Delta-Northwest merger on track, Delta Pilots strike a deal

Pilots of Delta airlines have reportedly come to an agreement with the company that would give pilots a small pay raise and an equity stake in the merged airline.

The agreement will only cover Delta's pilots at a combined Northwest-Delta and would not include Northwest pilots. However, there will be a small premium for Northwest investors, reports said.

Delta Chief Executive Officer Richard Anderson is expected to retain the post in the combined carrier, and Northwest CEO Doug Steenland will probably be a board member.

This kind of agreement would definitely give an edge to the Delta pilots over their Northwest counterparts.

In order to resolve the issue and go forward with the deal, Delta wants to draw up a new contract with just its 7,000 pilots, reports said. Northwest's 5,000 pilots would be asked to join under a single contract later. Northwest pilots' union will thus be forced to negotiate their own agreement with the merged airline later on, after the announcement of a deal.

"It's sort of a backhanded slap at the Northwest pilots," said Douglas Marshall, director of the Aviation Graduate Program at the University of North Dakota. "Delta's pilots are going to have more leverage. They will be in a stronger position."

The merger between Delta and Northwest has been in talks for a long time. The main hindrance to the contract has been to decide the seniority for the 12,000 pilots who will work under the combined carrier. The agreement however does not resolve the main issue of seniority.

Although there is no binding on the Airlines to reach any new contracts with the unions before the merger, but they were hopeful that the unions will resolve their issues before the merger is finalized.

This agreement can help in moving forward with the merger plans as early as next week. This would create the world's largest airline.

Rising oil prices and weakening economy are the main reasons which have forced the airlines to go for a merger deal. They feel that if they want to survive this grave phase in the economy, merger is the only way out, experts said.

Delta jumped 84 cents, or 9.4 percent, to $9.75 at 4:15 p.m. in New York Stock Exchange composite trading. Northwest rose $1.22, or 13 percent, to $10.87.