Updated from 4/14/2006

Delta Air Lines

(DALRQ)

and its pilots union have reached a tentative agreement on wage and benefit cuts, averting a potential strike for the time being.

Delta, the nation¿s third largest airline, announced Friday it had reached the agreement with negotiators from the Air Line Pilots Association, which represents about 6,000 active Delta pilots. Neither the airline nor the union disclosed terms.

Citing sources familiar with the situation,

The Wall Street Journal

reported Saturday that the pilots had agreed to $280 million to $290 million in an annual concessions, including a 14% pay cut and possible wage increases linked to future financial performance.

Much remains to be done before the agreement is a done deal. The Master Executive Council of Delta¿s ALPA chapter must decide whether to put it before union members for a vote. Then it must be ratified and receive bankruptcy court approval.

"We are going to respect the MEC review process,'' said Edward H. Bastian, Delta's CFO, in a news release. "We have worked hard together as a team to forge an agreement that is good for Delta and all of its constituents,'' he added.

Battered by high fuel bills and intense competition, Delta filed for bankruptcy protection last September. The airline had asked the pilots for $305 million in annual concessions to be achieved through an 18% pay cut and reduced benefits. The pilots have noted they already made significant sacrifices, agreeing in late 2004 to a 32.5% pay reduction, worth about $1 billion a year.

The airline and its pilots set up an arbitration panel in March to determine whether Delta could mandate new contract terms. But the pilots said they would strike if the answer was yes. The panel was scheduled to report Saturday, creating a deadline of sorts, and the airline¿s pilots had empowered Lee Moak, head of Delta¿s ALPA chapter to call strike anytime after April 17. The airline has warned that a strike by the pilots would put it out of business.

Delta¿s shares, which are likely to be rendered worthless if and when the airline emerges from bankruptcy protection, finished Thursday¿s session at 63 cents.