Northwest pilots say merger proposal by Delta is ‘too risky’

Northwest Airlines Corp.’s pilots union leaders said a merger plan proposed by their Delta Air Lines Inc. peers was “too risky” and assumed future growth at the combined carrier that might never materialize.

Management “would be wise” to encourage both pilot groups to support expedited arbitration to settle their dispute, the Northwest pilots said Tuesday in an e-mailed letter.

The pilot groups broke off talks this month after failing to reach an accord -- the last major hurdle to a merger that would create the world’s biggest airline.

Delta, the third-largest U.S. carrier, was counting on cost savings from buying No. 5 Northwest to help weather an 86% surge in jet fuel prices over the last year. Earlier Tuesday, Delta said it would park about 40 additional aircraft and cut 2,000 non-pilot jobs in the U.S. in an effort to lower costs. Northwest said it planned to reduce capacity by September.

The pilot breakdown occurred because the two sides couldn’t agree on how to “slot” their ranks based on hire date, Dave Stevens, head of the Northwest pilots union, said in the letter. Delta’s proposed list favored Northwest pilots initially, but harmed them in a few years as older Northwest pilots retired and younger Delta pilots took those slots, Stevens wrote.

“Do we base a seniority list which will affect Northwest pilots for the next 30 years on an aggressive business plan and aircraft options which may never be implemented?” he wrote.

A combination of Delta, based in Atlanta, and Northwest, based in Eagan, Minn., would surpass AMR Corp.’s American Airlines as the world’s largest carrier.

Failure among the pilot leaders to reach an agreement has cast doubt on whether the two carriers will merge. Shares of both airlines have dropped more than 30% this year.

Delta’s 7,000 pilots and Northwest’s 5,000 may need to worry about job cuts if oil prices remain so high and their carriers decide to ground more planes, said consultant Robert W. Mann of R.W. Mann & Co. in Port Washington, N.Y.

The pilots already have agreed on pay raises and an equity stake valued at $2 billion but won’t get those increases if no merger occurs. Seniority determines pilots’ pay, the type of aircraft flown, work schedules and routes.

Lee Moak, head of Delta’s pilots union, said in a letter Monday that “every reasonable effort” by its negotiators to draw up a combined list had failed, and that it was unclear what would happen next.