Captain Steve Dickson
[FONT=Verdana,Verdana][FONT=Verdana,Verdana]Senior Vice President – Flight Operations Delta Air Lines, Inc.[/FONT][/FONT]
[FONT=Verdana,Verdana][FONT=Verdana,Verdana]To: [/FONT][/FONT][FONT=Verdana,Verdana][FONT=Verdana,Verdana]All Pilots [/FONT][/FONT]
[FONT=Verdana,Verdana][FONT=Verdana,Verdana]Date: [/FONT][/FONT][FONT=Verdana,Verdana][FONT=Verdana,Verdana]January 6, 2009 [/FONT][/FONT]
[FONT=Verdana,Verdana][FONT=Verdana,Verdana]Re: [/FONT][/FONT][FONT=Verdana,Verdana][FONT=Verdana,Verdana]Context of Capacity Reductions and Associated Impact on Staffing Levels [/FONT][/FONT]
I want to take a moment to provide you with some background and perspective on the capacity reductions announced in recent weeks which, in part, resulted in the Advance Entitlement/Surplus bid posted yesterday. This past fall we began seeing the global economy deteriorate into what is now considered to be a full-blown recession. Current projections assume this downturn will persist throughout 2009 and possibly beyond. Consequently, we are forecasting an 8-12% industry-wide revenue decline which has the potential to be one of the worst revenue environments in history, surpassed only by post-September 11th.
Although we are well-positioned strategically to deal with the economic uncertainty (with a non-fuel CASM at 6.85¢ and unrestricted liquidity around $6.7 billion), our network plan to reduce capacity 6-8% system wide (8-10% domestically, 3-5% internationally) is a proactive and appropriate response to current market and economic conditions. Rationalizing our domestic network to reflect demand and maintaining capacity discipline has resulted in a fleet realignment that will provide flexibility for our changing network, ensure supply meets passenger demand, and move us further toward profitability.
While our network has been adjusted over the last few months, one of the challenges we face in Flight Operations is, "when do we shift pilots from one category to another in order to meet the changing demands of a very dynamic flight schedule?" Although we work very hard to systematically align our staffing with network requirements, we make measured and deliberate decisions in order to avoid "chasing the flying" which can create costly training churn. As has been the case for quite some time, the MD-88 category has been tightly staffed. Conversely, we have seen surpluses develop over the past several months in several categories, most notably on the domestic 767.
After carefully considering all variables including the forecasted economic outlook, current fuel prices and the increased block hour requirements for the 2009 summer schedule on the MD-88, the tight staffing on the MD-88 fleet is no longer sustainable. With the 2009 schedule published in early December and a review of our systemwide staffing now completed, the difficult decision of posting this Advance Entitlement/Surplus bid had to be made. Remember that even though surpluses may not be posted in your category, as the bid is processed your category may experience contingency surpluses, so you should be sure to update your AE, VD and MD bid preferences. You may also wish to consider that [FONT=Verdana,Verdana][FONT=Verdana,Verdana]Context of Capacity Reductions and Associated Impact on Staffing Levels January 6, 2009 Page 2 [/FONT][/FONT]
[FONT=Verdana,Verdana][FONT=Verdana,Verdana]Attachment B to the JCBA (the transition provisions applicable to pre-merger Delta pilots) provides for limited pay protection in the event of a Mandatory Displacement (MD). [/FONT][/FONT]
[FONT=Verdana,Verdana][FONT=Verdana,Verdana]I know many of you may be asking how the decline in demand is affecting the flying schedule at Northwest. The short story is that although there will be some differences in timing and processes, taken as a whole the capacity pulldowns are generally of similar magnitude and character. The process at Northwest is different because they currently operate under a scheduling system which provides for a [/FONT]
[/FONT][FONT=Verdana,Verdana][FONT=Verdana,Verdana]monthly [/FONT][/FONT][FONT=Verdana,Verdana][FONT=Verdana,Verdana]system bid (called an Advance Position Award, or APA) that continually adjusts to their network needs. For some perspective on this, we can look at a Northwest Flight Operations communication piece that accompanied their December APA. They stated with respect to the DC9 staffing forecast, "with the latest flying schedule, there is expected to be a significant increase in the DC9 flying in the spring leading up to a high summer schedule. This necessitates increased staffing in both positions. Due to the pulldown of the B757, the displacements off the B757 will help fund the incremental DC9 staffing requirements." [/FONT][/FONT]
[FONT=Verdana,Verdana][FONT=Verdana,Verdana]A corresponding message on the B757 was "as per the latest flying schedule, there has been a shift in flying from the higher capacity narrowbody aircraft (B757) to the smaller capacity equipment (A320 and DC9) to optimally meet customer demand and account for the slowing economy. As a result, displacements off both seats of the 757 are needed to appropriately staff the A320 and DC9 fleets and reduce the surplus created on the 757 fleet." As you can see, our colleagues at Northwest are seeing a similar pattern of reductions in larger narrowbody domestic flying and increased flying in the smaller narrowbodies. Until the Northwest pilots are brought into DBMS, beginning in late 2009, they will continue to operate under their APA system. They have been adjusting their staffing in a similar manner over the last several months while the pre-merger Delta pilots are seeing our adjustment in one of two Advance Entitlement/Surplus bids which we typically only post on an as-needed basis and rarely more than a few times a year. [/FONT][/FONT]
[FONT=Verdana,Verdana][FONT=Verdana,Verdana]Nobody likes to see contraction—I certainly don’t—and over the long term our airline must grow to be successful and provide secure careers for all of us. However, with the current economic environment, we must remain very agile and continue to adjust our business model to stay ahead of our competitors and do what we can to maximize revenue while aggressively controlling the costs of running the business. Because of this discipline and the merger, we are better-positioned than any of our competitors and need to stay that way so we’re in a position to capitalize on opportunities that will be open to us when the economy turns around—hopefully sooner rather than later. Additionally, we will continue to work through the integration of our two airlines this year while maintaining our focus on safety and operational excellence. [/FONT][/FONT]
[FONT=Verdana,Verdana][FONT=Verdana,Verdana]Thank you for everything you do, every day, every flight, for our passengers, our company and each other.[/FONT][/FONT][FONT=Verdana,Verdana]
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