Delta Air Lines' pilot union today overwhelmingly accepted the latest concessionary contract that cuts the airline's costs by $1 billion and cuts all pilots' pay by 32.5 percent.
During the 11-day vote that ended at noon, 91 percent of eligible pilots voted and 79 percent of these voted for the deal.
If the pilots had not agreed to the cuts, the Atlanta-based airline was ready to file for Chapter 11 bankruptcy protection, having lost $6.2 billion in the last three years and with the company burning through its cash reserves.
Delta operates its second-largest hub at the Cincinnati/Northern Kentucky International Airport, where it employs about 8,000 in addition to Erlanger-based regional subsidiary Comair.
That includes about 4,000 employees who work directly for Delta, more than 800 of whom are pilots.
"The Delta pilots needed to decide between two bad choices ...they chose the lesser of two evils," said John Malone, chairman of Delta's branch of the Air Line Pilots Association.
Results on the voting were announced after the stock market closed. Shares in Delta ended the day at $6.29, up 21 cents; it was the very best closing price for the shares since July 12.
The contract switches into affect on Dec. 1 and runs through 2009. In addition, it dramatically restructures and cuts down on pilots' pension fund; allows this company to fly more 70-seat regional jets that the Delta pilots viewed as a threat to their jobs; and calls for higher medical insurance premiums and increases pilot productivity.
In return, the pilots are now being given alternatives on about 30 million shares of stock that could equal about 16 percent ownership of the company if the options are exercised and the corresponding shares are newly issued by Delta.
In combination with now cutting pilot pay, all other workers are obtaining a 10 percent pay cut beginning on Jan. 1. Delta, the nation's third-largest airline, is also closing its hub in Dallas, and cutting up to 7,000 jobs over the next 18 months.
But the Atlanta-based carrier is not yet clear of the threat of bankruptcy, analysts say. The company's debt load is $20.5 billion, although it has announced several recent deals to restructure some of that debt. Those deals were contingent on a new pilot contract.
And high fuel costs as well as increased competition pushing prices down continue to threaten the bottom line of all major airlines, said Ray Neidl, airline analyst for Calyon Securities.
"But everything was waiting for the pilot deal before it could fall into place," Neidl said. "This is a big day for everyone involved, and at this point I think it is probably enough to save the company."
The pilots now are left with finding other options to boost their takehome pay. Some sources are seeing many going to the Internet and looking for home based businesses that require little or no involvement. With the stressful schedule that many have, finding a way to work as a pilot and earning extra income can be a challenge. Here is a video from a 1st officer explaining the problems many are facing today. It is an eye opener for Pilots and those with pay cuts from the last round of agreements. PilotsFindExtraIncome.Com-Video.US
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