Delta in “tentative” $1 billion cost saving deal with pilots
Struggling Delta Air Lines has reached a “tentative” deal with pilots designed to deliver $1 billion in cost savings.
The agreement with the pilots’ union – subject to a vote on November 11 – is seen as a key step towards the airline staving off bankruptcy.
Delta said the pilot accord was “a necessary element of the company’s comprehensive out-of-court restructuring initiative” intended to deliver approximately $5 billion in annual savings by 2006. This includes finalising new financing arrangements, restructuring debt, securing concessions from vendors and lessors, retooling operations and reducing non-pilot employee and operational costs, including management overheads.
Delta chief executive Gerald Grinstein admitted that although bankruptcy remained a possibility due to Delta’s “precarious” financial situation “we are making significant progress and are on course with our customer-focused transformation plan.”
He added: “The pilot agreement, which still is subject to ratification by the pilot membership, is one very important and necessary piece of a complex puzzle that must come together in time to begin to reverse the impact of high costs, including unrelenting high fuel prices, compounded by low revenues, and to stem our cash drain.
“Reaching a tentative agreement is an important step in our march toward viability, and I appreciate the negotiators’ good faith efforts and hard work.”
Delta recently announced that it had a commitment with American Express to provide up to $600 million in financing, subject to “significant” conditions, and also reached agreement with some bondholders to defer $135 million in debt due next year.
Report by Phil Davies
Phil Davies
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