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Continental Has Deadline for Pilot Contract

Stocks in this article: CAL UAUA DAL LCC AMR

HOUSTON ( TheStreet) -- Continental (CAL) is negotiating a new pilot contract against a deadline, because regulators have given it until mid-January 2011 to implement a trans-Atlantic joint venture with three partners.

The carrier cannot implement the joint venture, or accompanying trans-Atlantic antitrust immunity, without the consent of its pilots, who are in contract talks. The existing pilot contract's scope clause says Continental cannot enter into a revenue-sharing agreement with a domestic carrier without its pilots' consent. In the joint venture, United (UAUA) would be a Continental partner.

"There's a window of opportunity for Continental this year, and the pilot group controls that window right now," said Jay Pierce, chairman of the Continental chapter of the Air Line Pilots Association, in an interview. "It's a tremendous opportunity for everyone to benefit. They will get the scope relief they need and we will get out from under this concessionary contract that we have lived under since 2005."

A template for Continental and its pilots may have been established at Delta (DAL - Get Report), where pilots agreed to a merger with Northwest and received raises and improved working conditions as a result. "Delta recognized that it was worth investing a little money in the pilot group to get the pilot group's support," Pierce said. "If a corporation has confidence in a business plan, they should be willing to invest a little money in making it happen."

The Continental pilots contract became amendable Dec. 31, 2008. Pilots are asking for a package of wage increases, enhanced retirement benefits and work-rule changes. "It's a $500 million annual increase, which we recognize is an opening position," Pierce said. "We're waiting for a counter."

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