(Updates with information on negotiations at US Airways in third paragraph.)

DOW JONES NEWSWIRES

The pilots unions of Delta Air Lines Inc. (NYSE:DAL) (DAL) and Northwest Airlines Corp. (NYSE:NWA) ( NWA) have reached a tentative agreement on a joint contract and a single pilot seniority list to take effect upon the closing of the airlines' merger later this year.

With the exception of antitrust concerns, the actions remove the biggest stumbling blocks to completing the merger agreement. The usual approach in airline combinations has been to have pilots work out a joint union contract after a deal is announced. Delta and Northwest took a different approach in their talks for months, figuring that if they could obtain full pilot agreements in advance, they would reap the benefit of a combined airline much sooner.

US Airways Group Inc. (NYSE:LCC) (LCC), which three years ago agreed to combine with America West Holdings Corp., still hasn't reached an agreement with its two pilot groups. In a statement late Tuesday, the US Airline Pilots Association said it has initiated contract talks with the company's management. Pilot negotiations broke off 10 months ago due to the disparate pay and working conditions between the two pilot groups.

"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 and is a testament to the leadership of ALPA and a working together culture," Delta Chief Executive Richard Anderson said.

Shares of Delta traded after hours up 8 cents at $5.34, while Northwest shares closed at $5.92 and weren't trading after hours.

The airlines initially couldn't agree on seniority, which is especially important for pilots because those 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. It's also the reason pilots don't often leave to go work for another airline.

The tentative pilots agreement, reached between the units of the Air Line Pilots Association, is subject to ratification by both airlines' pilot groups.

Delta in April announced its plan to merge with Northwest in an all-stock transaction to create the world's largest airline. The merger is subject to the approval of shareholders and regulatory approvals, which are expected to be completed later this year.

-By Lauren Pollock, Dow Jones Newswires; 201-938-5964; lauren.pollock@ dowjones.com

    (END) Dow Jones Newswires   06-24-08 1707   Copyright (c) 2008 Dow Jones & Company, Inc.