Delta and Northwest plan to merge, in a deal that would create the world's largest airline in terms of traffic. But there is still a lot to be worked out.
Regulators and shareholders need to be convinced. And the Northwest's pilots union is saying it will do everything it can to block the deal.
Without the pilots' support, there are big questions about how much the newly merged airline can save on its operating costs. And figuring out a way to reduce costs is the whole point.
Delta executives say they tried to do something different, even revolutionary: bring in pilot groups before the merger was announced and get their agreement.
Delta spokesman Mike Campbell said the airline got half of what it wanted, with Delta pilots agreeing to the deal. But Northwest's pilots did not.
"Now that we announced, we still have eight or nine months during the regulatory process to bring them on board," Campbell said.
Northwest and Delta pilots have been trying for months to reach an agreement on seniority issues. The union's seniority system decides which pilots get which flights — and that greatly affects their salaries and pension plans.
Under the proposal, Delta extended its current contract with pilots to 2012 and gave them 3.5 percent equity in the new airline. Northwest pilots say the Delta pilots would be getting the better deal.
In a memo, Northwest's pilots union Chairman David Stevens said that the risk to Northwest airlines and pilots is simply too great, and that no group of pilots would agree to a deal like this.
If they don't reach agreement, the result could be a long and divisive labor negotiation down the road. Some question how the combined airline can achieve the cost reductions and increased revenues it's seeking when it's not closing any hubs, not drastically reducing its flight schedule and has yet to resolve seniority issues with Northwest's pilots.
Delta officials said Tuesday that they expect the airline to be profitable in the first year of combined operations. Both carriers have been through bankruptcy, and both have already cut their domestic routes.
Still, mergers are never easy. And one of this scope may be even more challenging.
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