliance partner with both Delta and Northwest, has said it will invest $750 million in a merger of the two airlines.

It was unclear Wednesday whether Air France-KLM is still expected to be part of the agreement, or whether the size of its potential investment has shrunk along with Delta and Northwest's market values. Delta and Northwest's share prices have dropped this year by 40 percent and 33 percent, respectively.

Another senior Delta pilot, who also asked not to be identified, said the prospect of Delta pilots negotiating without entanglement from their Northwest counterparts makes sense.

"The contracts are so different. It would be hard to merge two completely different contracts," the pilot said.

Separately, the U.S. Department of Transportation said Northwest and Delta should be allowed to share routes and revenue on flights across the Atlantic. The airlines have long been seeking permission to coordinate schedules and share money from such flights. Now the government has tentatively decided to grant that immunity to the two U.S. carriers, as well as to Air France-KLM, Alitalia and Czech Airlines.

Transportation officials say it would basically allow the airlines to act as a single carrier for service between Europe and the United States. Northwest already has such an alliance with KLM. All the carriers will still be subject to antitrust laws for all non-trans-Atlantic flights.

-- Staff writer Jim Tharpe and The Associated Press contributed to this article.

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Comments

By wow gold

May 4, 2008 7:28 PM | Link to this

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By ex-NWA f/a

Apr 10, 2008 9:43 PM | Link to this

Old Delta Guy...you got it right! It is not NWA's fault that many senior Delta pilots ran for the exits when the pension plan was cancelled. The younger guys got a chance to experience the "good life" sooner than expected and, as you said, they got used to it. I remember getting a line and then going back on reserve....boy, that was tough! I agree that all seniority lists should be merged the same. I would be saying this even if I were a Delta employee. I was raised in ATL and my dad flew Eastern and Delta everywhere!

By J.R.

Apr 10, 2008 3:40 PM | Link to this

Dear Old Timer,

Ever think that Delta is NOT in decline? Delta is doing remarkably well and is in the best financial position of any airline while STILL treating its employees better than any other. You absolutely MUST consider that when Delta made money hand over fist that oil prices were dirt cheap and people were willing to pay higher prices for airfare. No one could have anticipated current oil prices. That and the consumer market is completely different. If Ron Allen, the last home-grown head honcho, were still running the show, Delta would have folded ages ago.

By J. R.

Apr 10, 2008 3:26 PM | Link to this

In response to those who take issue with the fact that Delta's current executive leadership had not been groomed within the system: just snap out of it. In the days of Ron Allen, Delta was a dysfunctional victim of corporate inbreeding. There it wasn't about making money (anyone remember Leadership 7.5? That crew couldn't lead its way out of a paper bag.), but about being a Southern airline. New ideas were stifled and the old boy network was alive and well. In contrast, today's Delta is full of vitality with its international emphasis. Finally, Delta is focusing in the right direction. By the way, I am an 18-year Delta employee with a business degree. For those employees who take issue with Delta only being in the business of making money, well, of course they are. The very first thing one learns in basic business courses is that the number one objective is indeed to make money.

By old timer

Apr 10, 2008 2:19 PM | Link to this

Delts's decline has been due, in large part, to the fact that at the old delta promotion was always from within. Every upper management person had experience in the lower jobs and understood the system. There is not one single upper management person now who has a Delta background. Their sole experience has been going from one company to another looking for more money. That's how they measure success. None of them would have reached their positions at the Old but Good Delta. Their evaluations should read, "Helped kill a great company."

By OLD DELTA GUY

Apr 10, 2008 1:50 PM | Link to this

Rick...my opinion is shared by the vast majority of older DAL people. The younger ones who remain self-centered would not have survived at the "old delta".

By ExDAL AMT

Apr 10, 2008 10:23 AM | Link to this

I left Delta a couple of years ago after 18 years as a mechanic. It was a tough choice, but I am much better off now. I imagine conditions are worse now than they were then. It was a great job at a great company. That once great company, unfortunately evolved into an ATM for upper management where the employees became a liability instead of an asset. The board for years has been the proverbial "Goat guarding the cabbage patch"
I wish everyone the best, because the vast majority of the people I worked with were excellent, dedicated people, excluding upper management. For upper management the phrase: Sht in = Sht out seems to apply.
To paraphrase a quote from Teddy Roosevelt " When the role is called at a Delta board of directors meetings, the members don't know whether to answer present or not guilty"

Good Luck All

By Rick

Apr 10, 2008 10:08 AM | Link to this

Old Delta Guy,
your way of thinking is fair, rational and equitable. I hope that doesn't make you an outcast at DL.

True Delta,
I'm not a widget but I appreciate what you and your co-workers do.

By applecheeks

Apr 10, 2008 8:22 AM | Link to this

I have found the Delta flight attendants to VERY NICE and accommodating. I've observed them closely and even when they look tired from a quick turn; they are smiling and gracious. The general public is usually rude and treat them with total disregard and I very seldom hear a "thank you" to any of them. Stay strong and keep smiling. You really are making Delta look good.

By Delta Retiree

Apr 10, 2008 1:50 AM | Link to this

This is to True Delta.
Your 1:24 post was excellent. Well stated, and from your heart. Us old widgets appreciate you and know y'all do a helluvajob and tolerate a lot of crap.

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