Delta, Northwest Pilots Reach Tentative Pact
WALL STREET JOURNAL:
Delta, Northwest Pilots Reach Tentative Pact
by Susan Carey
Negotiators for the unions representing pilots at Delta Air Lines Inc. and Northwest Airlines Corp. agreed Tuesday to a tentative joint contract covering all 11,000 aviators, Delta said.
The negotiators also agreed on a method for integrating the groups onto a single seniority list by the time the planned Delta-Northwest merger closes, Delta said.
Leaders of the two unions, both branches of the Air Line Pilots Association, are meeting this week to vote on the tentative accord. If they approve it, the deal will go out for membership votes. The two airlines, the nation's No. 3 and No. 5 by traffic, respectively, hope to complete the merger late this year.
Lack of agreement between the 5,000 Northwest pilots and their 6,000 Delta colleagues on how to meld their seniority almost sank merger talks earlier this year. Seniority affects which plane a pilot flies, and whether as captain or first officer, along with pay and other issues.
Without agreement on seniority, the two airlines wouldn't be able to reap the scheduling, fleet and operating efficiencies they plan after the deal closes.
In April, the merger plan was salvaged, with Delta extending the current contract with its own pilots through the end of 2012, giving them a 3.5% equity stake in the new company and other enhancements that weren't disclosed. Delta left negotiations with the more senior but lower-paid Northwest pilots for later, which led to hard feelings.
Negotiations recently began anew between Delta, its pilots and the Northwest pilots. An earlier idea -- that the Northwest group be brought up to Delta pay rates over three years -- was dropped, said one person familiar with the talks.
The tentative agreement raises the Northwest pilots to pay parity on the first day the companies merge, an $80 million annual cost, this person said. Over the course of a four-year contract, the Northwest pilots would reap pay increases of at least 30%.
With soaring oil prices forcing airlines to retire old aircraft, defer deliveries of new planes, shrink schedules and cut jobs, the Northwest pilots are expected to like the proposed contract. The deal assigns the Northwest pilots a proportion of the equity promised to pilots. The two groups will share one voting member on the merged airline's board.
Most important to the two carriers, the deal establishes a separate process designed to establish a single seniority list. If further direct negotiations fail, the two groups will put the issue to binding arbitration on an expedited basis.
"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," Richard Anderson, Delta's chief executive officer, said Tuesday.
Mr. Anderson, who will run the combined carrier if the merger receives antitrust approval, has said he wanted to harmonize the two pilot groups as quickly as possible to smooth the path of the merger and preserve what he calls "a working-together culture."
The Northwest pilot group said Tuesday that the tentative agreement was reached after seven days of talks in New York. Northwest pilots always thought the merger could be beneficial to employees and travelers, but "it has also been our position that the promised enhancements, efficiencies and synergies may be lost if a joint contract was not achieved," said Monty Montgomery, vice chairman of the Northwest branch of the pilots association.
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