Exec: Delta Won't Lower Pilot Concessions
Thursday March 16, 5:54 pm ET
By Harry R. Weber, AP Business Writer Delta CFO Tells AP That Airline Won't Lower Amount of Concessions It's Seeking From Pilots
WASHINGTON (AP) -- Delta Air Lines Inc. won't lower the amount of concessions it is seeking from its pilots any further, but would be willing to discuss concerns pilots have about the possible termination of their defined benefit pension plan, the carrier's chief financial officer said in an interview Thursday.
Edward Bastian, following the fourth day of two weeks of hearings before an arbitration panel that will decide whether to allow the company to throw out its pilot contract, made the most definitive statement to date about what Delta is willing to accept and what it isn't.
The comments came even as the chairman of the union's executive committee, Lee Moak, said in a separate interview with The Associated Press that anyone who doubts the pilots' resolve to strike if their contract is voided is mistaken.
The "$305 million is non-negotiable because that's what our minimum needs are to survive as a company," Bastian told AP. Regarding the pilots' pension and other changes "those are things to be discussed in the room. There is no magic number," Bastian said.
The nation's third-largest carrier had requested $325 million in pay and benefit cuts, but agreed to reduce the amount if the pilots reach a consensual agreement.
Pressed on whether his position could lead to a strike that would doom the Atlanta-based airline, Bastian said, "It's a serious situation. I don't want to downplay the significance of this."
But he added, "I strongly believe Delta will be here 30 days from now. It's on the back of everyone's mind obviously, but the reality is I believe we will figure this thing out."
The arbitration panel must decide on Delta's motion to reject its pilot contract by April 15.
The company and union have not had any negotiation sessions since the hearings in Washington began on Monday. While both sides say they are willing to meet, no sessions have been scheduled. Top union and company officials have been staying in the same hotel.
"It takes two parties," Bastian said. "We're here and they know where we're at."
Moak, in an interview, said the company should take the union's stance seriously and be more open to negotiations on all terms being discussed.
"If management's action is to destroy the airline, I can't control them," Moak said.
He said he hopes and believes cooler heads will prevail but he said whether that happens is up to the company.
"I look at it unemotionally," Moak said. "Whatever action they take, we are going to respond appropriately."
He reiterated the union will strike if its contract is rejected. Asked if Delta will ultimately go out of business, Moak said he still is encouraging people to book flights and stick with the airline.
But he also said the pilots won't back down in the fight over their pay, benefits and pensions.
"All I know for sure, with 100 percent certainty, is our actions are very predictable," Moak said. "We will respond appropriately and decisively."
The pilots have offered a second round of long-term cuts, but disagree on the amount Delta says it needs. The pilots previously gave Delta $1 billion in annual concessions in a five-year deal in 2004, and they believe they should receive some credit for the savings they say the company will reap if it terminates the pilots' defined benefit pension plan.
The airline, which filed for Chapter 11 protection from creditors in New York in September, had asked the bankruptcy court in November to void the pilot contract. Shortly before a judge was set to issue a decision, the company and its pilots reached a deal on interim pay cuts.
That deal, equal to a little less than half of what the company is seeking on an annual basis, would be replaced by the long-term deal the two sides have been negotiating since December. They missed a March 1 deadline to settle on their own, sending the matter to arbitration.
In the latest negotiating proposals, the company has agreed to reduce its request to $305 million in cuts annually, while the union said it is offering $140 million annually.
Delta has lost roughly $12.6 billion since January 2001.
Bastian said Delta needs the cost cuts it is seeking to compete effectively with rivals and survive long-term.
"What we need to survive as a company we can't compromise on, and it would be irresponsible to compromise on," he said.
While he believes the situation will ultimately be worked out without a strike, he acknowledged there are some barriers to that happening.
"I can understand the anger and the frustration, but the reality is we have to put the emotions aside and look forward to the future," Bastian said. Also Thursday, Delta said it is delaying the filing of its annual report by up to 15 days. It told the Securities and Exchange Commission it needs extra time because of its bankruptcy filing.
Thursday March 16, 5:54 pm ET
By Harry R. Weber, AP Business Writer Delta CFO Tells AP That Airline Won't Lower Amount of Concessions It's Seeking From Pilots
WASHINGTON (AP) -- Delta Air Lines Inc. won't lower the amount of concessions it is seeking from its pilots any further, but would be willing to discuss concerns pilots have about the possible termination of their defined benefit pension plan, the carrier's chief financial officer said in an interview Thursday.
Edward Bastian, following the fourth day of two weeks of hearings before an arbitration panel that will decide whether to allow the company to throw out its pilot contract, made the most definitive statement to date about what Delta is willing to accept and what it isn't.
The comments came even as the chairman of the union's executive committee, Lee Moak, said in a separate interview with The Associated Press that anyone who doubts the pilots' resolve to strike if their contract is voided is mistaken.
The "$305 million is non-negotiable because that's what our minimum needs are to survive as a company," Bastian told AP. Regarding the pilots' pension and other changes "those are things to be discussed in the room. There is no magic number," Bastian said.
The nation's third-largest carrier had requested $325 million in pay and benefit cuts, but agreed to reduce the amount if the pilots reach a consensual agreement.
Pressed on whether his position could lead to a strike that would doom the Atlanta-based airline, Bastian said, "It's a serious situation. I don't want to downplay the significance of this."
But he added, "I strongly believe Delta will be here 30 days from now. It's on the back of everyone's mind obviously, but the reality is I believe we will figure this thing out."
The arbitration panel must decide on Delta's motion to reject its pilot contract by April 15.
The company and union have not had any negotiation sessions since the hearings in Washington began on Monday. While both sides say they are willing to meet, no sessions have been scheduled. Top union and company officials have been staying in the same hotel.
"It takes two parties," Bastian said. "We're here and they know where we're at."
Moak, in an interview, said the company should take the union's stance seriously and be more open to negotiations on all terms being discussed.
"If management's action is to destroy the airline, I can't control them," Moak said.
He said he hopes and believes cooler heads will prevail but he said whether that happens is up to the company.
"I look at it unemotionally," Moak said. "Whatever action they take, we are going to respond appropriately."
He reiterated the union will strike if its contract is rejected. Asked if Delta will ultimately go out of business, Moak said he still is encouraging people to book flights and stick with the airline.
But he also said the pilots won't back down in the fight over their pay, benefits and pensions.
"All I know for sure, with 100 percent certainty, is our actions are very predictable," Moak said. "We will respond appropriately and decisively."
The pilots have offered a second round of long-term cuts, but disagree on the amount Delta says it needs. The pilots previously gave Delta $1 billion in annual concessions in a five-year deal in 2004, and they believe they should receive some credit for the savings they say the company will reap if it terminates the pilots' defined benefit pension plan.
The airline, which filed for Chapter 11 protection from creditors in New York in September, had asked the bankruptcy court in November to void the pilot contract. Shortly before a judge was set to issue a decision, the company and its pilots reached a deal on interim pay cuts.
That deal, equal to a little less than half of what the company is seeking on an annual basis, would be replaced by the long-term deal the two sides have been negotiating since December. They missed a March 1 deadline to settle on their own, sending the matter to arbitration.
In the latest negotiating proposals, the company has agreed to reduce its request to $305 million in cuts annually, while the union said it is offering $140 million annually.
Delta has lost roughly $12.6 billion since January 2001.
Bastian said Delta needs the cost cuts it is seeking to compete effectively with rivals and survive long-term.
"What we need to survive as a company we can't compromise on, and it would be irresponsible to compromise on," he said.
While he believes the situation will ultimately be worked out without a strike, he acknowledged there are some barriers to that happening.
"I can understand the anger and the frustration, but the reality is we have to put the emotions aside and look forward to the future," Bastian said. Also Thursday, Delta said it is delaying the filing of its annual report by up to 15 days. It told the Securities and Exchange Commission it needs extra time because of its bankruptcy filing.
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