Delta Air Lines pilots have ratified an interim agreement that provides for a 14 percent hourly wage reduction and reductions in other pilot pay equivalent to an additional one percent in pilot pay. The interim agreement will result in pilot cost reductions of approximately $143 million on an annualized basis.
The agreement, crafted earlier this month by the company and the Air Line Pilots Association, International (ALPA), the collective bargaining representative of the company’s more than 6,000 pilots, is effective as of Dec. 15, 2005, and will remain in effect while the parties seek to reach a comprehensive agreement.
“Given the critical nature of our financial situation, this provides much needed financial relief while we seek to reach a comprehensive agreement with ALPA,” said the company’s chief executive officer, Gerald Grinstein.
“We greatly appreciate the additional sacrifices Delta employees - including our pilots - are making to help save the company. Working together, everyone’s efforts are contributing to the operational progress and network improvements being made under the company’s transformation plan.”
Under the terms of the interim agreement, the company and ALPA have pledged to commit their full resources to negotiate a tentative comprehensive agreement by March 1, 2006, with pilot membership ratification by March 22, 2006.
In the event a tentative comprehensive agreement is not reached by the March 2006 time limits, Delta and ALPA have agreed to submit the section 1113 issue to a mutually agreed upon, neutral panel of three experts in airline labor matters for a binding decision on that issue.
“It remains our strong preference to reach a consensual agreement that is equitable and that helps Delta realize the cost reductions that will enable it to survive and to successfully restructure,” Grinstein said.
“I believe these are not mutually exclusive goals and, in the best interest of the company and everyone concerned, we will proceed in good faith in an attempt to realize them.”
Delta has said that achieving additional annual pilot labor cost reductions is an important element of its restructuring plan.
The restructuring plan calls for an additional $3 billion in annual cost reductions and revenue improvements to be realized by the end of 2007.
The $3 billion improvement target is in addition to the approximately $5 billion in annual financial benefits the company says it is on track to deliver by the end of 2006, as compared to 2002.