Delta Seeks to Void Pilots’ Deal

Delta Air Lines Inc. asked a U.S. Bankruptcy Court judge Wednesday to void its contract with Delta’s pilots union so the beleaguered airline could impose deep wage and benefit cuts and avoid further financial erosion.

In a hearing that lasted into early evening and was to continue today, Delta attorney Jack Gallagher said the airline valued its pilots and tried to negotiate reductions, but ultimately failed.

Faced with rising fuel costs, Delta is seeking to slash $325 million from its collective bargaining agreement with its pilots, saying the money is needed to keep its operations running.

The Air Line Pilots Assn., which has offered $90.7 million in concessions, has threatened to strike if the court grants Delta’s request.

“The need is $325 million of cash. That is what our investment bankers tell us. That’s what our creditor committee tells us,” Gallagher said. The union “is fervently urging the court to say it isn’t so. We’re telling them it is so. We wish we didn’t need $325 million of cash. But the need is real.”

With several uniformed Delta pilots looking on in the standing-room-only courtroom, union attorney Bruce Simon said the pilots association attempted to come to an agreement on further cuts, but he said the pilots were rebuffed. He also noted the union agreed to concessions last year, and had given back enough.

U.S. Bankruptcy Court Judge Prudence Carter Beatty actively questioned both attorneys, but singled out Delta for attempting to draw comparisons to other airline bankruptcies, which she said were useless in considering Delta’s unique case. Delta filed for Chapter 11 on Sept. 14.

With each side expected to call multiple witnesses, including financial experts, union officials and a number of pilots, the hearing could continue through the rest of the week. At that point, Beatty could rule on the request or could give the two sides 30 more days to reach an agreement before having to issue her own decision.

If the court approves the cuts, they 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% pay cut.