Executive: Delta compromise with pilots not driven by fears of Christmas strike | VailDaily.com
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Executive: Delta compromise with pilots not driven by fears of Christmas strike

Assoicated Press

NEW YORK – Delta Air Lines Inc. got less of a pay cut than it wanted in its temporary deal with its pilots, but its willingness to compromise was not driven by the fear that a strike could disrupt Christmas travel, a top company executive said Wednesday.Instead, the bankrupt airline’s need for immediate cash relief as it works with its pilots on a comprehensive long-term deal was the main reason, Chief Operating Officer Jim Whitehurst said.”For employees, it is important to have that certainty through the holidays, but that wasn’t the driver,” Whitehurst told a small group of reporters during a round table discussion at a New York hotel.Whitehurst also insisted there has not been a backlash among customers due to the protracted labor dispute.”It is hard for me to speculate what is on our customers’ minds,” Whitehurst said. But, he added, “what I can say is their behavior and our revenues (are) on plan.”Atlanta-based Delta, the nation’s No. 3 carrier, had asked a bankruptcy court judge to throw out its pilot contract so it could impose $325 million in yearly concessions, including a 19 percent pay cut, on its 6,000 pilots, who offered $150 million in concessions, including a 9 percent pay cut.The pilots threatened to strike if their contract was rejected by the court, but Delta refused to budge.Then on Sunday Delta reached a compromise with its pilots on a temporary 14 percent wage cut as well as other cost savings that are equal to an additional 1 percent cut.The value of the cuts based on the pilots’ average annual salary of $169,393 in 2005 could be as much as $152 million on an annual basis.Whitehurst, who is viewed by some in the industry as a possible successor to Chief Executive Gerald Grinstein, said in a speech later Wednesday that Delta wants to shed another $200 million in overhead costs in 2006, on top of more than $150 million of overhead it reduced this year compared to 2002 levels. He did not specify how the company plans to meet its target.”It is important to remember that the financial demands on the company continue to be unrelenting and maintaining our cash position through reorganization is going to require a continued commitment to reducing costs and growing revenues,” Whitehurst said during the speech to the Wings Club, an aviation industry group.Whitehurst acknowledged the airline’s customer service has not always been as good as it had been in the past.”In the 1990s, we lost our way,” he said. “We have been ‘in the pack’ for the last 10 years. This is absolutely unacceptable.”He said next year the company will host a day-and-a-half discussion with every flight attendant about Delta’s new service expectations, “and the role they play in the integrated product-service offering of the new Delta.” He did not elaborate.Asked by an audience member about the future of pilot pensions, Whitehurst said pension reform in Congress is key to allowing the company to keep the pension program going. He said a Senate-approved plan to allow airlines to spread out their pension contributions over 20 years is a good start.”It gives us a fighting chance to keep the pension,” Whitehurst said. “Without it, it’s going to be very, very difficult.”Pilots union officials at Delta have said they believe Delta will ultimately terminate the pilot pension plan, like UAL Corp.’s United Airlines, the nation’s No. 2 carrier, did in its bankruptcy case.During the earlier round-table with reporters, Whitehurst said Delta is not concerned about staffing shortages in meeting its broad international expansion plans, despite the company’s agreement with its pilots to end a program on December 31 that allowed the airline to recall retired pilots on a temporary basis.Prior to Sunday’s tentative agreement, Grinstein had said he might ask the pilots to extend the recall program to help meet staffing needs.”As we’re becoming more efficient and strong, we’re confident we have the pilots we need to run the international program,” said Whitehurst.Asked about his future with the airline, Whitehurst said he has not been thinking about succeeding Grinstein, but rather is focusing on the company’s turnaround efforts. When Delta filed for Chapter 11 on Sept. 14 in New York, Grinstein said he planned to stay with the airline through its bankruptcy case.Delta has lost more than $11 billion over the last five years.Vail, Colorado


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