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Delta rejects settlement with Northwest to combine carriers

ATLANTA — Delta Air Lines Inc.’s pilots union rejected Wednesday the idea of submitting to arbitration with its counterpart at Northwest Airlines Corp. to break their impasse over integrating seniority lists as part of a possible combination of the carriers.

“In short, there will be no binding arbitration,” Lee Moak, head of Delta’s pilots union, said in an e-mail to The Associated Press.

Pilot union leaders at Northwest had suggested in a memo to rank-and-file Northwest pilots on Tuesday that arbitration may be a way to break the deadlock. Traditionally, arbitration in these situations is binding.

The memo said that “if management feels the time is now for consolidation, they would be wise to encourage both pilot groups to accept expedited arbitration.”

Arbitration can be a long, contentious process that traditionally follows announcement of a deal between two airlines if their unions can’t reach contractual or seniority agreements on their own.

In this case, Atlanta-based Delta and Eagan, Minn.-based Northwest have not announced a combination agreement, and Delta executives have stated they will only move forward on such a deal with another airline if, among other things, the seniority of their employees is protected.

Arbitration might not be desirable for Delta’s pilots union because of concern that younger Delta pilots might lose the seniority they obtained after the mass exodus of older pilots ahead of Delta’s bankruptcy filing in 2005, industry observers have said. The airline emerged from Chapter 11 protection last April.

On Monday, the head of Delta’s pilots union said in a letter to Delta pilots that the union had told company executives it has been unable to agree on seniority issues with its counterpart at Northwest, raising serious doubts about the prospect of a combination of the two companies.

The letter suggests talks between the two sides are over, and it gave no indication there would be further talks.

The two carriers don’t need a pilot seniority integration deal in advance to move forward with a combination, but having one in place could help speed up the integration of the companies down the line.

Northwest pilot leaders said in their memo to Northwest pilots that arbitration is not perfect, but could get the job done in time for the merged entity to “reap the benefits of the efficiencies much earlier than with two frustrated pilot groups engaged in a traditional merger.”

The pilot union leaders at Northwest said they don’t know what the managers and boards of the two companies will decide to do. A Delta executive said Tuesday his board’s review of strategic alternatives is “fluid,” but he did not say what would be decided or when.

Delta spokeswoman Betsy Talton declined Wednesday to address the dueling positions of the two pilot unions, but she said a special committee of Delta’s board remains active and “will continue at its sole discretion to review the long-term best options to protect the interest of all Delta stakeholders.” Northwest spokeswoman Tammy Lee declined to comment.

Delta shares rose 34 cents, or 3.4 percent, to $10.43 in trading Wednesday while Northwest shares rose 58 cents, or 5.8 percent, to $10.55.

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