200 More Delta furloughs by May 1st

[General Lee]

Just saw on the Dalpa Net that 48 more pilots will be furloughed on April 1st (without the 30 days noticed required in the contract) and another 152 on May 1st. This coincides with Leo's statement today that there will be no more "involuntary leaves" or furloughs. And they want more relief, huh? They disrespect the contract and are asking us for voluntary cuts---and then they furlough more pilots. This won't go well with Dalpa I am sure. Let's hope for a quick War.

Bye Bye--General Lee

 

[ultrarunner]

So this is just after the judge said no more furloughs? Has Delta invoked the 'war clause'?

 

[embdrvr]

Protection for management not for pilots

Pinched Delta gives bonuses to execs last year

By RUSSELL GRANTHAM
Atlanta Journal-Constitution Staff Writer

Executives at Delta Air Lines got cash bonuses totaling $17.3 million last year, as the company posted huge losses, slashed thousands of jobs and sought millions of dollars in federal aid.

Delta used another $25.5 million in cash to create special funds guaranteeing certain executives' pensions in the event of a bankruptcy, according to a filing the Atlanta-based airline made Tuesday with the Securities and Exchange Commission.

The filing shows that Chairman and Chief Executive Leo Mullin got the biggest bonus, $1.4 million, in addition to his full salary of $795,000, for a total of $2.2 million in cash pay. It was the highest amount Mullin has received in his 5 1/2 years at Delta.

Delta had given no executive bonuses in 2001, but last year retooled its bonus formula to make them possible despite $1.3 billion in losses.

Company documents show executives were aware the pension changes could create public relations problems with various groups, ranging from union pilots to politicians, but decided to make them anyway.

In its SEC filing, Delta said the bonuses and pension moves are justified by the need to retain executive talent amid industry turmoil.

BY THE NUMBERS
$1.3 billion: Delta's net losses
16,000: Jobs cut
58.6%: Drop in share price
$4.8 million: Bonuses paid to top five executives
$12.5 million: Bonuses paid to 55 second-tier executives
Note: 2002 figures
Source: Company filings, internal documents, staff research





The filing shows Delta's No. 2 executive, President and Chief Operating Officer Fred Reid, got a $1.2 million bonus in addition to his full salary of $700,000. Three other top executives got six-figure bonuses.

The airline also doled out $12.5 million in bonuses to 55 second-echelon executives. Individual amounts ranged from $385,000 to $126,000, according to company documents that were not part of the SEC filing.

The moves stand in stark contrast to 2001, when Delta's top executives skipped bonuses "in recognition of the sacrifices being borne by Delta's work force," as stated in that year's SEC filing.

At the time, Delta was cutting 10,000 jobs after the Sept. 11, 2001, terrorist attacks caused passenger demand to plummet. It later announced up to 8,000 more job cuts.

Concessions sought

Disclosure of the bonuses and pension changes comes at a sensitive time. Delta recently approached its pilots union about contract concessions. Karen Miller, a spokeswoman for the union, said the disclosures in Tuesday's filing will be considered.

"Both of these issues are things that we will be evaluating as part of our financial analysis of Delta" before deciding to reopen labor contract negotiations, she said.

"I can't speak for how all pilots . . . will react to this if management is asking for some major wage reductions," Miller said.

Delta and other major airlines are seeking a new federal aid package, citing the damage to the industry's faltering recovery effort from the war in Iraq. Mullin has been a point man for the industry in lobbying for federal relief from security-related costs that airlines contend have been unfairly thrust upon them.

Delta is apparently the first major airline to make the required SEC filing that includes executive pay for 2002.

Traditionally, executive bonuses at Delta were based largely on profits and operational yardsticks.

Last year, company documents show, the board of directors changed the rules to award bonuses based on so-called "free cash flow" -- the profit the airline generates before interest, taxes, depreciation and aircraft rent.

The documents indicate executives will be eligible for further retention bonuses of up to 300 percent of their salary by meeting the targets and staying with Delta through 2004.

In addition to his 2002 bonus, Mullin last year got restricted stock and stock options pushing his total compensation to almost $13 million, based on assumptions about future stock performance, according to the SEC filing. Some of those awards are part of a new five-year contract Mullin negotiated.

Both Mullin and Reid recently said they will take 10 percent salary cuts this year, as of March 1.

Delta management in early 2002 asked directors on the board's compensation committee to create individual trusts for 33 executives that would isolate much of their pension benefits from creditors in case Delta had to be restructured in bankruptcy court.

The move required Delta to pay out $25.5 million to fund the trusts and cover additional tax liabilities triggered by the action.

Like most large corporations, Delta previously covered the majority of its retired executives' pension benefits on a pay-as-you-go basis out of operating funds.

Companies in financial distress may use such so-called "secular trusts" to protect executive pensions from creditors if the company lands in bankruptcy court, pension consultants John Dempsey and Michael Siebenhaar wrote in a recent article for the American Compensation Association.

In Delta's SEC filing, the company's directors said the terrorist attacks "demonstrated that unprecedented actions outside Delta's control could result in the complete loss of" a large portion of executives' pensions. That "creates a significant concern for retention of management personnel," the directors added.

But executives also worried how the politicians, the pilots, the press and others would react to Delta's moves to guarantee its executives' pensions, according to a "risks" analysis in company documents obtained by The Atlanta Journal-Constitution.

Wary of Washington

Washington, which had enacted a $10 billion bailout package after the Sept. 11 attacks, "might react negatively in view of the employee reductions in force," Delta's analysis stated.

Pilots, who have similar pension plans that might be wiped out by a bankruptcy, "will be envious but not vilify the action," the company concluded.

Delta managers seemed less concerned about the press, noting that "little information is provided" in the company's filings to the SEC.

The report stated Delta will say "the action simply provides the same level of retirement benefit as all its other employees, except pilots."

The federal government guarantees worker pensions up to a certain amount in the event of corporate failures. Typically the amount is about $40,000.

Mullin's cash pay was nearly triple what he got in 2001. He took a pay cut immediately after the terrorist attack and received a salary of $596,250 with no bonus.

He had received more than $2.1 million in 2000 and $1.7 million in 1999.

 

[Ty Webb]

Unbelieveable.

That $42 million could have paid for 420 FO's making $80,000. plus bennies, probably even more, if some of the furloughees were making first-year pay.

The most inflammatory part of the filing is the fact that most of it went to protect Director's bonuses in the even of a bankruptcy! Things that make you go "hmmmmnnnnn . . . .!"

 

[General Lee]

Ty,

Yeah, this stinks. And they also want us to give up pay and benefits voluntarily. I really hope we do have 150-600 retirements on May 1st, and maybe then they will scramble for pilots. This really is sad, and I also know it is business---but come on. I believe the lack of the 30 day notice is in accordance with the rules under Force Mejeur---so maybe they had the right. It still stinks.

Bye Bye---General Lee

 

[Heavy Set]

Leo has BALL$!

Leo Mullin has big Ball$ to accept higher pay while more employees are furloughed..... Big BALL$!!!!!!!!!!!!!!!!!!!!!!!!!!

I think Delta (of all of the "original" big 4) will do well in the end, but management needs to read Herb Kelleher's book to get a CLUE on how to improve employee relations.... Leo is sending a contradictory message - I get more while others get less - it should be "share and share alike..."

This industry is IMPLODING!!!!!!!!!!!!!!!!!!!!!

 

[Dieterly]

That $42 million could have paid for 420 FO's making $80,000. plus bennies, probably even more, if some of the furloughees were making first-year pa

, or 1100 FO's at Airtran...

 

[trainerjet]

Dieterly's troll and bait attempts keep getting weaker and weaker. Maybe you should take a break and re-group. Come up with some better material.

 

[Ty Webb]

, or 1100 FO's at Airtran...

More like 500 . . . and that's with a lot of 'em being first year FO's.

If you're going to be an @ss, you might as well be a factually accurate @ss.

 

[trainerjet]

If you're going to be an @ss, you might as well be a factually accurate @ss.

I don't think he cares about being accurate...just an @ss.

 

[General Lee]

Apparently we are yet again going to file a greivance with the arbitrator, but this time over the "War Emergency" clause. Apparently the explained definition of it states, "Something that prevents the company from flying airplanes or prevents people from buying tickets..." like a revolution or a war coming to the United States. We have dropped some flights to Europe, but those airplanes are being used for more $$$ in the CRAF. We have med-evac 767-ER's that unfortunately fly the wounded from Kuwait to German Bases--like Ramstein and Rota, Spain. The process takes a full 90 days---60 days for a hearing and no more than 30 more for a decision.

And look at this one: The Company also asked DALPA today for Relief of 777 and 767-400 manning do to the fact that the company believes there will be a surge in early retirements in May. So, they want relief for a shortage of pilots in certain big planes, and they furlough pilots in the smaller ones. Ironic, eh?
How about upgrading some people? And what about the huge bonuses for the execs, and Leo stating today that there will be no more "involuntary leaves" (or furloughs) given to non-union employees. This has been a great Delta day!!!!

Another thing that is interesting. Most of the guys that I have flown with were responsive to maybe giving Delta the upcoming 5% raise due in May. That would have saved Delta $67 million. Well, now Delta Furloughs 200 guys , and let's just say that they all make $100,000 a year---which means Delta would save $20 million a year. Now most pilots are pi$$ed, and don't want to give up the raise. Delta could have had an extra $47 million, but no. Who made that decision to furlough? Our possible future pay cuts are VOLUNTARY. That was an interesting move.


Bye Bye--General Lee

 

[Heavy Set]

Contradictory Message = Lame!

I would love to fly for Delta - but the management absolutely SUCKS. How can they possibly justify pay increases or bonuses when their OWN EMPLOYEES are being laid off and solicited for pay reductions to "help the effort"? LAME!!!!!!!!!!!!!!!!!!!!!!!!!

What are they thinking? Hey Delta pilots, it's obvious Delta MUST have some cash if they can pay their senior managers that much money... DO NOT give in on concessions unless they forgo their bonuses and start to rehire the furloughees!!!!!!!!!!!!!!!!!!!!!

Leo has BRA$$ BALL$!

 

[Publishers]

contract

While you can and will debate the cost of or payment to issues, the fact is that we need the situation to change where people are needed.

To yell about a contract is fine, but, we need the market to come back to support employment not having employment by force.of contract.

 

[General Lee]

Publisher,

So, why would they furlough an extra 200 when they know that they might lose 200-600 in early retirements on May 1st? It is now looking closer to the 600 number than the 200 number. It is a direct slap in the face. Sure, we need the marketplace to come back, and hopefully a short war (done within a month) and the summertime flying increase will help that. But, they just lost the respect of the employees, again. And, we were in the early stages of negotiations to give them some sort of pay cuts etc... Nice timing!!!

Bye Bye--General Lee

 

[flaps30]

ATA predicts 2006 before traffic....

rebounds to pre 9/11 levels. Doesn't look like they will bring anyone back for years. Don't worry about being shorthanded in May, you know they will just transfer the flying to DCI. The industry has turned into Walmart, lowest price, cheap labor, redneck passengers wearing t-shirts and flip-flops demanding more Mountain Dew.

 

[duckman]

Re: ATA predicts 2006 before traffic....

rebounds to pre 9/11 levels. Doesn't look like they will bring anyone back for years. Don't worry about being shorthanded in May, you know they will just transfer the flying to DCI. The industry has turned into Walmart, lowest price, cheap labor, redneck passengers wearing t-shirts and flip-flops demanding more Mountain Dew.

EXACTLY Flaps30!! It has turned into WalMart...except maybe for the 6+ hours flights where I think passengers will still pay for more than a peanut, cup-o-coke and knees in their chest seating?? But the market drives the train (in this case the air-borne train) and the Big 4 have GOT to have the flexibility to adapt/change to meet the current situation...until business travel(and the corresponding ticket prices) returns--if it ever will???

 

[rjcap]

With the upcoming chapter 11 filing of AA you can bet the mainline operations across the industry will bear the brunt of the reorganization. More specifically the shredding of the mainline pilots contracts especially the retirement provisions.

Its not pretty but its going to be a rough road ahead for the next year.

 

[corpguy]

To all of you guys, especially Gen. Lee,

Even if DAL gets 600 retirees, they are still will have WAY too much overcapacity and more guys will be hitting the streets. I'm furloughed AA with 900 ahead of me....i wish the situation were different, but there are too many seats flying around with too few asses to fill them.

That's the big problem.

The majors need a complete redo of the business model which will change the landscape as we now know it. Even with liquidations (which don't seem will happen), expect all of the majors to shrink signifigantly. This is just the beginning.

The best attitude to have is to look far ahead and figure out where Wall Street will take this. Sometimes the truth is hard to face.