DALLAS AND ATLANTA—Delta Air Lines Inc. and Northwest Airlines Corp. pilots agreed on a tentative joint contract and on a plan to create a single union seniority list, clearing a hurdle in a merger that will create the world’s largest carrier.

Union negotiators sent the accord to the airlines’ pilot leaders for votes this week, and it will then go to rank-and-file members. Seniority is critical for pilots because it sets pay, vacation, routes and type of planes flown.

The agreement is a victory for Delta, which has said it expects to complete its purchase of Northwest by the end of 2008. The merger almost fell apart when pilots failed to agree on meshing seniority lists in March, forcing Delta to seek an accord just with its 7,300 pilots. Northwest has 5,000 pilots.

“It’s big,” said Ray Neidl, a Calyon Securities analyst in New York who has a “neutral” rating on Delta. “Pilots are always the toughest” labor group with which to come to terms, he said. “But they realize how important this merger is.”

The carriers’ Air Line Pilots Association chapters declined to give details about the contract or the seniority-integration rules pending the union leadership votes. The accord was reached late Monday after a week of almost-continuous talks, pilots at Atlanta-based Delta said Tuesday in a statement.

“The merger must now have the support of both pilot groups,” Monty Montgomery, union vice chairman at Eagan, Minnesota-based Northwest, said in a statement.

Delta’s all-stock acquisition of Northwest was valued at $3.63 billion when it was unveiled on April 14. That figure had slumped to $1.82 billion late Tuesday as rising jet-fuel prices erode industry profits.

The carriers are betting that expanding their networks and eliminating duplicating jobs and service would produce at least $1 billion in savings and new revenue. Northwest’s pilots have more years of service than their Delta counterparts, which had stalled work on a plan for combining their union chapters.

“Achieving a joint contract and combined seniority list in advance of the closing of the merger is something that has never been done in this industry,” Delta chief executive officer Richard Anderson said in a statement.

The earlier Delta pilot agreement, which didn’t cover Northwest employees, provided a 3.5 percent equity stake in the new company. Pilots also would get a 5 percent annual pay raise on January 1, followed by 4 percent increases in each of the next three years.

In exchange, the Delta pilots agreed to give management more flexibility on minimum hours for which they’re paid during the merger process. The combined carrier will keep Delta’s name and Atlanta headquarters.

Delta is the third-biggest US airline by traffic, and Northwest is No. 6. Together, they will be larger than AMR Corp.’s American Airlines, now the world’s biggest carrier. (Bloomberg)

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Delta Air, Northwest pilots agree on merger

DALLAS AND ATLANTA—Delta Air Lines Inc. and Northwest Airlines Corp. pilots agreed on a tentative joint contract and on a plan to create a single union seniority list, clearing a hurdle in a merger that will create the world’s largest carrier.