ATLANTA — Pilots for Delta and Northwest airlines are counting on a big pay day as the two companies make their final approach in a proposed merger to create the world's largest carrier.
The boards of directors of Delta Air Lines Inc. and Northwest Airlines Corp. were expected to meet today and could vote on a combination. The company is mulling a Thursday announcement if everything falls into place.
A merger would create a globe-spanning airline headquartered in Atlanta with unparalleled access to routes in the United States, Europe, South America, Africa and Asia.
A merger announcement would set the stage for consideration by the U.S. Department of Justice, which would have to approve the deal. A Delta-Northwest combination could spark further consolidation in the financially strapped airline industry, which on Tuesday saw oil top the $100-a-barrel mark.
"It will be one hell of an airline," said Minneapolis-based airline consultant Terry Trippler.
The deal still could fall apart, or it could be shot down by the companies' boards. The 11,000 pilots for the two airlines are key to the final deal. The airlines want to ensure their support before moving ahead with a deal to avoid pitfalls of past industry mergers.
US Airways and AmericaWest did not get pre-merger agreements from their pilots before they combined in 2005. Today, those pilots still are working under separate seniority lists and contracts, weighing down full integration of the companies' operations.
There were indications Tuesday that Delta and Northwest pilots stand to profit handsomely for their cooperation in a merger plan.
According to sources close to the Delta-Northwest negotiations, the pilots' union agreement includes:
• A plan for merging seniority lists covering about 6,300 pilots at Delta and 4,800 at Northwest that includes adjusting their seniority based on overall experience. That would quell concerns from some of Northwest's highest-ranking pilots that less-experienced peers at Delta would be given the same seniority.
• A voting seat on the board of a new carrier. Northwest pilots now have one voting member on their airline's board, and Delta pilots have a nonvoting member on their board.
• A 7 percent equity share in the combined company. Northwest and Delta currently have profit-sharing programs for employees, including the pilots.
A longtime Delta pilot briefed on the talks said the plan created by union negotiators would give each pilot a $50,000 to $100,000 stake in the new company, but only if pilots unions for both airlines ratify the agreement.
That would amount to up to $1 billion, or 5 percent to 7 percent of the value of the new company, which would be paid out either in cash or stock.
That is a huge incentive, the pilot said, especially after taking pay cuts during Delta's bankruptcy. The carrier emerged from Chapter 11 protection last spring.
"The pilots wanted to use their cooperation and influence to recuperate lost wages and benefits in the bankruptcy," the Delta pilot said.
Salaries for the Northwest pilots would rise 10 percent to 15 percent to bring them up to par with Delta pilots.
Meanwhile, Delta pilots would get concessions on seniority, the pilot said. Seniority determines which planes pilots qualify to fly and, therefore, their pay rate.
Delta pilots flying the airline's biggest jets have fewer years on the job, on average, than their counterparts at Northwest. They have feared Northwest pilots with more years in the air could bump them out of these coveted cockpits. But under the agreement reached by union negotiators, a Delta pilot hired in 1988 might have the same seniority as a Northwest pilot hired in 1985, the pilot said. Delta pilots also could get a modest hourly pay raise in the deal, the pilot said.
Both groups want to take advantage of the global reach of their combined airline and look good compared to their competition, the pilot said.
He said US Airways and AmericaWest pilots still are "fighting with hatred" over their placement on the seniority list.
The next step for the pilots unions is for their elected officials to agree to the terms reached by the negotiators. If union officials like the deal, they would send it to their pilot membership for a vote.
The vote to ratify that agreement probably would come after a merger is announced.
Trippler, the airline analyst, operates in the same metro area where Northwest is based. He said he thinks the deal is done: His home state will lose Northwest headquarters, based in suburban Minneapolis.
"I'm telling people here, 'Get over it,"' Trippler said. "The Fortune 500 company is gone. The headquarters is gone. The red tail (the Northwest insignia) is gone. But the critical thing is the hub, and we will save the hub."
Trippler said he expects all of the main Delta and Northwest hubs to survive, and he predicted there will be minimal job cuts initially.
Both airlines slimmed down considerably when they went into bankruptcy a few years back. They came out of reorganization as much leaner carriers, he said, setting the stage for a merger with few cuts in the offing.
A Delta-Northwest merger could run into opposition in Washington, however. Two U.S. lawmakers are asking their colleagues to "express concerns" about airline mergers to the regulators who would review any such tie-ups.
Mergers "could result in diminished service to small and medium size cities, job losses, less competition, higher fares and fewer options for consumers," Reps. Dan Lipinski and Steven LaTourette wrote in a letter to other House members.
The two lawmakers may offer legislation related to mergers, including possibly widening required federal reviews to include the effects on employees, said Deborah Setliff, a spokeswoman for LaTourette, an Ohio Republican.
Setliff provided a draft of the letter to Attorney General Michael Mukasey and Transportation Secretary Mary Peters on Tuesday in Washington. A spokesman for Lipinski, an Illinois Democrat, didn't immediately respond to a request for comment.
Contributing: Gannett News Service, Bloomberg News