Delta pilots strike could doom carrier

John W. Schoen Senior producer • Profile • E-mail

A strike threat by Delta Air Lines’ pilots, following a standoff with management over proposed wage cuts, has raised the prospect of the first shutdown of a major U.S. airline in seven years. At stake is the carrier’s survival — and a potential travel nightmare during the upcoming holiday rush.

“It’s doomsday if they go through with the strike — for everybody,” said Ray Neidl, airline analysis for Calyon Securities.

Delta agreed with that assessment, saying Monday that a pilots strike would be “murder-suicide” and in effect put the carrier out of business.

The strike threat comes as a U.S. Bankruptcy Court judge in New York is scheduled to hold a hearing on Wednesday to discuss Delta’s request to cancel its current labor contract with its pilots. The pilots union has raised the prospect of a strike if the contract is rejected by the court, and it has scheduled a rally for Tuesday.

Though a strike threat by Delta pilots at this point is a bargaining ploy, it’s a powerful one. A strike by Northwest mechanics last month fizzled after the union failed to win support from Northwest pilots. The company announced before the strike began that it had lined up enough replacement mechanics to keep flying.

But lining up replacement pilots is not an option, said Neidl. Delta said as much in an SEC filing Monday, warning Delta shareholders that it can’t predict whether it would be able to stop a walkout by its 6,000 pilots.

In its filing, Delta said a strike would be disastrous for all concerned. “Deny the motion to reject, the court is told, or the association will call a post-rejection strike that will kill the company and eliminate every pilot job — indeed every Delta job.”

And Delta argues that the Railway Labor Act prevents the pilots from striking. “Even if the threat were realistic — even if Delta’s pilots seriously intended to put the company into liquidation rather than agree to needed concessions — the threat would be a hollow one,” the airline wrote.

Management could also call on the White House to intervene and order the pilots back to work. But the administration made it clear ahead of the Northwest strike threat that it would not do so.

Delta Inc., which landed in bankruptcy court Sept. 14, last week posted a $1.1 billion loss for the latest three months of operations — and said it is borrowing money to cover continuing losses. The latest quarter brings the carriers Delta's losses to just over $11 billion since January 2001.

The losses come as the airline industry is on course to its best year since the Sept. 11 terror attacks sent the travel industry into a tailspin. U.S. airlines carried 5.2 percent more domestic passengers and flew 1.6 percent more domestic flights during the first eight months of 2005 than they did during the same period in 2004, according to the U.S. Department of Transportation. And those planes are fuller that last year: The industry’s so-called “load factor” is up 2.5 points so far this year.

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