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Wed, Apr 26, 2006

Could 'Delta Envy' Keep NWA Pilots From Approving Pay Deal?

Also, NWA Pilots Vote To Retain Chairman... For Now

Call it "Delta Envy." That's the realization hitting pilots at Northwest Airlines -- just as they're voting on a new pay deal that the bankrupt carrier says it needs to emerge from Chapter 11 -- that they'll be making as much as 10 percent less than their counterparts at Delta Air Lines... even after pilots at that carrier have their pay cut, too.

Before the two airlines entered bankruptcy last September, Delta pilots made about 2 percent more than those at Northwest.

"Terms of Delta's tentative pilot agreement appear significantly richer than those at Northwest," said analyst Mark Streeter. "...Any case of 'Delta envy' on behalf of Northwest pilots would appear justified."

The St. Paul (MN) Pioneer Press reports the Northwest deal includes a 24 percent pay cut, in addition to a previous 15 percent reduction. The union's executive council is split on approving the deal (six for it, six against) which would set the pilots' annual pay scale range from about $27,000 for new hires to $160,000 for veteran pilots on the airline's biggest jets.

Industry insiders say the pilots' realization that the grass is greener in Atlanta than in Eagan, MN may hamper Northwest's efforts to move on from its heated talks with its pilots.

Despite the discrepancy, Streeter expects Northwest's pilots will narrowly approve their pay deal -- especially when considering the Northwest pilots' more favorable agreement over pensions.

"Our assumption is that Northwest pilots begrudgingly vote in favor of their tentative agreement, though by a narrow margin," said Streeter, who writes for J.P. Morgan Securities.

Another sign that Northwest's pilots might be looking to approve the deal came Tuesday, as union leaders representing Northwest Airline pilots have... for the moment... dropped their efforts to oust chairman Mark McClain because of their angst over pay and benefit cuts.

McClain has led the NWA unit of the Airline Pilots Association since 1999, and the vote to dump him was widely seen as an indication of whether the pilots would go along with the leadership-endorsed pay cut plan.

If Northwest's pilots don't go for the new agreement, Wall Street figures Northwest will probably try to impose a new contract on them... figuring if they don't like it, they can go the way of unionized mechanics.

FMI: www.nwa.com, www.alpa.com

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