Northwest Airlines and Delta Air Lines pilots haven't met face to face for a week in their attempts to integrate seniority lists, but executives at the two companies are giving the union leaders breathing space in the hope that they can still forge a deal.
There is sharp disagreement about how to merge the pilot ranks, the final obstacle to a merger agreement.
"Northwest has nearly 1,000 pilots who reach age 60 within the next five years," Curt Kruse, a veteran Northwest pilot and union executive council member, said in a memo to fellow pilots Wednesday.
Delta has younger pilots in the top tier of its seniority list, in large part because many Delta pilots chose to retire a few years ago before the airline eliminated its traditional pension plan.
Kruse, who has been briefed by Northwest's seniority negotiators, said that the attrition rate of Northwest pilots must be factored into any plan to blend Northwest's list with a merger partner. If the attrition rate is not considered, he said, Northwest pilots "would quickly find themselves much more junior" in relative terms to the other pilot group.
Delta and Northwest managements reached agreement earlier this month on a stock swap in which Delta would acquire Northwest.
But a merger announcement has been on hold pending the outcome of the pilot seniority negotiations. While the companies want to be handed a combined seniority list before unveiling a merger, another option is agreeing on a narrowly defined arbitration to settle differences.
Investors showed Wednesday that they are growing increasingly worried that the merger may not be consummated.
Delta's shares dropped nearly 6 percent Wednesday, while Northwest's shares were down a similar amount. Both stocks are well below their post-bankruptcy highs.
William Greene, a Morgan Stanley analyst, said Wednesday that he still believes a deal is possible soon.
"Oil prices at $100 a barrel and a slowing U.S. economy will keep the pressure on major airlines to do a deal," Greene wrote in a note.
The two pilot groups have negotiated a new labor agreement with management that would provide Northwest pilots in excess of 30 percent pay raises over four years.
But Kruse, chairman of the Northwest pilots union Seattle council, said, "Seniority is not for sale." Other Seattle pilot leaders joined in that message.
Mark Shanahan, also a leader within the Northwest branch of the Air Line Pilots Association (ALPA), concurred.
"Trading seniority for economic gains is not in the best interest of protecting our long-term goals or ensuring career enhancements for Northwest pilots," Shanahan and his fellow Twin Cities local officers said in a Tuesday memo.
Randy Babbitt, an aviation consultant and former ALPA president, said he understands why Delta CEO Richard Anderson wants to give the parties more time to negotiate.
"So much of a pilot's career is dependent on what their seniority number is and how they are allowed to use it," Babbitt said. "It's a service industry. If employees aren't on board with you, the service suffers."
Liz Fedor • 612-673-7709
