Wednesday: NWA merger now hinges on vote by Delta pilots

Delta Air Lines pilot union leaders will meet today to consider new contract terms that would apply strictly to the Delta pilots. If the proposal is approved, it likely would allow Delta and Northwest Airlines to announce a merger as early as next week, two people familiar with the situation said Wednesday.

No similar contract offer is going to Northwest's pilots this week.

Delta adopted this strategy of crafting a deal only with its own pilots in reaction to the failure of the Northwest and Delta pilot unions to reach agreement in March on a seniority integration list.

High oil prices and impatient shareholders are prompting the Delta and Northwest boards to move toward announcing a merger in the coming days, so the Justice Department could have enough time to review the deal before President Bush leaves office.

A Delta acquisition of Northwest -- if approved by federal regulators -- would create the largest carrier in the world and be based in Atlanta.

The Delta pilots' deal contains pay raises for the Delta pilots, but Northwest pilots would not see financial benefits quickly.

Financial gains for Northwest pilots would come after the two groups are merged onto one seniority list and they negotiate a common contract. Northwest pilots proposed using arbitration to settle their differences, but that has been resisted by Delta's pilots.

In exchange, the Delta pilots would get wage improvements to offset some of the losses they sustained in bankruptcy. Northwest's contract is not amendable until the end of 2011, but the enhanced Delta contract is expected to be used as a carrot to encourage the Northwest and Delta pilots to resolve their conflict over seniority integration.

The tactic is likely to upset some Northwest pilots, because they will view the Delta pilots as using leverage against them at this time, said a person familiar with the pilots' thinking.

Greg Rizzuto, a spokesman for the Northwest branch of the Air Line Pilots Association, said, "The Northwest pilot contract contains significant protections in the event of any merger or acquisition."

He added that the union is willing to work with management and another pilot group but "we will exercise our contractual rights in order to protect the interests and careers of every Northwest pilot."

The two pilot groups, both represented by the Air Line Pilots Association, jousted for several weeks over seniority issues and could not resolve their conflict even though they had negotiated a four-year labor agreement with management for the merged carrier.

"The last thing Delta or anyone involved in this transaction wants is for there to be a disparity between the two pilot groups," a source close to the talks said Wednesday. "There are benefits that emerge from the agreement with the Delta pilots."

Delta management wants to "close the gap as expeditiously as possible," the source said.

On Wednesday, Dave Stevens and Monty Montgomery, chairman and vice chairman of the Northwest pilots union, flew to Washington, D.C., with the hope of meeting with U.S. Rep. Jim Oberstar. The Minnesota Democrat has been the most outspoken opponent of a Delta-Northwest merger.

Since this winter, executives at both airlines had hoped that they could break the mold in airline mergers by reaching agreement with their pilots upfront. Normally, seniority and contract issues aren't resolved until well after a merger deal is unveiled.

Julius Maldutis, a New York-based consultant, said he sees more pilot conflict ahead for this merger. "How can you even contemplate doing a merger without the support of the Northwest pilots?" Maldutis said.