Delta Concessions Deal Approved

Elena
01 Jun, 2006
New York City

A bankruptcy judge approved the $280-million-a-year concessions deal Wednesday, hours after 61% of the airline''s rank-and-file pilots voted for the pact. The deal includes an initial 14% pay cut for pilots and assurances the pilots union won''t fight any company effort to terminate the pilots'' pension. The agreement, running through 2009, takes effect Thursday.

[R]8:00AM Delta Air Lines concession deal got approval from a bankruptcy judge.[/R]
Delta Air Lines Inc. and its pilots, who were hit with two major pay cuts in two years, achieved reconciliation, ending a battle that brought the nation''s third-largest carrier close to a devastating strike. Delta and negotiators for the pilots union reached the deal in April. A week later, union leaders ratified the deal, paving the way for the rank-and-file pilots to do the same. Before the agreement being reached, Delta had asked an arbitration panel to reject its pilot contract so it could unilaterally impose the cuts it wanted. The pilots had threatened to strike if the contract was voided. A bankruptcy judge approved the $280-million-a-year concessions deal Wednesday, hours after 61% of the airline''s rank-and-file pilots voted for the pact. Court approval came despite an objection by the government's pension insurer, which insisted that a $650 million note and $2.1 billion unsecured claim that the company promised the pilots should belong to the agency if the pilots'' pension is terminated as expected. The deal included an initial 14% pay cut for pilots and assurances the pilots union won''t fight any company effort to terminate the pilots'' pension.

The agreement, which runs through 2009, takes effect Thursday. As part of the settlement, Delta agreed to provide retired pilots an administrative claim of $9 million to cover a portion of certain pension benefits. Delta also said in a filing with the bankruptcy court that it lost $27 million in April. Excluding items, it would have earned $22 million in the 30-day period. As of April 30, Delta had $2.5 billion of unrestricted cash. It has posted losses of more than $14.4 billion since January 2001. Delta said it planned to file thousands of pages of disclosure documents with the court detailing its finances and its obligations. The Pension Benefit Guaranty Corp. said that it was reviewing its options, including the possibility of an appeal.


[R]7:30AM Japanese shares finished higher, other indices fell.[/R]
Asian markets finished mixed. Tokyo''s Nikkei 225 index closed higher, advancing 36.41 points, or 0.24%, to close at 15503.74 points. Auto stocks were among the gainers. Toyota Motor advanced 1.5%, real estate shares also added with Sekisui House gaining 2.2% and bank stocks recovered as well, as Mitsubishi UFJ Financial Group rose 1.3%. Hong Kong’ Hang Seng Index closed 212.62 points lower, or 1.3%, to 15645.27, despite Bank of China''s 15% gain. South Korea’s stocks plummeted, following banks shares, brokerage firms and auto makers. Kookmin Bank, dropped 3.1%, and Woori Finance Holdings shed 4.1%. Daewoo Securities fell 6.8% and Samsung Securities was down 3%. Hyundai Motor lost 3.5% to its lowest point since August 5, 2005. Australia''s benchmark S&P/ASX 200 advanced 1.2% to 5060.6. BHP Billiton advanced 1.5% and Rio Tinto gained 1.9%.


[R]6:30AM European stocks fall on banks and commodity prices.[/R]
European markets fell in early trading. After an hour of trade, London’s FTSE 100 shed 0.4% to 5,698.5, the Xetra Dax declined 1% to 5,636.86 and the CAC 40 lost 0.6% to 4,902.84.On the corporate front, some gainers included Spain’s Cepsa gained 1.3%, Neste Oil added up 0.7%. The decliners were more. Among them were gas and water facilities, with RWE off 2.2%, Eon down 2.4%, Gaz de France slipping 1.3% and Suez down 1%. Despite a strong start, the telecoms slid. The only gainer was Belgacom, rising 0.4%, but Telia Sonera dropped 0.5%.

Light, sweet crude oil for July delivery lost 36 cents to $70.93 a barrel and July Brent at London''s ICE Futures exchange shed 31 cents to $70.10 a barrel. Bullion shed more than 2% Thursday to a one-month low as gold''s fall intensified on a firming dollar. Spot gold dropped to $629.80 an ounce, the lowest since April 27, before slightly recovering to $632. The dollar advanced against major currencies on Thursday after minutes from the Federal Reserve''s latest policy meeting buoyed expectations that the interest rates will be hiked. The greenback was trading at 112.55 yen, down 0.04 yen from late Wednesday in New York. The euro dropped to $1.2779, from $1.2814. The British pound fell to $1.8634 from $1.8689 in New York.