The new contract will smooth integration, but the combining of seniority lists will be harder.
Pilots at Northwest Airlines and Delta Air Lines, aware of the bitter labor conflicts that have harmed previous airline mergers, on Monday ratified a four-year contract, a major step toward a smooth combination of their carriers.
The two pilot groups still must merge their seniority lists that determine which airplanes pilots fly, a more-contentious negotiation that the pilots were unable to accomplish earlier this year. But they've already agreed to a legally binding process to come up with that list, and the arbitration phase begins today.
Under the new labor pact, Northwest pilots would be brought up to Delta pay rates when Delta acquires Eagan-based Northwest. Then the combined group would receive annual raises of 4 to 5 percent from 2009 to 2012.
Among the Northwest pilots who cast ballots, 86.76 percent voted in favor of ratification. At Atlanta-based Delta, 61.74 percent of those voting supported the deal.
The financial stakes were higher for Northwest pilots. They are working under a contract negotiated during Northwest's bankruptcy that does not become amendable until late 2011. Delta pilots are now better paid and they reached a labor deal for themselves before the merger was announced in April.
Dave Stevens, Northwest pilots union chairman, described the ratification vote as "momentous." In a Monday memo to pilots, he said that the contract gains, profit-sharing program and 2.38 percent equity for Northwest pilots will "motivate us all to pull together and make the merger a financial success."
Lee Moak, Delta pilots union chairman, said, "This historic milestone marks the first time that a labor agreement has been reached in advance of the close of an airline merger."
Up next: seniority
Both pilot groups, represented by the Air Line Pilots Association, have agreed to an approach to produce a seniority list by Nov. 20. The arbitration process kicks off today, but pilot negotiators will simultaneously continue their work to see whether they can create a "fair and equitable" list on their own. Since pilots are paid according to which airplanes they fly, seniority ultimately defines how much a pilot earns over a career.
On Monday, the airlines' leaders focused on their big labor victory: ratification of the joint contract.
"This agreement helps set the stage for what we believe will be the most successful merger in airline history because it will allow us to quickly capture a great share of the $2 billion in synergies we are projecting for the combined carrier," said Northwest CEO Doug Steenland.
Delta CEO Richard Anderson said, "In most airline mergers, this step doesn't take place for a couple of years after the closing of the transaction." Anderson also said he believed Monday's ratification would unify the two pilot groups.
The airlines' executives expect to secure federal approval of the merger before the end of this year.
The Northwest pilots had a much higher approval vote on Monday. But Delta and Northwest pilots had virtually identical voter turnouts, with slightly more than 80 percent of pilots casting ballots from both groups.
Delta's pilot leadership unanimously supported the joint contract, but a substantial segment of pilots voted against it. In a Friday memo, Moak rebutted opponents who argued the deal favored Northwest pilots in some respects and who said the negotiators could "go back and get more."
In a union newsletter published by local leaders in Atlanta, union officials also countered arguments by pilots who wanted to vote down the labor deal in an attempt to increase their leverage on negotiating a seniority list.
John Budd, a human resources professor at the University of Minnesota, called contract approval ahead of the merger a "major milestone," but he viewed the Delta pilot vote as a "small red flag" of dissatisfaction that management needs to heed.
"Unfortunately, this agreement still leaves everything very much up in the air for the other employee groups," Budd said. "The question of whether flight attendants and other employees will be unionized after the merger is completed looms large."
Liz Fedor • 612-673-7709