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Cut and paste

Business | Delta pilots agree to a 32.5 percent pay cut and no pay raises for five years

Issue: "Iraq: Fallujah's fallen," Nov. 27, 2004

Last month, WORLD reported on Delta Air Lines' request for major concessions from its 7,000-member pilots union ("Bumpy ride," Oct. 16) in an attempt to avoid bankruptcy. On Nov. 11, the pilots agreed to a 32.5 percent pay cut and no pay raises for five years-moves that will save the airline more than $1 billion annually.

Nearly 80 percent of the pilots agreed to the deal, which calls for them to receive options to buy up to 15 percent of the company's stock in return for their sacrifices. (Delta CEO Gerald Grinstein had already agreed to forgo his salary for the rest of the year.)

Union leaders, after 15 months of negotiations, said the pilots felt they had no other option. "Our airline has been managed to the brink of bankruptcy and the Delta pilots had to decide between two bad choices," said John Malone, chairman of the pilots union's executive council. "They chose the lesser of two evils."

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Delta has lost more than $6 billion since early 2001, during which time it has eliminated 16,000 jobs and cut the pay of other employees, including its executives. Delta pilots, though, are among the highest-paid in the nation with salaries averaging between $100,000 and $300,000 a year.

Full steam ahead

During one week last month, the rail industry moved the most freight volume in its history-33.1 billion ton-miles, just eclipsing the 32.7 billion ton-miles mark set a week earlier, according to the Association of American Railroads.

That boom in volume has led to rising profits for railroad companies and many new jobs. But it's also caused headaches for both the companies and their customers, many of which have found it difficult to find enough trains available to transport their increasing orders.

"The rail industry has been carrying record tonnage, but the growth had been a more measured pace, 3 to 5 percent," said Steve Forsberg, a spokesman for Burlington Northern and Santa Fe Corp., which hired 2,300 entry-level conductors this year compared to the normal class of 800. "This year, we're experiencing three years of normal growth in a single year."

The high cost of fuel has made railroad transport more attractive, but it has also cut into the increased profits of railroad companies. Diesel fuel prices have risen more than 70 percent from a year ago.

Still, railroad officials say they will have to solve their labor and capacity problems soon, as they foresee the current growth surge extending well into 2005.

Balance Sheet

•UPS plans to hire 70,000 temporary workers to help with the holiday shipping season, a 40 percent increase from 2003. The company expects to deliver more than 340 million packages between Thanksgiving and Christmas, peaking on Tuesday, Dec. 21, with about 20 million air and ground packages. That is more than 6 million more than the company's normal domestic daily load.

•In an effort to keep up with the competition, Verizon Wireless is buying cellular capacity for 23 markets from bankrupt NextWave Telecom Inc. for $3 billion. Verizon's capacity, though, still trails new market leader Cingular in many markets.

•Advertising company has been permanently barred from doing business in Idaho after the state accused the company of faxing hundreds of unsolicited advertisements to Idaho consumers. California, Indiana, and Washington, as well as the federal government, have brought similar actions against the company.

•SBC Communications Inc. says it expects to cut 10,000 or more jobs- 6 percent of its work force-by the end of next year through a combination of layoffs and attrition. The announced cuts are in addition to 7,000 jobs that ended through "normal attrition" this year.


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