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Panel scolds Delta, pilots
'This is your mess, you fix it,' arbitrator says
By RUSSELL GRANTHAM
The Atlanta Journal-Constitution
Published on: 03/24/06
WASHINGTON Calling the past two weeks of hearings a "shameful exercise," an arbitrator in the contract dispute between Delta Air Lines and its pilots told both sides to immediately resume talks on a consensual deal rather than make his panel hand down a decision.
"You both got us here, this is your mess, you fix it," arbitrator Richard Bloch said in a scathing conclusion to the hearings, which wound up Thursday. "Because, unlike us, when you go home, you're going to have to live with this."
Bloch said the two sides should start talks "today, tonight" toward reaching a deal before his panel's April 15 deadline for ruling on whether Delta can void the pilot contract and impose more than $300 million in annual cost cuts. Pilot union leaders have said they expect a strike if the airline imposes terms.
Bloch said the three-man panel will issue a ruling if it must, but he told the two sides that would amount to an "abandonment of responsibility that will and should haunt all of you."
Reading from a statement on behalf of the panel, Bloch quoted a hearing witness who said leadership means not being able to "unvolunteer" in a crisis. He added that "if the parties here allow us to write this opinion, you both will not only have unvolunteered, you will have bailed out."
Delta and the Air Line Pilots Association submitted their dispute to the arbitration panel after failing to meet a March 1 deadline for a new long-term contract agreement. ALPA is offering about $140 million worth of cuts, less than half of what Delta says is needed for its Chapter 11 recovery plan to work.
Despite missing the March 1 deadline, nothing has prevented Delta and ALPA from continuing talks.
"This is a shameful exercise by two groups who, it appears, have bargained successfully in fat times," Bloch said. "But in hard times the talk turns to nuclear options shredding the labor agreement, eviscerating pensions, striking the company and generally taking actions that challenge ... a 65-year relationship."
Over the past two weeks, lawyers and representatives argued for the two sides' respective positions. ALPA says Delta's demands are too high and unfair; Delta says they are fair and critical to its recovery.
Bloch said the panel members saw "real flaws, oversights, exaggerations and shortcomings" in both sides' arguments. If forced to decide the case, he said, "we'll be choosing the less unpalatable plan."
Bloch said pilots, whose pay rose almost 35 percent from 2000 to 2004, got "an unprecedented, and very rich contract" that was signed just as the airline's financial crisis began in 2001.
He added that "management, too, has done very well for itself," noting the big bonuses and bankruptcy-proof pension trust funds the company gave top executives in 2002, amid losses and job cuts. While those executives have since been largely replaced by new management, he called such perks "both lavish and beyond reason, and, considering their timing, inexplicable."
Despite the withering criticism of both sides, Bloch said his remarks were "not intended to disparage," and he offered the arbitrators' help in forging a deal.
To prod progress, he told the parties to submit confidential progress reports on April 3 and 7.
"You need to get back to your committees. You need to get down to it now, privately," he said.
ALPA Chairman Lee Moak said afterward that "the ball is in the company's court. It takes two parties to negotiate, and they haven't negotiated to this point. We'll see if the panel's words can bring them to the table willing to negotiate in good faith."
A quick return to negotiations "is certainly the company's hope and expectation," said Delta financial chief Ed Bastian. "I would expect there to be talks as the panel suggested ... as soon as we can organize them."
The unusual hearings were set up by a temporary deal in December that cut pilots' pay by 14 percent and suspended Delta's motion in bankruptcy court to void the contract. Delta filed for Chapter 11 protection six months ago and began seeking a new round of pilot cuts about the same time. It went to court to void the contract after initial talks failed.
In late 2004, it had negotiated a $1 billion-a-year concessions deal, including a 32.5 percent wage cut for pilots. Delta has also imposed two pay cuts, job and other cutbacks on non-contract workers between then and now.
ALPA argues that Delta's demand for a long-term 18 percent cut which would supersede the temporary December cut would put disproportionate pain on pilots.
The airline contends both pilots and other groups would be contributing proportionate amounts to its recovery plan.
The arbitration panel can only decide whether to void the contract or reject the company's motion to do so. Bloch said risking such an all-or-nothing decision "is cynical, it is myopic and it is absurd."
Reacting to the panel's criticism, Bastian said: "I respect their opinions. I think it is a very difficult situation for both parties and I respect the enormity of the task ahead of us."
