Leaders of the union representing 11,100 pilots at Northwest Airlines Corp. and Delta Air Lines Inc. have reached an agreement on consolidating the two groups of workers under a merged carrier, sources close to the matter said Monday.
The pact outlines terms for combining the pilots' seniority lists, as well as calls for a pilots' representative on the board and an equity stake in the merged airline.
The agreement between the Delta and Northwest chapters of the Air Line Pilots Association the only union representing employees at both airlines will be presented Wednesday at a scheduled meeting of Delta's board in New York, the sources said.
The plan addresses most of the pilots' concerns and removes a major hurdle to a Delta-Northwest merger. Both airlines wanted the pilots to work out a deal before an official consolidation announcement was made.
"The companies are putting a lot of trust in labor to try and address the aspects of a deal ahead of time," said Bill Swelbar, an industry analyst and research engineer for the International Center for Air Transportation at the Massachusetts Institute of Technology in Cambridge, Mass. "That's a very smart thing."
An announcement had been expected by the end of last week, but talks between the pilots union chapters bogged down as they struggled to work through the thorny issue of blending seniority lists. Pilots depend on the seniority lists to determine their pay, as well as what routes and which planes they will fly.
According to the sources close to the Delta-Northwest negotiations, the pilots' union agreement includes:
• A plan for merging seniority lists covering about 6,300 pilots at Delta and 4,800 at Northwest that includes adjusting their seniority based on overall experience. That would quell concerns from some of Northwest's highest-ranking pilots that less-experienced peers at Delta would be given the same seniority.
• A voting seat on the board of a new carrier. Northwest pilots now have one voting member on their airline's board, and Delta pilots have a nonvoting member on their board.
• A 7 percent equity share in the combined company. Northwest and Delta currently have profit-sharing programs for employees, including the pilots.
If Delta and Northwest agree to merge, officials of the pilots union would then have to present their plan to the memberships for a vote. If it isn't ratified, a deal would have to be reached through binding arbitration.
Though talks between the pilot groups may have delayed a merger announcement, getting a pilots' deal could go a long way toward helping the airline avoid post-merger problems like those that plagued US Airways when it bought America West Airlines in 2005. The two companies became one last year, but the pilots, flight attendants, mechanics and other labor groups still work under separate contracts with different provisions because union groups never reached agreement on a combined labor pact.
Northwest and Delta have continued to decline official comment on any aspects of a merger deal as have leaders of the pilots union though CEOs of both companies told employees last week that any consolidation would take into account their best interests.
Northwest CEO Doug Steenland made that assurance again Monday. "We do have the best interest of the airline and you in mind," he said in an announcement recorded for employees Monday. "We're always looking to find the best answers for the challenges that we face."