Delta Air Lines pilots agreed yesterday to $1 billion in pay and benefit cuts to help the airline reduce its costs and avoid an immediate filing for bankruptcy protection.
Nearly 79 percent of the pilots who voted favored a contract that calls for a 32.5 percent pay cut, fewer benefits, additional job losses and longer work hours. The union said 6,756 of the airline's roughly 7,000 pilots cast ballots. The pilots also agreed to have their defined-benefit retirement plan frozen and replaced with a defined-contribution plan.
Delta's pilots were the airline industry's highest paid, with salaries ranging between $120,000 and $260,000. With the pay reductions, their wages fall closer to the industry average.
The five-year contract will save the nation's third-largest airline about $5 billion. Delta has lost more than $6 billion since 2001. Last week, Delta announced it would phase out 2,000 maintenance jobs, nearly 3,000 customer service jobs and 1,800 management positions beginning Jan. 1.
Delta Air Lines Inc. executives have said that even with the pilots' agreement the airline may still have to file for bankruptcy protection. The airline reported last month that its loss in the third quarter totaled $646 million.
Delta's pilots had been expected to ratify the agreement to avoid potential steeper cuts in bankruptcy court.
"Our airline has been managed to the brink of bankruptcy, and the Delta pilots had to decide between two bad choices. They chose the lesser of two evils," said John J. Malone, chairman of Delta's pilots union.
Pilots at other airlines, including United Airlines, US Airways and American Airlines, have already agreed to sharp pay and benefit cuts.
The nation's airlines are trying to cut costs and conserve cash during the fourth and first quarters, when travel demand is traditionally the weakest. The airlines also are bleeding cash due to high fuel costs and an inability to raise fares because of stiff competition from low-cost, low-fare airlines.
US Airways Group Inc. and its customer service, reservation and gate agents also were grappling yesterday with potential fresh cost cuts. Late Wednesday, 86 percent of the carrier's 6,000 agents voted to authorize a strike if their union and airline fail to reach an agreement. Arlington-based US Airways, which filed for Chapter 11 bankruptcy protection in September, is seeking $137 million in pay and benefit cuts from the agents as part of its effort to cut nearly $1 billion in its overall labor costs.
"This is just the first step," Candice Johnson, a spokeswoman for the Communication Workers of America, the union that represents the airline's agents, said of the vote. "The point is to show that our membership is strong and we want a contract."
US Airways spokesman David Castelveter said both sides were "making great progress" in contract talks.
Legal experts said it is unlikely the agents would be able to strike for months because of federal mediation rules governing airline labor relations.
A U.S. bankruptcy judge last month granted US Airways permission to cut most of its employees' pay by 21 percent through February. The decision affects those labor groups that had not already agreed to a new contract.
US Airways has already reached new labor contracts with its pilots, flight dispatchers, flight crew training instructors and simulator engineers. The airline is in talks with its flight attendants and mechanics, two of its largest and most influential groups.
The airline also said yesterday it reached new lease agreements with manufacturers of 413 planes. The airline was still working on new agreements on 36 of its aircraft.