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ATLANTA_Delta
Air Lines Inc. defended its proposal for a severance plan
for officers and directors, saying in a Tuesday bankruptcy
court filing that "management attended to the rest
of the company's employees first and itself last." |
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The
company was responding to an objection filed last week
by the Air Line Pilots Association, which asked the court
to reject the Atlanta-based company's severance proposal
in light of the deep wage and benefit cuts that Delta's
6,000 pilots are being asked to take. |
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A
hearing on the severance proposal is set for Wednesday
in U.S. Bankruptcy Court in New York. Delta, the nation's
third-largest airline, filed for protection from its creditors
in September. |
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The
company said that under the severance program, pay of
six to 12 months would be granted to certain employees
whose jobs are terminated because of organizational or
business changes. Employees who quit or are fired for
cause would not receive severance. |
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If all 144 employees
eligible were terminated under the program, the cost to
Delta would be $14.2 million, the company has said. CEO
Gerald Grinstein and Chief Operating Officer James Whitehurst
would not participate in the program. The directors covered
under the proposal refer to managers below the vice president
level, not members of the company's board of directors. |
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Delta said in
its filing Tuesday that a more likely cost for the severance
program is $3 million. That assumes 20 percent of officers
and directors are let go as part of the airline's plan
to cut $200 million in corporate overhead costs. |
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The company said
failure to implement the severance program could increase
unwanted attrition among upper-level employees. |
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"Delta cannot
wait any longer," the airline said in the filing. |
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It added that
it believes the plan is "modest" and that its
pilots' claim that a select few would receive special
treatment because of their position is "pure fantasy." |
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A spokesman for
the pilots union, John Culp, declined to comment on Delta's
filing. |
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Delta pilots
who are furloughed get up to six months of pay depending
on years of service, according to the union, which says
the company wants to reduce the furlough benefit to the
equivalent of up to three months of pay. |
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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. |
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The union has
said previously that approval of the company's severance
proposal could hurt negotiations over new pilot concessions
the company wants. |
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Delta has been
seeking $325 million in new concessions from its pilots.
It recently offered to lower the request to $315 million.
The pilots are currently offering about $115 million in
annual concessions. In December, the pilots agreed to
an interim pay cut to allow time to discuss comprehensive
concessions that include more than just pay reductions. |
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The comprehensive
cuts would be on top of $1 billion in concessions the
pilots agreed to in a five-year deal reached in 2004. |
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If negotiators
for the pilots union 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. |
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The pilots union
has said it will strike if the contract is thrown out. |
