If the two sides don't agree to a long-term deal on deep pay cuts and other concessions by 5 p.m. Wednesday, the issue goes to an outside panel of arbitrators, which will decide whether to void the pilots' contract and allow Delta to impose its own terms.
Delta and the Air Line Pilots Association say they expect talks to continue after Wednesday. Some analysts predict the union will eventually settle rather than risk having Delta's terms imposed or shutting down the airline in a strike. "Unions always talk tough but usually cave," said CreditSights analyst Roger King in a recent report.
Still, the latest deadline raises the prospect of another drawn-out drama this spring, following a bankruptcy court clash that produced a temporary deal in December and a cliff-hanger in 2004. It ended with a $1 billion-a-year concessions deal that enabled Delta to put off bankruptcy for a year.
The latest chapter surrounds a long-term deal that would supersede the temporary December pact. That deal cut pilot wages 14 percent but set a March 1 deadline for the broader agreement, and set up the arbitration process if the deadline is missed.
Under that process, a three-member panel has until April 15 to hear the two sides' cases and decide whether to reject the union contract. If the panel voids the contract, Delta could impose more than $300 million in concessions, including up to a 19 percent pay cut that it says is critical to its Chapter 11 survival effort.
The panel is scheduled to begin two weeks of hearings in Washington on March 13 if no deal is reached by then.
Meanwhile, ALPA has been raising the temperature of its rhetoric leading up to Wednesday's deadline, setting up a strike center and threatening a strike if the panel allows Delta to ditch the contract.
The company says a strike would be illegal without going through a waiting period under the Railway Labor Act — as well as fatal to Delta's bid to reorganize in court. It would likely seek a court injunction to stop a walkout.
Both sides are under "significant pressure" to reach a deal before things go that far, but also to avoid being seen as giving in to the other side's demands, said Les Hough, director of research at Georgia State University's Usery Center for the Workplace.
"With the pressure that the two sides feel under, it's very, very difficult for either side to blink, or to be perceived as blinking," said Hough.
Delta management needs to stop the carrier's hemorrhaging soon and reduce uncertainty for customers and financial backers, he said. Union leaders need to show members they're putting up a tough fight, Hough added, but he thinks they start from a weak position because the panel is likely to reject the contract.
"They may try to play it right up to the end, but unpleasant as it is, come up with some sort of settlement," he said.
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» Top 10 Aviation Stories of 2006 from TheAirlineHub
In the spirit of the traditional year end countdown, I have comprised my top ten aviation stories of 2006. Looking back this was a turbulent year in the airline industry. From last minute deals averting strikes to the first... [Read More]
Tracked on: December 27, 2006 12:13 PM | Permalink to Trackback