Delta cuts pay to avert bankruptcy

By Marilyn Adams
USA Today

Delta Air Lines yesterday slashed pay for most workers, and pilots agreed to contract changes that should prevent a wave of pilot retirements from pushing it into bankruptcy protection. But it may be too late to save the United States' No. 3 airline from bankruptcy court.

Celebrating its 75th anniversary this year, the Atlanta-based airline has prospered for decades with the economic awakening of its home city and the Southeast. But no more.

Unlike at United Airlines and US Airways, both already in bankruptcy-court protection, the decline in Delta's financial fortunes has been swift.

Delta has lost $5.6 billion since the beginning of 2001, a bigger combined net loss than any other airline except the larger United. Soaring jet fuel prices are sapping cash. Four recent hurricanes in Florida, the source of a quarter of Delta's business, have disrupted flights.

The airline is shouldering $21 billion in debt and a labor contract that pays senior pilots as much as $300,000 a year, the richest contract in the industry.

The new pilot agreement will prevent short-term staffing shortages and flight cancellations, as recent retirees will be allowed to return to the cockpit. And cuts announced yesterday will trim non-union wages by 10 percent starting in January.

The moves buy only a little time. Delta lost $2 billion last quarter and has been burning through about $3 million a day in cash.

The carrier blossomed with the Sun Belt. It operates a shuttle in the lucrative Washington-New York-Boston corridor. And Delta, where only the pilots are organized, has the least unionized workforce of the big airlines.

If Delta files Chapter 11, three of the United States' biggest airlines will be in bankruptcy reorganization at the same time: Delta, No. 2 United and No. 7 US Airways. Together, they represent nearly 40 percent of the industry's domestic flying capacity.