Delta, Pilots Reach Tentative Agreement

Delta Air Lines and its pilots union agreed Tuesday to a tentative four-year contract, ending two years of bitter contract disputes and averting a strike vote.

The contract would also pave the way for Delta to launch a low-cost, no-frills airline--called Sunshine--that would compete head-to-head with no-frills carriers such as ValuJet and Southwest.

Details of the contract were not disclosed.

“Solving the pilot issue would remove one of the few remaining question marks facing Delta,” said Brian Harris, an analyst at S.G. Warburg.

Delta shares fell 37.5 cents to $73.625 on the New York Stock Exchange. The Air Line Pilots Assn. said its executive council will meet soon to vote on ratifying the contract. A vote by the airline’s 8,600 pilots would then follow.

Atlanta-based Delta is in the midst of a wide-ranging plan to cut annual expenses by $2 billion. It had hoped to reduce pilot costs by $340 million a year.

Delta, the third-largest U.S. carrier, and the pilots, Delta’s largest unionized faction, had squared off for four weeks of mediation under the direction of the National Mediation Board. The pilots were scheduled to vote this week on whether to strike.

Delta was seeking to cut salaries for all pilots by 7%.

The union had countered with a demand for a 5% annual pay increase and more than $1 billion worth of Delta stock.

The union, whose members have some of the highest salaries in the industry, had indicated a willingness to accept lower pay for pilots who would fly on the Sunshine airline.