This article from NYTimes.com has been sent to you by psa188@juno.com. Delta to Request Pilot Talks to Cut Costs February 12, 2003 By REUTERS Filed at 2:05 p.m. ET NEW YORK (Reuters) - Delta Air Lines Inc. (DAL.N) said on Wednesday that it will ask its unionized pilots to open talks on their current contract as the company, like its rivals, struggles to offset weak sales and ticket prices by cutting costs. Delta, the No. 3 U.S. air carrier, trimmed the size of its operations by cutting passenger capacity 10 percent last year, but stubbornly low airfares showed no improvement, Chief Financial Officer Michele Burns told analysts and investors at the Deutsche Bank Transportation Conference. As travel demand stays weak and airfares continue to sag, airlines are asking employees to sacrifice wages and benefits to lighten cost loads. Labor is the most expensive budget component for the U.S. airline industry, which has lost more than $7 billion annually for two years straight. AMR Corp.'s (AMR.N) American Airlines and US Airways Group (UAWGQ.OB) are expecting about half their cost reductions to come from workers, while employees at bankrupt UAL Corp.'s (UAL.N) United Airlines have taken $70 million per month in temporary wage cuts. In a recent report, Blaylock & Partners analyst Ray Neidl said it is up to workers at airlines that are not already bankrupt to determine whether restructuring will happen in or out of the courts. Barring an economic recovery this year, he said airlines like Delta must reduce their labor-related expenses, which he said account for about 40 percent of the industry's operating costs. ``If this cost structure is not addressed, these carriers will not be able to survive long-term,'' Neidl said. Burns said on Wednesday that Delta expected any recovery in the industry's revenue to be slow. PILOTS NOT REQUIRED TO TALK Atlanta-based Delta has already cut about $320 million a year through headcount reductions, helping it trim a total of more than $900 million a year, including improvements in operating efficiencies, Burns said. Delta's expense cuts so far fall short of industry leader American's targeted $4 billion per year and bankrupt No. 2 airline United's request for $2.4 billion from labor, which it says it needs to satisfy conditions of its financing. Burns said Delta's pilots, whose contract runs until May 2005, do not have to open discussions over cost-cutting, but the company expects that they will. ``Generally, the rank-and-file Delta pilots are supportive of this company,'' she said, ``and we believe that we will have meaningful and supportive discussions.'' Pilots are the only major unionized group at Delta. A spokeswoman for the Delta division of the Air Line Pilots Association was not immediately available for comment. A bulletin posted on the pilots' Web site on Tuesday did not mention possible talks over the contract with the airline. ``Labor cannot be blamed for all the industry's problems,'' Neidl said, ``But the uneconomical cost structure imposed by current labor contracts makes up the single biggest and toughest item that has to be modified.'' If unions agree to the cuts needed to keep their employers out of bankruptcy, he said he sees ``good upside potential'' in the airlines' stock prices. Shares of Delta were down 6 cents at $9.28 at midafternoon New York Stock Exchange trade. http://www.nytimes.com/reuters/business/business-airlines-delta-pilots.html?ex=1046079745&ei=1&en=18cc7b7b3bd46a7e HOW TO ADVERTISE --------------------------------- For information on advertising in e-mail newsletters or other creative advertising opportunities with The New York Times on the Web, please contact onlinesales@nytimes.com or visit our online media kit at http://www.nytimes.com/adinfo For general information about NYTimes.com, write to help@nytimes.com. Copyright 2002 The New York Times Company