Posted on: Tuesday, September 21, 2004
Delta, union reach deal on use of retired pilots
By Harry R. Weber
Associated Press
ATLANTA — Delta Air Lines' pilots union agreed yesterday to allow the struggling carrier to bring pilots out of retirement on a limited basis to deal with staff shortages that threaten to ground flights.
The move came after the company agreed not to terminate the pilots' pension plan before February even if it files for bankruptcy.
The tentative agreement must be ratified by the 7,500 active Delta pilots, which could take several days to complete. The nation's third-largest airline has warned that it would have to file for bankruptcy if it doesn't stem a wave of early pilot retirements by the end of September.
The agreement still does not resolve Delta's larger problem: Getting the pilots to agree to $1 billion in concessions. The Atlanta-based airline also has warned of the possibility of a Chapter 11 filing without the concessions.
Delta fears that its pilots could jump ship en masse because they are worried about their pensions amid United Airlines' threat to terminate its employee retirement plans.
Several hundred Delta pilots have retired early in recent months, and more have threatened to do so, Chief Executive Gerald Grinstein has said.
Delta pilots who retire can elect to receive 50 percent of their pension benefit in a lump sum and the other half as an annuity later, according to regulatory filings.
"This agreement addresses the shortage-of-pilots issue," union spokeswoman Karen Miller said. "I can't speak for the company's intentions, though."
Delta spokesman John Kennedy said the airline was pleased by the agreement.
"This is an important step that will provide us additional time to try to address the company's financial problems consensually, rather than through the courts," he said.
'Random selection'
According to yesterday's tentative agreement, which was announced in a memo from the pilots union to its members, the agreement would cover pilots whose retirement date is Oct. 1 or later.
The pilots union said there will be a "random selection process" for those in the post-retirement pool, which can be tapped only when staffing falls below a certain level. Eligible pilots must be captain-qualified and current in their certification for certain models of aircraft.
The union said the agreement allows it to determine any time after January that no additional pilots can be employed as post-retirement pilots.
Post-retirement pilots will be able to collect their retirement benefits, the union said. A contract provision allowing pilots to retire with only one-day notice is still intact, Miller said.
Problems mounting
Delta has faced increasing struggles the past several months because of high fuel costs and competition from low-fare carriers.
Earlier this month, Delta said it would cut up to 7,000 jobs over the next 18 months, shed its Dallas-Fort Worth hub and undertake a sweeping restructuring effort to try to save the airline.
Delta already has reduced its work force by 16,000 employees over the past three years as it lost more than $5 billion.
Besides wage concessions from pilots, the company also is seeking to restructure its $20 billion in total debt.
Shares of Delta Air Lines Inc. fell 15 cents yesterday, to close at $3.81 on the New York Stock Exchange.
