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Seniority an Issue for Delta, Northwest

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ATLANTA — Northwest Airlines Corp. pilots have integration issues to sort out. Not just the ones with their counterparts at Delta Air Lines Inc. that threaten to scuttle talks to combine the two carriers. The ones with Republic Airlines. From 1986.

An arbitrator is still sorting out seniority questions from that deal, illustrating just how much the point matters. Employees at the top of the list get first choice on vacations, the best routes and the bigger planes that they get paid more for flying.

The boards of Delta and Northwest had been expected to vote Wednesday on a combination projected to be worth $20 billion if a pilot deal was in place. It was not clear if the boards met, though a person familiar with the negotiations said a merger deal would not be announced Thursday as had been hoped. That person said a deal now could be announced at the beginning of next week, presuming everything falls into place by then.

Delta and Northwest don't need a labor agreement between the pilots unions before announcing a combination, but having one in place could help speed up the integration of the companies down the line.

"I think they obviously recognize that with an unhappy pilots group, that could make the merger and integration process painful and expensive," said Dan Kasper, an airline consultant with LECG in Cambridge, Mass.

Pilots at US Airways and America West waited until after the 2005 announcement that the airlines would combine to try to hammer out a seniority and joint contract accord. Nearly three years later, no joint pilot contract has been reached.

People close to the Delta-Northwest talks said the pilots unions have agreed on a comprehensive joint contract, but cannot agree to how seniority for the 12,000 pilots would work under a combined carrier. The people asked not to be named because of the sensitive stage of the talks.

John D. Kasarda, a management professor at the University of North Carolina's Kenan-Flagler Business School, said it would be prudent for airline executives to wait for the pilots to settle their differences.

"One more week to resolve a pivotal issue would generate far greater returns to both airlines," said Kasarda, who has studied airline labor issues. "I think Delta and Northwest are very astute for getting that issue resolved."

Kasarda said blending seniority lists is always a problem when airlines combine because different unions have different rules. "That is a resolvable issue, and I believe it will be resolved," he said.

A problem for the unions is the difference in age of their pilots. Northwest pilots tend to be older than Delta pilots because many senior pilots retired from Delta during the run-up to the airline's 2005 bankruptcy filing.

Talk of airline consolidation has heightened in recent months amid persistently high fuel prices, which are eating away at the industry's bottom line.

A combination of Atlanta-based Delta and Eagan, Minn.-based Northwest would create the world's largest airline in terms of traffic, before any divestitures regulators might require.

Many terms of how a combined Delta-Northwest would operate had been resolved as of Tuesday, two people close to the talks said. The airline would be based in Atlanta, would be called Delta and Delta's chief executive, Richard Anderson, would be head of the new company, the people said.

It remained unclear what role Northwest's CEO, Doug Steenland, would play, the people said. A joint Delta-Northwest would maintain a substantial presence in Minneapolis and there would be no furloughs for front-line U.S. employees, the people said. The two airlines have roughly 85,000 total employees.

But pilots at Northwest still have unresolved issues 22 years after the carrier's combination with Republic Airlines.

Northwest, with its Pacific routes, had a fleet of widebody aircraft and pilots who aspired to fly them when it bought domestically focused Republic. Republic pilots poured into the ranks, some with years of experience that would put them in line for the big planes ahead of Northwest pilots.

An arbitrator decided that pre-merger Northwest pilots would stay in line for the big jets ahead of Republic pilots. That locked some pilots out of widebody flying for decades and caused serious bitterness. The Air Line Pilots Association said an arbitrator is still working on some of the issues, although it declined to provide details.

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, Kasper said.

As a result, some of those Delta pilots may be on the same footing as older Northwest pilots who have been flying longer, Kasper said.

There was no similar exodus of veteran Northwest pilots when it went through bankruptcy because the company froze pilot pensions _ so they still got what they had earned, although their pensions stopped growing. Delta terminated its pilots' defined benefit pension plan while the company was in bankruptcy.

A person close to the talks said Tuesday night that a small group of Northwest pilot negotiators want thousands of young Delta pilots to go to the bottom of the combined seniority list as part of agreeing to a deal. The person said that was a major hang-up.

But Greg Rizzuto, a spokesman for Northwest's pilots union, said Wednesday that the labor group is united, and all it wants is what's fair, noting that a pilot's career is tied to his or her seniority ranking.

Airline consultant Robert Mann said some of the same sorts of claims were made in the US Airways-America West talks.

"The US Airways guys, who were in bankruptcy, if they had their druthers they would have stapled every single America West pilot to the bottom of their seniority list," Mann said. "You have some of the same emotion playing out here."

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Associated Press Writers Joshua Freed and Chris Williams in Minneapolis and AP Business Writer Dave Carpenter in Chicago contributed to this report.