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Stakes high in strike by Comair pilots

The strike by Comair pilots involves an airline most people have never heard of flying largely between small Midwestern cities. But the stakes are much higher — essentially, how the airline industry will divide the profits created by the advent of the regional jet.

Comair's 1,350 pilots, who went on strike Monday, shutting down the airline, are seeking a large pay increase and a generous company-funded retirement package. If they succeed in forcing Delta Air Lines, which owns Comair, to radically increase their compensation, the commuter carriers owned by or aligned with other major airlines will have to follow, potentially crimping the fast growth the carriers have seen in recent years.

On Sunday, Comair, which is one of the country's largest regional airlines, canceled all of its 800 daily flights in anticipation of the strike. It said Monday that it would cancel its schedule through 11 a.m. Wednesday.

The airline said that it was able to accommodate 85 percent of its customers on other Delta flights. At Cincinnati/Northern Kentucky International Airport, which is Comair's main hub, there seemed to be little disruption.

"It's not as bad as I expected," said Rina Errazo, 21, who was trying to get home to New Jersey from a business trip. "I'm going to get a Delta flight from here that will be about 2 hours later than the Comair flight that I had booked."

Comair and the pilots, which are represented by the Air Line Pilots Association, have not scheduled new negotiations. But they both said they were willing to return to the bargaining table.

President Bush intervened last month to delay a strike by machinists at Northwest Airlines and promised to do what he could to stop all strikes in the industry this year. He seemed to back away from that vow Monday. Speaking in Kansas City, Mo., Bush said that he could only intervene after receiving a recommendation from the National Mediation Board, which governs labor relations in the airline and railroad industries.

Eight years ago, Comair was the first commuter airline in North America to fly a regional jet. It now has 110 of them, more than any other airline. That has allowed Delta, which is the country's third-largest airline, to expand its network at the lower costs made possible by using Comair's 50-seat jets — flying under the name Delta Connection — rather than using larger jets from its main fleet.

In 1999, Comair's profit margins were 25 percent compared with only 10 percent at Delta. One reason for the gap was an unusually generous profit-sharing agreement between the two airlines. Rather than accept a reduction in its compensation from Delta when the deal came up for renewal that year, Comair agreed to have Delta buy the 78 percent of the airline it did not already own for $1.8 billion.

With Comair, Delta has been able to expand its Cincinnati hub, flying in passengers from all over the country and transferring them to mainline Delta flights.

But Comair pilots say that success has come at their expense. A second-year pilot at Comair earns a little more than $22,000 a year. That can rise to nearly $70,000 a year after 18 years, but the company only offers a small retirement benefit.

A comparable second-year pilot at Delta earns more than $63,000. That can rise significantly over a 25-year or 30-year career, which is capped by a retirement package worth millions.

The Comair pilots are asking for higher pay and retirement benefits that would bring them closer to Delta's mainline pilots. They are also asking for a shorter work day.

But the pilots are convinced that Comair is profitable enough to meet their demands and keep growing.

"Our proposals are fair and reasonable, especially for an airline as immensely profitable and successful as Comair," J.C. Lawson, the head of the pilots' union, said in a statement Monday.

Comair represents about 7 percent of Delta's annual passenger load. About 45 percent of its passengers connect to a Delta flight. A prolonged strike could hurt the parent airline, analysts said.

"This stuff tends to be very profitable flying," said Michael Linenberg, an analyst at Merrill Lynch in New York. Delta is expected to earn $2 a share for the quarter, he added. Depending on what happens, the strike could erase that, a sum equal to $260 million.

But Delta stock, which has declined more than 20 percent this year, rose $1.73 Monday, closing at $39.70 on the New York Stock Exchange.

For now, Delta is taking a low profile in the Comair dispute. It is deeply involved in separate negotiations with its own pilot group and has said that it will let Comair's managers do their jobs.

"There is a sense that at some point Delta will step in and write a big check," Thomas J. Slocum, the airline's senior vice president for corporate communications, said Monday, "and we are not going to do that."