Delta Air Lines Inc. reached a tentative interim agreement with its pilots yesterday, a move that could help the troubled airline avoid a crippling holiday season strike.
The agreement calls for a 14 percent reduction in hourly wages as well as cuts that the airline said are equivalent to an additional 1 percent hourly wage reduction. Delta, the nation's third-largest carrier, filed for Chapter 11 bankruptcy protection in September.
The interim cost reductions begin Thursday and will remain in effect until a long-term agreement is reached, the airline said, setting March 1 as its target date. Delta's 6,000 pilots -- the airline's only unionized labor group -- are set to vote on a new contract by Dec. 28.
"This [interim] agreement reflects the resolve of Delta people to work together to help save the company," Chief Financial Officer Edward H. Bastian said in a statement.
Last week, the leaders of Delta's pilots union urged its members to consider striking if both sides could not reach an agreement.
Delta was seeking about $325 million in pay and benefit cuts per year -- including a 19 percent pay reduction -- while union leaders countered with cuts in the 9 to 10 percent range. Last year, Delta's pilots agreed to $1 billion a year in pay and benefit cuts.
Delta is trying to save about $3 billion in annual costs.
Still on the table is the pilots' pension plan, which Delta wants to terminate.
Lee Moak, chairman of Delta's pilots union, said yesterday's agreement is in the "best interest" of the airline and its pilots. "With a lot of hard work and dedication, I believe we have crafted an agreement that contributes to the restructuring plan and recognizes our value to the company," he said.
Delta spokeswoman Gina Laughlin said yesterday's agreement was "one portion" of the airline's restructuring plan, "but an important step."