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Delta, Northwest pilots recess negotiations

/ Source: The Associated Press

Pilot union leaders at Delta and Northwest have taken a break from joint meetings aimed at hammering out an agreement to integrate their seniority lists as part of a combination of the two carriers, two people familiar with the discussions said Wednesday.

A third person familiar with the talks said that while the two sides aren't currently meeting, they remain in communication.

It was not clear when the two sides would meet again, the people told The Associated Press on condition of anonymity because of the sensitivity of the discussions.

The executive committee of Delta's pilots union is scheduled to meet Thursday. The executive committee of Northwest's pilots union is currently meeting through Friday. Both sets of executive committee meetings were previously planned.

Unlike prior airline deals, Atlanta-based Delta Air Lines Inc. and Eagan, Minn.-based Northwest Airlines Corp. have tried to get their pilots to work out their own integration before any airline combination announcement. Seniority is a major issue for pilots because it determines who gets desirable — and higher-paying — planes, routes, and schedules.

Delta officials have given no indication publicly that they would be willing to move forward with a merger without a pilot agreement in advance.

Shares of the two companies have been battered in recent weeks amid soaring fuel prices and as on-again, off-again talks between the two pilots unions dragged on and raised uncertainty about whether a merger could be accomplished this year.

A Delta acquisition of Northwest in a stock-swap deal was projected several weeks ago to be worth $20 billion, according to people familiar with the talks. It's not clear how the heavy drops in the companies' stock prices since then could affect that projection.

Delta shares fell $1.98, or 16.4 percent, to $10.13 Wednesday, while Northwest shares fell $1.98, or 16.2 percent, to $10.25. Airline shares fell after oil prices hit a record and after JP Morgan analyst Jamie Baker issued a wide downgrade of airline shares because he believes prior estimates have not accounted for a combination of a recession and high oil prices. He advised shareholders that if airline shares rebound on merger news, shareholders should view that as a chance to head for the exits.

Leaders of the two pilot unions had been meeting since March 4 in Washington, in what had been a hopeful sign that formal negotiations over integrating seniority lists to facilitate a combination of the two carriers could soon resume.

Before those meetings, which at least initially did not include the two sides' full negotiating teams, pilot union officials from Delta and Northwest had not met since Feb. 21.

Several people familiar with the discussions have said the pieces of a deal that would create the world's largest airline are in place, held up only by the lack of a seniority agreement between the pilots at each carrier.

Northwest's pilots' union has said seniority issues must be addressed if they're going to agree to a merger. Delta executives have said they will only agree to a combination with another carrier if, among other things, the seniority of their employees is protected.

Delta's president and chief financial officer, Ed Bastian, has said that if Delta's consolidation talks fall apart, the airline isn't committed to finding a replacement deal.

A Delta spokeswoman declined to comment Wednesday beyond previous statements that the company is reviewing strategic options, including a possible consolidation transaction.