Big News re: DL mainline?

[~~~^~~~]

Super Ed:

What can you tell us about the scope revisions?

And I am not Jesse, although I think most of his analysis is spot on. At least his prognostications have come true six months to a year after his forecasts.

Regards,
~~~^~~~

 

[MSNFlier]

here's the article.....

Delta to Cut Costs by $2.5 Billion
Fri Nov 15, 4:14 PM ET


By MARK NIESSE, Associated Press Writer

ATLANTA (AP) - Delta Air Lines is launching a low-fare mini-airline at the same time it cuts costs by $2.5 billion more over the next three years.

Delta needs to further reduce spending to deal with the lingering effects of the Sept. 11 attacks, Chief Financial Officer Michele Burns announced Friday at an industry conference in Key Biscayne, Fla.

Details of the coach-class airline-within-an-airline will be made public by the end of the month, spokeswoman Peggy Estes said.

Also Friday, Delta said it reached a tentative agreement with the Air Line Pilots Association (news - web sites) for a proposed marketing agreement with Continental Airlines and Northwest Airlines. The code-share proposal, which is being reviewed by federal regulators, would allow the airlines to sell seats on each other's flights as if they were their own, and to cooperate on frequent flier programs.

J.P. Morgan airline analyst Jamie Baker said the new low-fare unit, which hasn't been named, would help Delta, the nation's third-largest airline, fend off increasing competition from lower-cost carriers such as AirTran, JetBlue and Southwest.

"Delta's goal is to retard the growth of its discount competitors, and at the same time, more closely align its costs with discounters," Baker said.

Baker said he expects the new Delta unit will try to avoid traditionally congested hubs and concentrate on routes between the Northeast and Southeast.

Estes would not say what the low-fare division would be named, what type planes it would use or whether pilots would be paid less.

Increasing competition from Delta won't hurt JetBlue because it's growing fast and its customers are loyal, said spokesman Gareth Edmondson-Jones.

"We feel secure nothing can touch us," Edmondson-Jones said. "Imitation is the sincerest form of flattery, and the airline-within-an-airline model hasn't worked so far."

Baker said the new Delta carrier could avoid mistakes made by its last low-cost venture, Delta Express, by using larger planes.

"This reduces Delta's per-seat costs to a level more closely related to its discount competitors," Baker said. "Simply by having a bigger plane with more seats, an airline can spread out its costs."

AirTran, whose fares have been matched by Delta since 2001, isn't worried about the venture either, spokesman Tad Hutcheson said.

The cost cuts announced by Delta come on top of $1 billion in previous cuts, which included plans announced last month to eliminate up to 8,000 jobs.

Burns did not specify how the airline would save an additional $2.5 billion, although she said it would try work-at-home programs and would review employee benefits before seeking labor concessions.

Shares of Delta closed down 31 cents, or 2.8 percent, to $10.89 on the New York Stock Exchange (news - web sites).

US Airways is restructuring under bankruptcy-court protection and United Airlines is involved in intense negotiations with workers in an effort to win a $1.8 billion loan guarantee from the federal government. Without the government backing, United's chances of avoiding its own bankruptcy court filing are slim, analysts said.

Delta has fared better than US Airways and United, but its troubles still run deep. The airline lost $326 million in the third quarter and more than $900 million since the year began. In 2003, Delta said it will have to spend up to $250 million in cash and take charges of up to $300 million because of its underfunded pensions.

Delta chairman Leo F. Mullin has blamed the industry woes on higher airline insurance premiums and government security mandates that will cost the industry $4 billion this year. He said that doesn't include $2.5 billion in lost revenues from passengers who won't fly because of hassles associated with the new security measures.

 

[General Lee]

$2.5 Billion lost from people who won't fly due to security reasons. HMMMM. Well, our planes are still full, and I guess people who pay lower fares don't mind the hassles, but business travelers who used to pay $2500 for a one way ticket do. That is not the fault of our pilots, and that really is Marketing's problem. And our contract does not have a statement saying lower fares triggers more pilot furloughs. Nope.


Bye Bye--General Lee

 

[Tim47SIP]

Gen Lee/Super Ed

General Lee
You missed my point. I am not elated about the growth of Com/ASA and the shrinking of Delta mainline. I fully understand the ramifications and why this is really a bad thing. I guess to put it all in other words is that I keep hearing pilots (Delta mainline)state that things cant happen to us because the contract says so. Yet, things keep happening anyway. Delta management will find a way around your contract as they have done in the past. It is time for mainline guys to realize this (I am sure many already do). It reminds me of a little shoolboy putting his hands over his ears and yelling LALALALALA so he wont hear and see what is going on around him. It seems to me that with the recent (previously prohibited) codeshare agreement, increase in DCI percentages, continuing furloughs, and a new "alter ego" LCC, that the Delta mainline guys are eating their young to save the senior guys. What I was trying to put out in my previous post is that something needs to be done to protect present and future furloughs. The industry is changing all around us and ALPA hasent figured it out yet. In a couple years from now, they (ALPA) will be scratching their heads wondering what happened and trying to fugure out why they were not invited to the party.

$2.5 Billion lost from people who won't fly due to security reasons. HMMMM. Well, our planes are still full, and I guess people who pay lower fares don't mind the hassles, but business travelers who used to pay $2500 for a one way ticket do. That is not the fault of our pilots, and that really is Marketing's problem. And our contract does not have a statement saying lower fares triggers more pilot furloughs. Nope.

Contract or not, if you have less money comming in that you do going out (over long periods of time), regardless of who's fault it is, there will be layoffs and no contract will stop it. Delta management will find a way.

Super Ed
There are several articles that state the same thing that I quoted concerning the "contract is a contract". With the exception of John Lay, I have not read anything to the contrary. I have personally talked with several Delta mainline Captains (ones that I frequently commute with) who have stated that the article I documented was in fact correct and those events did in fact happen as described in the article. Additionally, there were two other senior Captains that wrote to the Atlanta Consitution during C2K negotiations stating that Mr. Lay was infact "missinformed" concerning Leo Mullins past dealings with DALPA.

 

[Publishers]

General Lee

General Lee making the statement that this is
"Marketings problem" reflects the problem not the solution. The second statement that low fares do not equate to his contract also reflects an ignorance of market effect on his and the others future. If fares do not go up, both mainline pilots left may be making a nice living.

These things are all inter related and pilots are not going to see their contract maintained in that situation,.

 

[csmith]

Re: Gen Lee/Super Ed

I guess it's time for yet another perspective.

First, for the guy who claims that 911 is like shell shock for pax, this is just not correct. Even the company admits that the shock effects of 911 are in the past. In fact, in the hearing, this was not even the company's argument. Their argument is the fallout from the attacks of 911 in the form of hassle factor, increased security costs, etc. Do people think about the 911 attacks, yes. Does affect their decision to travel by air? Minimally, if at all. AMTRAK does nothing but help our cause by crashing every other month. Rail is simply not the answer to expedited travel. This has been confirmed by our increasing loads on the shuttle.

The TA. I have to admit that I was a bit red in the face at first glance. After reading it and hearing the input, however, I am convinced by it's passage. I do question, somewhat, the method of its passage. That is a metter for explanation from my rep--whih is coming. The protections are there against job loss via the code share. In fact, the code share between CAL and NWA has actually increased block hours. The stickler with many refers to the max allowed block percentage of 49%. What isn't getting addressed is the conditions which must be satisfied in order to allow the company 49% of the block hours to go to DCI. The operating margin--loss--has to be large enough so that the loss must be in the billions over the next two years or so. If that indeed happens, the "Delta family" has much more to worry about than 49% of the block hours belonging to DCI. Additionally, DCI is ALL of DCI--Comair, ASA, Chautauqua, Skywest,--not, I believe, American Eagle. So the idea of one carrier getting big enough to become a Group 1, ~~~^~~, is ludicrous. Still additionally, the minimum block hours are also expressed as a function of the margin. Should the code share indeed add the advertised, min block hours will increase--thus adding the need for pilots--thus recalls. No furlough recalls immediately--yeah that's a bummer, a real bummer. Probably enough of a bummer that some may not exactly think it through prior to their vote--should they have gotten one.

Even more, Delta has done something that others have failed to do. They have done something on enhancing the revenue side of the house, rather than just pay cutting the workforce--UAL, AAA. This is where the problem is. National captains made 60K, look where they are. It ain't about salaries.

This notwithstanding, the non-union side of the house is getting lessons as we speak, and the pressure on the union side is ever increasing. I think we fared better in this deal than most will think. I do think it substantially affects our lives and we should have gotten the vote. I expect another update from the RJDC soon. I have a pretty good idea of what they are going to say in it. I will preempt on one part. I absolutely agree that ALPA has now allowed a codeshare domestically on an aircraft over 70 seats. I also agree that it is wrong that we allow NWA and CAL to do it without Comair and ASA. Still thinking about that one, and want to get some details before I get too riled about it.

More to follow....

 

[trainerjet]

csmith,

Dave has been spouting that same arguement for almost a year now, that since 9-11 people are afraid to fly...especially on larger aircraft like the 757. Apparently he actually believes this nonsense, since he continues to profess it, and give his lame reasons why. So I don't think any arguement to the contrary, no matter how well thought out and presented, will change his mind.

He's so obsessed with Delta, DALPA, FM, etc., that he has lost all concept of reality. Why he obsesses over things that don't concern him should give you some clue as to his state of mind (or lack thereof). Simply ignore him. Most everyone else does.

 

[~~~^~~~]

Re: Re: Gen Lee/Super Ed

DCI is ALL of DCI--Comair, ASA, Chautauqua, Skywest,--not, I believe, American Eagle. So the idea of one carrier getting big enough to become a Group 1, ~~~^~~, is ludicrous.

Yes, we agree. But our political power is growing none the less. Some day we might even get the right to negotiate with our employer. I keep hoping that eventually ALPA will allow us the same rights of representation that everybody else got in the 1890's. Don't let me kid you - I know our representation is completely impotent and likely to stay that way (until...)

So how does the deal keep the CAL's and the Chautauqua's separated?

How is DAL flying defined now? Is there any such a thing anymore?

 

[DaveGriffin]

Re: Re: Gen Lee/Super Ed

Even the company admits that the shock effects of 911 are in the past. In fact, in the hearing, this was not even the company's argument. Their argument is the fallout from the attacks of 911 in the form of hassle factor, increased security costs, etc. Do people think about the 911 attacks, yes. Does affect their decision to travel by air? Minimally, if at all. AMTRAK does nothing but help our cause by crashing every other month. Rail is simply not the answer to expedited travel. This has been confirmed by our increasing loads on the shuttle.

csmith;

Delta is certainly arguing a much broader scope in support of FM than I have here. The attacks of 9/11 were the proverbial straw that broke the camels back. The camel was already overloaded with a declining economy and then came 9/11. The aftershocks of the attacks, including the oppressive security changes, have added to the decline in air travel.

But the fact remains that the trigger was the attack of 9/11; an unforeseen and unpredictable event with catastrophic consequences. That is the definition of FM. The attorneys who wrote the contract had no previous experience or boilerplate to add the language to the PWA to exclude an event such as 9/11. That is why you found yourself on the losing side after the first hearing. The BEST you can hope for in the second hearing is a decision that instructs Delta to cease additional furloughs.

With a 10% reduction in revenue miles since 9/11 (primarily in 757 and wide-body transcon and international flying), a 10% furlough rate makes perfect sense.

That ALPA has fought so hard to arm and deputize pilot volunteers, as well as authorize small arms fire within an airborne commercial aircraft, is directly contradictory to your claim that the attacks of 9/11, and subsequent incidents and threats since, have not increased the threat to commercial aviation.

The sad part is that the MEC knows full well that the chances of reversing FM are very, very low. Yet they continue to propagandize about the valiant fight that DALPA is mounting in defense of the junior pilots. And then, to add insult to injury, the codeshare TA is a blatant and cowardly effort to again protect and promote the interests of the senior pilots at the expense of the juniors.

I can’t wait to see the LCC deal. As we all know full well, sh*t rolls downhill.

 

[DaveGriffin]

Dave has been spouting that same arguement for almost a year now, that since 9-11 people are afraid to fly...especially on larger aircraft like the 757. Apparently he actually believes this nonsense......

Gosh trainerjet. Sorry I interrupted your DALPA circle jerk.

You guys have been p*ssing and moaning the same “we been cheated” BS for more than a year and I wanted to offer an opposing viewpoint. I’ m surprised my lone voice of dissent has caused you such anguish.

 

[General Lee]

Dave,


Maybe you didn't know that the judge (arbitrator) said that he would stay on the case throughout this process, and not allow Delta to "take advantage" of FM? Force Mejeur, Dave, is a temporary solution when something catestrophic happens, and 9-11 was deemed catestrophic. But, even our VP of Marketing said in the Atlanta Journal Constitution that people were not scared to fly about 3 months after 9-11. And, our No Furlough clause stated that regardless of the economy, FINANCIAL STABILITY, or profitability or UNPROFITABILITY of Delta----NO FURLOUGHS.
The arbitrator probably made the right call on our first hearing, but now everyone who knows what is going on out there knows what really is wrong these days-----low revenue from cheap tickets. Did 9-11 scare everyone into buying cheaper tickets? I don't think so. The economy also is having a HUGE impact----businessmen are now having their secretaries use Priceline.com or Orbitz to find them their last minute fares-----is that because of 9-11 DAVE? Nope. Passengers have gotten smarter, not scared. The airlines are also saying there is hassle factor with airport security. That maybe true, but I think this Thanksgiving and Christmas travel will be full. Are they all scared? Dave, you say 9-11 was the straw that broke the camel's back. So, there were other problems before 9-11? Yes, the economy was starting to falter before 9-11-----and that is also a Non-furlough event. You also said 10% of our revenue is down, so they should furlough 10%. They are scheduled to furlough up to 1400, and that is 15% of the 9800 total pilots. Why don't they stop at 10%?

The arbitrator said he was staying on this case, and that is good for us. He will decide when FM is over (when people are NOT scared to fly-----that was is only reason why he was allowing the furloughs to continue, I believe) and then decide on a recall schedule. And, Dalpa had better continue to fight for us for the amount of dues we pay them. They know that Delta has saved a lot of money with 990 guys on the street, but it is time to figure other ways to save money and time to stick to the contract they signed. If they want more from us, they should come asking, we will probably listen. Respect is important, and they may get what they want, who knows?

Bye Bye---General Lee

 

[Tim47SIP]

cssmith

The stickler with many refers to the max allowed block percentage of 49%. What isn't getting addressed is the conditions which must be satisfied in order to allow the company 49% of the block hours to go to DCI. The operating margin--loss--has to be large enough so that the loss must be in the billions over the next two years or so. If that indeed happens, the "Delta family" has much more to worry about than 49% of the block hours belonging to DCI.

Was wondering what is behined this statement. What exactly does the new agreement entail and what are the company requirements. Thanks. Tim


trainerjet
Dave has been spouting that same arguement for almost a year now, that since 9-11 people are afraid to fly...especially on larger aircraft like the 757. Apparently he actually believes this nonsense, since he continues to profess it, and give his lame reasons why. So I don't think any arguement to the contrary, no matter how well thought out and presented, will change his mind.


Dave does have some valid points. Not that I agree with all of them, many of his ideas do make sence. As written in many aviation journals, 911 is still affecting us in several different ways. We dont have to change his mind, a differnt point of view is usually better than a one sided debate.

 

[9rj9]

Comair rumor

32 RJs coming in the month of January alone, does this have anything to do with the undisclosed agreement between Delta MEC/ Delta. All of a sudden the hiring pool is gone and we are interviewing throughout Dec.

 

[trainerjet]

Gosh trainerjet. Sorry I interrupted your DALPA circle jerk.

You guys have been p*ssing and moaning the same “we been cheated” BS for more than a year and I wanted to offer an opposing viewpoint. I’ m surprised my lone voice of dissent has caused you such anguish.

Dave,

Sorry to disappoint, but I'm not Delta. Just going on about a subject that doesn't concern me. Same as you.

Get it????????? I doubt it.

 

[General Lee]

9RJ9,

32 jets in Jan alone? I don't think that is possible unless you are getting some from another airline (like older Midway ones), or maybe you are including Chitaqua's E145's for the Florida deal. I have a friend who is a Captain at Continental Express, and he says there are a lot of rumors going around in CLE and IAH that they might be the next Delta Connection. You see, Express Jet, their company which is partly owned by Continental, is sorta like the next Skywest----being able to fly for more than one Major.
He told me that Salt Lake City may be their next co-hub (with Salt Lake----like DFW and COMAIR/ASA/SKYWEST) and this rumor was echoed by a Skywest friend of mine. He also said he heard maybe Denver for another un-named airline. Interesting, huh?
That big codeshare deal might have some really interesting outcomes. But, there will always be a mainline, and I guess now a LCC---with 757's. Very Interesting!!!

Bye Bye---General Lee