EARNS DELTA
Ric Feld  /  AP
With a major showdown expected over pay cuts it wants to impose on its pilots, and a bankruptcy hearing at which  concessions amounting to $325 million will be argued, Delta Air Lines faces an important week.
updated 11/14/2005 3:43:45 PM ET 2005-11-14T20:43:45

Delta Air Lines Inc. said Monday that if its pilots strike should their contract be rejected in bankruptcy court, it would be “murder-suicide” and in effect put the nation’s third-largest carrier out of business.

The comments by the Atlanta-based airline came two days before a U.S. Bankruptcy Court judge in New York will hold a hearing to discuss Delta’s request to reject its pilots’ collective bargaining agreement.

Delta said in the filing that if its motion is granted, it will impose $325 million in concessions it is seeking from its pilots.

The Air Line Pilots Association, which represents Delta’s 6,000 pilots, has raised the prospect of a strike if the contract is rejected by the court, and it has scheduled a rally for Tuesday to defend the contract.

But in its filing Monday, Delta said a strike would be disastrous and, it maintains, illegal.

“ALPA devotes substantial space in its objection to the balance of the equities, using as its centerpiece a ’murder-suicide’ threat,” the airline wrote. “Deny the motion to reject, the court is told, or the association will call a post-rejection strike that will kill the company and eliminate every pilot job — indeed every Delta job.”

Delta argued in the filing that the Railway Labor Act prevents the pilots from striking.

“Even if the threat were realistic — even if Delta’s pilots seriously intended to put the company into liquidation rather than agree to needed concessions — the threat would be a hollow one,” the airline wrote.

A union spokesman did not immediately return a call Monday seeking comment.

Even though it believes it’s on solid legal ground, Delta said it can’t predict whether it will be able to prevent or stop a strike if its pilots choose to walk off the job if their contract is thrown out in bankruptcy court.

Delta said in its quarterly report to the Securities and Exchange Commission earlier Monday that it believes a strike by its pilots would be illegal, but at the same time it warned that it doesn’t know if it would be able to get a court order to stop it.

“In addition, if we or our affiliates are unable to reach agreement with any of our unionized work groups on future negotiations regarding terms of their collective bargaining agreements, or if additional segments of our work force become unionized, we may be subject to work interruptions or stoppages,” Delta said.

Delta said it needs the $325 million in concessions it is seeking from its pilots as part of its recovery. The pilots have offered $90.7 million in average annual concessions over four years.

Delta said in Monday’s bankruptcy court filing that it offered the union on Friday to reduce the pay reduction portion of its concessions proposal from 19.5 percent to 19 percent, but with other changes that would actually increase the value of the concessions to $326.2 million.

The cuts would be on top of $1 billion in annual concessions the pilots agreed to in a five-year deal reached in 2004. That deal included a 32.5 percent pay cut.

In Monday’s SEC filing, Delta also said it can’t predict whether its defined benefit pension plan will continue when it emerges from Chapter 11. Delta pilots have tried without success to get the company to continue making certain contributions to the pension plan during the bankruptcy case.

Delta estimates that its funding requirements under its defined benefit pension plan are roughly $3.4 billion between 2006-2008. The cash-strapped airline said it may be required to fully fund required contributions at the time it exits bankruptcy if it decides to keep the plan going.

Delta, which filed for Chapter 11 on Sept. 14, has recorded losses of more than $11 billion since January 2001 and over that period has announced that it would cut up to 33,000 jobs. Its loss in the third quarter, reported Thursday, was $1.13 billion.

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