Delta Pilots to Vote on Pay Cut Agreement
By DANIEL YEE(AP) _
Associated Press Writer
ATLANTA - Delta Air Lines Inc. is hoping its pilots' union will approve a steep pay cut to help the company avoid bankruptcy.
Delta pilots, currently among the highest paid in the nation with salaries that average between $100,000 and $300,000 a year, were expected to begin voting on the contract proposal Monday.
The agreement would cut their salaries by nearly a third and would provide no raises for the remainder of the five-year pact.
Company officials say the pilots' potential $1 billion in concessions would give the nation's third-largest carrier some much-needed breathing room in its attempt to restructure its financial problems.
"The pilot membership will be provided with detailed information about the tentative agreement so they can make an informed decision," said pilots' union spokeswoman Karen Miller in a statement on Friday.
The voting is expected to close on Nov. 11. A simple majority vote is needed to ratify the tentative agreement, which the pilot's union leadership approved late Wednesday.
If ratified by the pilots, the agreement would call for a 32.5 percent wage cut effective Dec. 1. Other pilots' concessions include revisions in the pension plan and work rules. In return, pilots would get options to purchase up to 15 percent of the company's stock.
Even if the agreement is approved, company officials say bankruptcy remains a possibility. Delta still has to convince the holders of its $20.6 billion in debt to restructure the repayment terms for all the pieces of its transformation puzzle to fall into place.
Delta's other major work groups, including flight attendants and gate and ticket agents, are not unionized. The company has cut the pay of its other employees, including executives' salaries.
Delta has lost more than $6 billion since 2001, during which time it has also cut 16,000 jobs. Delta plans to cut up to another 7,000 jobs in the next 18 months. Last week, the struggling airline reported a $651 million loss in the third-quarter. Delta had only $1.45 billion left in cash at the end of the quarter.
Delta has already secured a commitment of up to $600 million in new financing from a unit of American Express Co. and an agreement to defer $135 million of its debt for two years, but those deals are conditioned on Delta achieving all of its cost-cutting targets.
___