Delta, pilots reach accord on new concessions package that could help struggling airline avoid bankruptcy
Thursday, October 28th 2004, 8:56 am
By: News On 6
ATLANTA (AP) _ Delta Air Lines Inc. took a giant step away from bankruptcy with a tentative agreement on contract concessions from its pilots.
But details on the proposal reached Wednesday were withheld while it was reviewed by the pilots' union, so it was unclear whether it included the $1 billion in concessions Delta said it needed from its 7,000 pilots.
The deal came after 15 months of negotiations that have intensified in recent days, said Karen Miller, spokeswoman for the Air Line Pilots Association.
``We will not release any details until the MEC has completed its deliberations,'' Chris Renkel, a spokesman for Delta's Master Executive Council, a branch of the union, said in a message to union members.
The deal must be ratified by rank-and-file pilots, which could take several days.
Tuesday was Delta's self-imposed deadline for debtholders to respond early to an exchange offer intended to give the airline breathing room. The deadline came and went without any word from Delta on its progress.
Delta had offered to exchange $680 million of its debt with new notes secured by $1.2 billion worth of debt-free aircraft, flight simulators and flight training equipment. The offer was made to holders of $2.6 billion in various forms of Delta debt.
Earlier this month, Delta extended a debt exchange offer to Nov. 18, but said it would give some creditors a better deal if they agreed to the terms by Tuesday. There was no word about what the creditors' response has been.
Delta has warned that its debts could force it into bankruptcy, even if its unions agree to big concessions. The pilots have publicly offered up to $705 million in savings but have not released details of subsequent offers.
In a regulatory filing made earlier this month, Delta said that to date the union's counterproposals have been for substantially less than $1 billion. The company also said in the filing that the union was requesting for pilots a stock option program that involves substantially more equity than management's proposal.
Delta has lost more than $6 billion since early 2001, during which time it has also cut 16,000 jobs. Delta plans to cut up to another 7,000 jobs in the next 18 months. Last week, the struggling airline reported a $651 million loss in the third-quarter.