Delta Air Lines Inc. chief financial officer Edward Bastian told an arbitration panel that the loss-plagued, bankrupt airline is “tapped out” and can’t borrow any more money to pay its bills, according to the Associated Press.
As a result, he reportedly told the three-person panel, Delta needs permission to void its contract with the pilots’ union so it can cut pay and benefits for its 6,000 pilots by some $325 million. The pilots have threatened to strike if the contract is voided, the AP noted.
“We are clearly in the worst shape and are the most fragile of anyone in the industry,” Bastian reportedly told. He added that he expects fuel prices to remain high and ticket prices to remain low because of competition and industrywide overcapacity, and that Delta needs to continue cutting costs simply to survive. “We have both a revenue problem and a cost problem, and we’re tackling both,” Bastian reportedly said.
Jack Gallagher, a lawyer for the airline, reportedly told the panel that Delta was in a “race against time” to restructure and that it “looks more likely than not” that the company would terminate its pilots’ pension plan to save money, according to Reuters.
The pilots’ union reportedly doesn’t dispute that the airline has big problems, but it maintains that they have already agreed to significant concessions. The airline and the union had earlier reached a deal on interim pay cuts. They had been negotiating a long-term deal, explained the AP, but because they missed a March 1 deadline to settle on their own, the dispute went to arbitration.
The panel is in the second day of two weeks of hearings in Washington, D.C., the wire service reported; it must decide by April 15 whether to grant Delta’s request to void the contract.