Delta and Northwest could announce a combination as early as today that would create the world’s biggest airline, but pilot contract issues still loomed and there was no guarantee the deal would move ahead, three people familiar with the talks said.
The people, who spoke on condition of anonymity on Sunday because of the sensitivity of the situation, said officials were mobilizing for an announcement provided the boards of the two companies give final approval to a deal.
The boards of both companies have been having ongoing merger-related conversations. They were likely to meet yesterday, a person familiar with the talks said.
It was increasingly likely the two airlines would proceed without a prearranged seniority integration agreement between their pilots unions, making one of the main issues whether pilots would accept a merger.
Leaders of Northwest’s pilot union leaders issued a memo to rank-and-file pilots on Sunday saying that they would oppose any merger that does not keep the interests of Northwest pilots “at the forefront of the decision-making process.” The union leaders, who met in Minnesota, said any combination had to involve “fair and equitable seniority list integration.” It also remains unclear whether Delta pilots would be willing to make changes to their contract to give Delta more flexibility after a combination, one of the people said.
Delta may be willing to give incentives to Delta pilots to alter their contract, another person familiar with the talks said.
The changes being sought are related to the scope section in the Delta pilot contract, which in part spells out what planes pilots fly and what routes they fly, people familiar with the talks said.
Any changes to the contract, including financial incentives, would apply to only Delta pilots since their contract only governs that airline’s pilots. Northwest pilots have a separate contract.
A memo sent Friday from Delta’s pilots union to its members said union leaders were meeting in special session in Atlanta. It did not say what they were discussing. That meeting continued on Sunday, people familiar with the talks said.
The usual approach in airline combinations has been to have pilots work out a joint union contract after a deal is announced.
Atlanta-based Delta Air Lines Inc and Eagan, Minnesota-based Northwest Airlines Corp took a different approach in their talks for months, figuring that if they could obtain full pilot agreements in advance they would reap the benefit of a combined airline much sooner.
With that in mind, pilots were in line to get raises and equity in the combined company. But the two groups could not agree on seniority, which determines who flies more desirable aircraft and routes.
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