Delta Fights for Management Severance Proposal

February 21, 2006 ( - Delta Air Lines Inc. defended Tuesday its proposal for a severance plan for officers and directors, saying in a bankruptcy court filing that "management attended to the rest of the company's employees first and itself last," the Associated Press reports.

The Air Line Pilots Association (ALPA) asked the court last week to reject the proposal in light of the wage and benefit cuts the pilots are being asked to take, according to the AP.

The company said that under the program, severance pay of six to 12 months would be granted to certain employees whose jobs are terminated because of specified organizational or business changes. Employees who quit or are fired for cause would not receive severance.If all 144 employees eligible were terminated under the program, the cost to Delta would be $14.2 million, according to the company. The directors covered under the proposal refer to managers below the vice president level, not members of the company’s board of directors, and CEO Gerald Grinstein and Chief Operating Officer James Whitehurst would not participate in the program.

However, in its recent filing, Delta said that a more likely cost for the severance program is $3 million if 20% of officers and directors are let go as part of the airline’s plan to cut $200 million in corporate overhead costs. Delta said it could not wait any longer on the proposal and believes the plan is “modest.”

The pilots who are furloughed get up to six months of pay depending on years of service, according to the union, which says Delta wants to reduce the furlough benefit to the equivalent of up to three months of pay.The airline said that early in its bankruptcy case it sought and received court approval for severance and furlough protections for tens of thousands of its employees who are not officers and directors.

Delta has been seeking $325 million in new concessions from its pilots, but recently offered to lower the request to $315 million. The pilots are currently offering about $115 million in new annual concessions on top of $1 billion in concessions the pilots agreed to in a five-year deal reached in 2004.

If negotiators for ALPA and company can’t reach a comprehensive deal on new concessions by March 1, a three-person arbitration panel would decide the company’s request to reject the pilot contract so Delta can impose the cuts it is seeking unilaterally. ALPA has said it will strike if the contract is rejected.