Pilots at Delta Air Lines (DALRQ) have cleaned out their lockers. They've secured $10 million in strike funds. And they have overwhelmingly authorized a strike.
In short, they've done everything humanly possible to show they are committed to walking out if they feel they must. Yet there's hardly a person in the airline industry who believes they'll actually do it.
Time was, convincing a company that you would strike was a good way to get a pay raise. There were talks until midnight deadlines and negotiating scenarios to see who would blink first. Today, by contrast, a strike, in the words of a Delta court filing, would be "murder-suicide."
Jack Suchocki, for one, doesn't think a strike is advisable, or likely for that matter.
Suchocki knows pilot strikes. He headed the negotiating committee for the pilots at Eastern Air Lines, who joined in a three-union strike in 1989 that ultimately led to the carrier's shutdown.
"There comes a time when you stand and look at each other at midnight and decide whether to pull the gun or not," Suchocki said. "I don't think the Delta pilots will do that."
A New Conundrum
The Eastern pilots struck, Suchocki said, because they saw that Frank Lorenzo's Texas Air Corp. was moving assets from one unit, Eastern, to another,
Continental Air Lines
. The issue wasn't so much pay and benefits as it was Eastern's viability, he said, and to an extent the situation is the same at Delta.
"I think the Delta pilots would be willing to accept and live with the amounts of money being discussed if they had some assurance that what they were giving up would help the company survive and not put another Band-Aid on this hemorrhaging situation," Suchocki said. "They don't want to see their sacrifices squandered by management."
For the moment, it seems, the airline industry's financial plight has made pilot strikes obsolete.
Since 2001, U.S. airlines have lost about $42 billion, including nearly $13 billion in losses at Delta. In recent years, contract negotiations have proceeded against the backdrop of bankruptcies not just at Delta, but at
Bankruptcy law is meant to help debtors reorganize, and it gives companies more freedom to force workers to accept new contract terms than labor law does. Under the Railway Labor Act, which governs airline contracts, imposing a new contract is considered to be what's called "self help," and a union could strike in response. So far, no one has wanted to be part of a test case that might establish which set of laws should prevail.
The goal in the Delta situation was to bypass this particular conundrum. In March, after the two sides failed to make a deal on contract concessions, they set up an arbitration panel to determine whether Delta could mandate new contract terms.
The pilots say they will strike if the answer is yes. The panel is scheduled to report back on Saturday. Pilots have empowered Lee Moak, chairman of the Delta chapter of the Air Line Pilots Association, to call a strike anytime after April 17 if the panel rules in the company's favor.
Peace or Blame
However, a delay is likely. Airline spokesman Bruce Hicks said that even if the panel allows the company to impose a new contract, Delta might wait. "Implementing our proposal is at our discretion," he said. "The real issue is that we want to get a deal."
Kelly Collins, a spokeswoman for the pilots, said: "Nobody wants any of this. We're working as hard as possible to get a negotiated contract."
During the current round of talks, Delta and its pilots have been discussing the airline's request for $305 million in concessions through an 18% pay cut and reduced benefits. The pilots already took a 32.5% pay reduction, worth about $1 billion, in 2004. Delta pilots still have one of the industry's best contracts, with an average salary of around $150,000 in 2005.
Additionally, the company has said the pilots' pension plan will probably be terminated, and it has offered a $330 million interest-bearing note to limit the impact. The pilots contend that the effects would be far greater than that amount. About 300 pilots had a picket line near Delta's Atlanta offices Wednesday, the
Aviation consultant Scott Hamilton, publisher of an online industry newsletter, faults both the head office and the pilots for Delta's problems.
"Management waited too long to go into bankruptcy," he said. "And they tried to run an airline to drive
out of business rather than to make a profit."
He also said Delta's pricing strategy has been suspect. Earlier this year, Continental President Jeff Smisek said Delta's move to stop requiring passengers to have a Saturday night stay to get a lower fare was "criminally insane."
Meanwhile, Hamilton said, Delta pilots have been more aggressive than other pilots in trying to preserve their pay rates, which are still among the industry's highest. Pilot pay rose almost 35% from 2000 to 2004, partially because of a contract signed just as the airline crisis was about to begin. Despite the polarization, Hamilton expects a deal, though he added that "the airline business and common sense are contradictory terms."
Another airline industry consultant, Mike Boyd, said Delta's pilot can't strike, and they know it. "The options are either to continue negotiating or to shut the airline down," he said, noting that pilot leaders may have made a strategic error by "getting the troops all worked up, going into the 'strike-or-else' mode,' so that all of this emotional momentum can take the place of rational thought."
"Saber-rattling is important, and strike authorization is essential," he continued. "But how it's used is a matter of diplomacy."