No Harmony in Delta Blues

You might expect to hear sardonic commentary about airline peanuts in a comedy club, but it sounds a little odd in federal bankruptcy court, especially coming from the bench.

However, the topic actually did arise in a downtown New York courtroom earlier this month, where Delta Air Lines (DALRQ) is arguing it needs to squeeze $325 million in added annual savings from its pilots, on top of the $1 billion in concessions they've already agreed to.

"Do you serve peanuts?" U.S. Bankruptcy Court Judge Prudence Carter Beatty asked attorneys for Delta, noting her daughter's allergy to them. "Well, I don't think you should."

Beatty is presiding over a case in which Delta, the nation's No. 3 carrier by passenger traffic, wants to void its contract with 6,000 unionized pilots in order to impose wage and benefit cuts. Her peanut remarks were among several, let's say "colorful" comments she made during the first two days of a hearing that will resume Monday.

On the hearing's first day, Bruce Simon, an attorney for the Air Line Pilots Association, which represents the Delta pilots, tried to get Beatty to recuse herself for comments she made prior to the proceedings. One of those was her observation that "what's really weird is that anyone agreed to pay (the pilots) that much money to begin with." Beatty denied Simon's motion, saying she was kidding.

The point of the hearing, of course, is extremely serious. The pilots have threatened to strike, a step Delta has said in court papers would be "murder-suicide" that would run the airline into the ground. That might sound dramatic, but industry analysts say it may be right on the mark.

"If the pilots go on strike that could well be the nail in the coffin," said John Kasarda, a professor of management at the University of North Carolina's Kenan-Flagler Business Institute. "I don't think they're being hyperbolic. The last thing they need is a pilot strike. Everybody loses if there's a strike."