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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): April 29, 1996
DELTA AIR LINES, INC.
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(Exact name of registrant as specified in its charter)
Delaware 1-5424 58-0218548
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
Hartsfield Atlanta International Airport, Atlanta, Georgia 30320
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(Address of principal executive offices)
Registrant's telephone number, including area code: (404) 715-2600
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ITEM 5. OTHER EVENTS
On April 29, 1996, Delta Air Lines, Inc. ("Delta" or the "Company")
and the Air Line Pilots Association, International ("ALPA") entered into a new
collective bargaining agreement for the Company's approximately 8,000 pilots.
The new collective bargaining agreement, which generally became effective May
1, 1996, has a four-year term. It provides for, among other things, (1) a 2%
reduction in base salaries for four years, after which period the 2% reduction
will be rescinded; (2) reductions in certain other pay-related areas and
benefits; (3) certain productivity improvements, including changes in staffing
requirements; (4) additional pay reductions and productivity improvements
relating to the operation of the Company's B-737-200 aircraft, subject to
certain conditions; (5) job security protections for currently active pilots
and the recall of the approximately 260 remaining pilots on furlough by July 1,
1997; (6) a prohibition on the Company's engaging in code sharing with respect
to aircraft with over 70 seats that are operated by another U.S. airline,
subject to certain exceptions; (7) restrictions in certain circumstances on the
Company's entering into new code sharing arrangements involving aircraft
operated by foreign airlines; (8) an enhanced early retirement program for up
to 500 pilots; (9) pilot participation in a profit sharing program; (10) a
stock option plan for pilots providing for grants of stock options covering a
total of ten million shares of Delta common stock in three equal installments;
and (11) ALPA's right to appoint an associate non-voting member of Delta's
Board of Directors.
ALPA has the right to reopen the new collective bargaining agreement
in its entirety if there is a Change of Control (as defined) of Delta or if any
required stockholder approval of the pilots' stock option plan is not obtained.
Change of Control is defined in the new contract to include, among other
things, the acquisition by a person or entity of more than 40% of Delta's
outstanding common stock. The pilots' stock option plan and a similar stock
option plan for nonpilot personnel will be presented to stockholders for
approval as one proposal at Delta's 1996 Annual Meeting of Stockholders, which
is scheduled for October 24, 1996.
Delta believes the new collective bargaining agreement will improve
the Company's competitive position and make an important contribution to the
Company's efforts to achieve its cost reduction goals. Delta currently
estimates the new collective bargaining agreement, compared to the prior pilot
contract, will result in total savings of approximately $100 million in fiscal
year 1997, approximately $200 million in fiscal year 1998 and approximately
$230 million in each of fiscal years 1999 and 2000, before considering any
amounts to be paid under the pilots' profit sharing program.
The pilots' profit sharing program generally provides for profit
sharing payments to eligible pilots for a particular fiscal year equal to the
Company's Profit Performance Level (as defined) multiplied by a pilot's Annual
Base Salary (as defined) for that year, and subtracting from that product a
dollar amount equal to the Offset (as defined). The Profit Performance Level
for a given fiscal year is the Company's pretax income (after giving effect to
profit sharing payments and excluding any gains or losses on
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the disposition of flight equipment and less preferred stock dividends) as a
percent of the Company's total operating revenues for that year. No
payments are made if the Profit Performance Level is less than 2%; the maximum
Profit Performance Payment for purposes of the pilots' profit sharing program
is 10%. The Offset for any given fiscal year is the product of a pilots'
Annual Base Salary multiplied by the lesser of (1) 5%; or (2) the percent of
annual base salary (which is currently also 5%) by which profit sharing awards
for such year are reduced for participants in the Company's profit sharing
program for noncontract published scale personnel.
In connection with the pilots' enhanced early retirement program
described above, the Company expects to record a one-time pretax charge of
approximately $300 million in the June 1996 quarter, depending upon the number
of pilots electing early retirement and other factors which are not precisely
determinable at this time.
The above information regarding the cost savings that Delta currently
anticipates under the new collective bargaining agreement is forward-looking,
and the actual results could differ materially from the results that Delta
currently anticipates. The specific factors and events that could cause the
actual results to differ materially from the expected results include, among
other things, (1) ALPA's exercising its right to reopen the new contract if
there is a Change of Control of Delta or any required stockholder approval of
the pilots' stock option plan is not obtained; (2) the number of B-737-200
aircraft that Delta utilizes under reduced operating costs; (3) aircraft
deployment and utilization rates; and (4) competitive factors and general
economic conditions.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
DELTA AIR LINES, INC.
(Registrant)
BY: /s/ Thomas J. Roeck, Jr.
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Thomas J. Roeck, Jr.
Senior Vice President - Finance and
Chief Financial Officer
Date: May 2, 1996
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