Delta pilots agree to slash pay

Delta Air Lines pilots ratified an interim agreement with the bankrupt carrier that will cut pay 14 per cent and save the company US$143 million ($210 million) annually, while negotiators work toward a final contract.

The vote was 58 per cent in favour of the accord, said John "Curly" Culp, a spokesman for the Air Line Pilots Association.

The union and Atlanta-based Delta are seeking to reach a final contract by March. The pay cut is the second in as many years for the airline's 6000 pilots.

Delta has demanded annual concessions of US$325 million from the pilots, including a 19.5 per cent pay cut.

The airline, operating in Chapter 11 bankruptcy protection since September, has said it needs reductions to compete with discount carriers such as Southwest Airlines and with rivals like Northwest Airlines that are also cutting costs while in bankruptcy.

"It's only a down payment," said Bob Mann, a consultant in Port Washington, New York. "They'll need all of the 60 days, and I think eventually it will go to arbitration."

If Delta, the third-largest US airline, and the union can't agree on a final contract, a neutral panel will decide whether the company can get rid of the current contract.

Rejecting the interim agreement would have put the contract issue back before US Bankruptcy Judge Prudence Beatty.

Delta chief executive Gerald Grinstein said the ratification "provides much needed financial relief while we seek to reach a comprehensive agreement with ALPA".

The 14 per cent pay cut would reduce the average Delta pilot's annual salary to about US$145,678.

The interim agreement, reached December 11, ended a hearing in which Beatty would have ruled on letting the company get rid of the contract. "I think everybody considered that such a wild card that it was best avoided," Mann said.

Delta and Northwest filed for Chapter 11 protection in September after the price of jet fuel surged 65 per cent.

Delta is seeking to reduce annual costs by a total of US$3 billion while boosting revenue. The expense cuts would be in addition to US$5 billion in reductions already made.

The pilots last year accepted a 32.5 per cent pay cut in concessions that provided Delta with US$1 billion in annual savings over five years.

- BLOOMBERG