ATLANTA — For weeks, Delta Air Lines' pilots have said they wanted the company to promise to protect their pensions before they would consider a pact to ease a wave of early pilot retirements.
While the airline has insisted its contract proposal would preserve pilots' accrued retirement benefits, the union wanted further assurances, something pension experts and bankruptcy lawyers doubt is possible over the long-term if the carrier files for Chapter 11.
In a letter being sent to its members this week, the pilots union says it agreed to what amounts to a compromise because it believed the carrier's "threat" of bankruptcy. It says it first consulted legal, retirement and financial experts.
"The advice was consistent: reaching an agreement on the retired pilot issue now was far more preferable to having a solution imposed on us in bankruptcy," Capt. John Malone, the chairman of the union's executive committee, wrote in the letter to pilots.
On Monday, the union agreed to allow Delta to bring pilots out of retirement on a limited basis to deal with staff shortages that threaten to ground flights. The move came after the company agreed not to terminate the pilots' pension plan before February even if it files for bankruptcy in the meantime.
In his letter, obtained Tuesday by The Associated Press, Malone asked fellow pilots to ratify the agreement.
"Let's put the immediate staffing crisis behind us and focus on the future," Malone wrote.
Delta operates a hub at Salt Lake City International Airport and employs approximately 4,000 people in the state, including about 700 pilots.
Henry Harteveldt, a San Francisco-based airline analyst for Forrester Research Inc., said that if anything, the early retirement agreement gives Delta some breathing room to deal with its larger problem over concessions. He said the union was wise to strike the deal even if pilot pensions aren't guaranteed for the long-term.
"It's better to have some guarantee for the next four months or so, than to have none at all," Harteveldt said. "The pilots are smart enough to know that, 'If we can get them to compromise on this, we will get some more time to negotiate on the long-term contract and the overall pension program.' "
The future still holds much uncertainty for Atlanta-based Delta, the nation's third-largest airline.
A simple majority of active Delta pilots must ratify the agreement for it to go forward. As of Tuesday, there were roughly 7,000 active pilots and 900 more on furlough, according to the union. Delta chief executive Gerald Grinstein has warned that Delta will have to file for bankruptcy if it doesn't slow the pace of early pilot retirements before the end of September.
Malone, the union executive committee chairman, said that warning, which he described as a threat, was taken seriously by negotiators.
"The CEO's threat was deemed credible based on the company's precarious financial condition," Malone wrote in his letter to pilots. "Your elected representatives took a broader view of the threat to our career and attempted to secure as much pension plan protection as possible as part of any agreement addressing staffing concessions."
Even with the agreement on the retirement issue in place, Delta has warned that it could still file for bankruptcy if it doesn't get a minimum of $1 billion in other concessions, including wage cuts and work-rule changes, from its pilots.
The union has offered up to $705 million in annual concessions.
William Rochelle, an airline bankruptcy lawyer in New York, said he doesn't believe the agreement on the retirement issue makes it any more or less likely that the carrier will file for Chapter 11.
"What I read into it is there is an effective constructive dialogue taking place between the pilots and the company, and I read that as a positive sign," Rochelle said.