Delta Pilots Agree to 14% Pay Cut

By Keith L. Alexander
Washington Post Staff Writer
Thursday, June 1, 2006

Delta Air Lines' pilots union yesterday approved a 14 percent pay cut, eliminating a key hurdle in the airline's struggle to restructure under Chapter 11 bankruptcy protection and emerge from court supervision by mid-2007.

After more than six months of often-contentious labor talks, 61 percent of Delta's 6,000 pilots agreed to $280 million-a-year in pay and benefits cuts as part of a 3 1/2 -year contract.

"This agreement provides a framework for Delta to successfully reorganize and emerge from bankruptcy ready to win in today's competitive marketplace," said Lee Moak, chairman of Delta's pilots union.

The bankruptcy court approved the agreement yesterday soon after it was reached

The agreement follows earlier concessions. In 2004, Delta's pilots agreed to a wage cut of nearly 33 percent as part of a five-year deal designed to save the airline about $1 billion a year.

Delta's pilots, the only unionized work group at the airline, were the last employees to agree to concessions. The airline's flight attendants, baggage handlers and customer service agents have agreed to cuts of 7 percent to 9 percent. The airline's salaried employees agreed to a 9 percent cut. Delta's senior officers took a 15 percent pay reduction and chief executive Gerald Grinstein's pay was reduced by 25 percent.

Grinstein said the pilot agreement was "crucial" to the airline's reorganization. He added that "barring any disruptions" the airline was on track to achieve about 70 percent of its goal of $3 billion in annual savings by the end of the year. Delta, which filed for bankruptcy protection last fall, plans to emerge during the first half of 2007.

In addition to the pilot agreement, the bankruptcy court judge yesterday removed another potential obstacle to Delta's transformation. The court ruled against an objection to Delta's proposal to terminate its pension plan. The Pension Benefit Guaranty Corp., the federal agency that insures pension benefits, opposed the proposal.

Delta, the nation's third-largest airline, is the fourth major carrier to cut its pilots' compensation during bankruptcy proceedings. Similar cuts were made at US Airways, United Airlines and Northwest Airlines.

Before the airlines' downturn in 2001, Delta's pilots were traditionally the highest paid in the industry.

Delta also announced yesterday that it reported a loss of about $27 million in April, sharply less than its loss of $163 million in April 2005.

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