Delta Pilots Accept Pay Cuts in Huge Boost for Airline
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Delta Air Lines (DAL) pilots handed the struggling airline a huge victory Thursday in its effort to avoid bankruptcy, agreeing to slash their salaries by more than $1 billion and receive no pay raises through 2009.
The pilot's union announced results of a 10-day vote by the Atlanta-based airline's 7,000 pilots, who approved the plan with 79 percent of the vote.
Union leaders reached a tentative agreement with Delta after 15 months of negotiations. The five-year contract calls for a 32.5 percent pay cut and becomes effective Dec. 1.
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In return, the pilots get options to buy up to 15 percent of the company's stock.
Delta pilots are currently among the highest-paid in the nation with salaries averaging between $100,000 and $300,000 a year.
About 91 percent of eligible pilots cast ballots by phone and the Internet over the past 10 days. A simple majority was needed to ratify the agreement. The voting ended at noon Thursday.
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News of the contract's ratification sent shares of Delta Air Lines Inc. surging more than 8 percent, or 51 cents, in late trading. The shares ended the regular session 21 cents higher, at $6.29, on the New York Stock Exchange (search).
Delta has lost more than $6 billion since early 2001, during which time it has eliminated 16,000 jobs and cut the pay of other employees, including its executives. Last month, the airline reported a $651 million loss in the third-quarter.
The company said it needed the wage concessions to stay afloat. But company officials have warned that the agreement still may not be enough to avoid bankruptcy.
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Delta also must convince the holders of its $20.6 billion in debt to restructure the repayment terms for all the pieces of its transformation puzzle to fall into place.