Delta, Northwest next to test labor waters NEW YORK (Reuters) ? Will more U.S. airlines stumble to the brink of bankruptcy before workers agree to wage cuts, or can unbearable labor costs be fixed outside the courts? Delta Air Lines and Northwest Airlines, which want to cut their pilots' pay to stay better-positioned than their rivals in the battered sector, will soon find out. "Like any card game, it's very difficult to get people to start turning cards face up until everything is about to happen," said David LeMay, a partner in the bankruptcy department at Chadbourne & Parke LLP in New York. Low ticket prices and slow demand, battered by the war in Iraq and the SARS outbreak in Asia, have left U.S. airlines in dire straits. Nearly every major airline has worked to cut labor costs, their most expensive payout, to stay viable. No. 3 U.S. airline Delta and No. 4 Northwest recorded $862 million in combined net losses for the first quarter. Analysts say that while they are more likely to fight off bankruptcy than some competitors, their future now depends on their workers. Industry leader American Airlines, a unit of AMR, recently sealed deals with its labor groups for $1.8 billion in annual cost savings, but only after it narrowly averted bankruptcy three times. "The whole culture and tendency of labor negotiations is that they're very last-minute," said LeMay, who represented Continental Airlines during bankruptcy. "I'm sure that Northwest and Delta have been thinking hard about bringing the same urgency that American brought to bear, without actually coming that close to the brink." RUNNING OUT OF RUNWAY Atlanta-based Delta proposed this week to cut its pilots' pay by 22%, which would still leave their industry-leading pay rates higher than those of their peers at other airlines. If the proposal were accepted by the pilots' union, Delta pilots would still be paid roughly 12.5% more than pilots at United Airlines, which has filed for bankruptcy and enacted pay cuts across the board. Delta pilots would pocket as much as 22% more than American pilots in their first year under American's new contracts, JPMorgan analyst Jamie Baker said. "Delta should be asking for more, in our view," Baker said in a research note. "While recognizing Delta lacks the threat of imminent bankruptcy, we're unimpressed with the magnitude of management's proposal." He expected Delta's pilots to resist somewhat but react favorably overall. Northwest's pilot representatives have said they will work with the airline because cost savings appear to be needed, but the pilots' union said this week that it was in no hurry. "There is no need to rush since (Northwest's) cash reserves are sufficient for the near term," the Air Line Pilots Association (ALPA) said. The union planned to talk to management in the coming weeks and then report on its progress by June. ALPA said in February that Northwest had proposed cutting pilot costs by 37% a year by reducing pay by more than 17%, cutting benefits, and laying off workers. As leverage in talks with unions, many airlines have pointed out that bankruptcy lenders could demand harsher cuts from labor than contracts negotiated outside of bankruptcy would require. *************************************************** The owner of Roger's Trinbago Site/TnTisland.com Roj (Roger James) escape email mailto:ejames@xxxxxxxxx Trinbago site: www.tntisland.com Carib Brass Ctn site www.tntisland.com/caribbeanbrassconnection/ Steel Expressions www.mts.net/~ejames/se/ Site of the Week: http://www.pscutt.com TnT Webdirectory: http://search.co.tt *********************************************************