This buys a little time but the ship is sinking fast...
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Delta, pilot deal calls for 32.5% wage cut
CEO says company making 'progress' in recovery efforts
By RUSSELL GRANTHAM
The Atlanta Journal-Constitution
Published on: 10/28/04
Negotiators for Delta Air Lines and its pilots union reached a tentative pay cut agreement Wednesday night that could divert the ailing Atlanta carrier from its course toward bankruptcy.
Early today, the union said its leadership council approved the deal, which will now go to the membership for a ratification vote to be completed by Nov. 11.
Highlights of the deal include:
—A 32.5 percent wage cut starting Dec. 1, with no raises scheduled during the 5-year agreement.
—The traditional pilot pension plan will be frozen and replaced with a less costly plan.
—Pilots will get options to buy 30 million shares of Delta stock, amounting to a 15 percent equity stake.
—Certain work rules will change to help the company lower costs.
The union said the deal provides the $1 billion in annual cost-savings that the company sought.
Union chief John Malone said, "It pained me to see such drastic changes made to almost every section of our contract," but he added that the deal is "our best alternative."
"While there are no guarantees that a bankruptcy filing will not occur at some point, this tentative agreement will hopefully buy Delta additional time to continue its out of court restructuring efforts," Malone said.
Delta CEO Gerald Grinstein, in a statement released this morning, called the tentative pact "an important step in our march toward viability."
Grinstein added that "although bankruptcy remains a possibility due to Delta's precarious financial situation, we are making significant progress" with recovery efforts.
The tentative agreement came after more than a year of on-again, off-again talks as Delta's three-year financial slide steadily worsened. Talks culminated this week with around-the-clock sessions at the Air Line Pilots Association's headquarters outside Washington.
Delta's board of directors, meeting in Atlanta this week, was thought to be on the verge of a decision to file for Chapter 11 bankruptcy protection as soon as today, had a pilot deal not come together.
If approved, the pact would help Delta hold together several other important deals with creditors in a bid to achieve an out-of-court financial restructuring. Most, if not all, of those agreements were conditioned on Delta's getting substantial concessions from its pilots, who are the highest paid in the industry.
Analysts believe that a combination of pilot and creditor deals will buy Delta perhaps several months of time to see if its broader turnaround plans can work, but that the airline could still face a bankruptcy case if a rebound doesn't materialize...
http://www.ajc.com/news/content/busi...deltadeal.html