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Delta Airlines has been in Chapter 11 dalrq pinks Has been sitting at 60 cent range BIG NEWS
Judge OKs Delta pilots' pay cut Bankruptcy court judge approves deal after pilots at nation's No. 2 airline agree to 14% reduction; company reports losses of $27 million. May 31, 2006: 5:54 PM EDT
NEW YORK (CNNMoney.com) - A U.S. bankruptcy court judge approved a deal for a new contract between Delta Air Lines Inc. and its pilots, who had ratified the new contract earlier Wednesday.
The pilots union said the vote was 61 percent in favor and 39 percent opposed to the tentative agreement, reached April 14, which will save the airline $280 million annually. Pilots will be paid 14 percent less than they were before the airline's September bankruptcy filing.
The ratification probably ends the threat of a crippling strike at the nation's No. 2 air carrier, which analysts had warned could have led to the permanent closure of the Atlanta-based airline. That in turn could have caused a crisis for airline passengers, who are already looking at airlines filling an unprecedented high percentage of available seats during the summer travel season, even with Delta staying in operation.
"This agreement provides a framework for Delta to successfully reorganize and emerge from bankruptcy ready to win in today's competitive marketplace," said a statement from Lee Moak, a Delta captain who heads the union's unit at the bankrupt carrier. "The new contract also provides real returns and job security for the unprecedented recent sacrifices made by the Delta pilots in support of our great company. We look forward to Delta's successful emergence from bankruptcy and together with all Delta employees, returning our airline to success."
The airline issued a statement praising the vote, saying it is making progress in its efforts to emerge from bankruptcy.
"The additional pilot savings are a significant, necessary and appreciated component of Delta's restructuring plan," said the statement from Delta CEO Gerald Grinstein.
The air carrier also reported Wednesday its net loss for April was $27 million, as it struggles with high fuel and labor costs.
The No. 3 U.S. airline said it ended the month with $2.5 billion in unrestricted cash, cash equivalents and short-term investments. Delta reported a net loss of $2.1 billion for the first three months of the year.
One obstacle left for the pilots deal is an objection by the Pension Benefit Guarantee Corp., the federal agency that safeguards pension funds. The PBGC expects to end up with responsibility for Delta's underfunded pension plans for its pilots.
To win union agreement to the new concessions the airline agreed to give the union a $650 million interest-bearing note if its pension plans are terminated as expected and turned over to the PBGC. The union could then use that note to pay supplemental payments to members who would lose retirement benefits due to PBGC limits. The agency argues that note is improper.
One other obstacle to the tentative deal between the pilots and company was lifted Wednesday. A source familiar with negotiations said a group of retired pilots who had been fighting the new labor pact have dropped their objection under a new agreement with the airline.
The pact, which covers 6,000 pilots at Delta (Research), is due to take effect June 1 if it is approved by the court, and would run through the end of 2009.
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