Delta Air Lines pilots reject tentative contract: union

[July 11, 2015]   By Jeffrey Dastin
 
 (Reuters) - Delta Air Lines Inc <DAL.N> pilots have rejected a tentative contract agreement, casting in doubt both the labor deal and the airline's plans to order extra planes from the Boeing Co <BA.N>.

Nearly 7,000, or 65 percent, of voting pilots rejected the contract, according to Delta's Master Executive Council, part of the Air Line Pilots Association (ALPA). Some 97 percent of eligible pilots voted.

The contract's rejection was a mixed blessing for the airline, whose shares rose nearly 5 percent. Hourly pay would have risen 8 percent upon signing, trimming third quarter earnings per share by 10 cents to $1.66, according to one analyst's estimate.

Delta has said it would purchase 20 used and 40 new single-aisle aircraft from Boeing to replace planes scheduled to retire through 2019 if the new contract was ratified. The orders were not firm.

Delta and Boeing declined to comment. Boeing had been trying to finalize an agreement to sell the jets to Delta for months.

Delta pilots opposed to the proposed contract said it offered slight gains in light of Delta's growing profits and that higher wages meant sacrificing more-lucrative profit-sharing. They said changes in sick leave and other work rules offset the gains, criticism the union has called deceptive.

The Delta unit of ALPA will convene on July 21 to determine its next step and reassess its strategic plan, its Chairman Mike Donatelli said in a letter to pilots.

Although investors reacted favorably to the news, the negative vote is a setback for Delta, which set a goal of concluding a labor deal months ahead of schedule.

In a fact sheet for pilots, the union quoted Delta's Chief Executive Officer Richard Anderson as saying, "Failure to ratify the agreement will lead to a very different and longer path that will not result in a better deal. Uncertainty will prevail, and that will not be good for anybody."

Delta said it could not confirm the comment.

The pilots' current contract has a Dec. 31 target date for revision. That contract will remain in place even if the airline misses the deadline, as has been the case for some of Delta's U.S. peers. While strikes rarely ever result, prolonged talks strain labor relations.

Both the pilots union and management had backed the tentative agreement.

(Reporting by Jeffrey Dastin in New York, editing by Joe White and Christian Plumb)

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