DAL MEC Letter to Pilots

[767-300ER]

July 19, 2004

Dear Fellow Pilot:

Last month, your elected representatives directed the Negotiating Committee
to reengage Delta management in talks to amend our contract and lower
Delta's pilot costs. This decision was not arrived at hastily, but was
based upon ALPA's ongoing analysis of Delta and its deteriorating financial
condition. Recently, after months of requests from ALPA, management has
been cooperative in providing us the information necessary for us to
understand the gravity of the situation.

I am acutely aware of the frustration we are all feeling. People and events
we cannot control have placed our livelihood in peril. It is an unnatural
position for us, especially as pilots, to have so little control over our
destiny. We have witnessed former senior Delta executives leverage our
airline to the brink of insolvency and then leave, all the while making us
the pariahs of a failing business plan. Our own Federal government and its
anti-labor policies have put further downward pressure on our careers. We
all know pilots at other airlines whose tales of life under restructured
contracts make us question our decisions to become airline pilots at all.
Nevertheless, this dismal situation is where we find ourselves: we are not
the cause of the problem, but we certainly have a vested interest in finding
a solution and participating in turning around Delta's financial
performance.

In the near future, the Negotiating Committee will present Delta management
with a proposal containing significant productivity improvements and
reduction in pilot pay and benefits. These proposed concessions will be
contingent upon what must be a comprehensive restructuring of all of Delta's
costs. We have attempted for over a year to engage management in meaningful
negotiations even as the airline has hemorrhaged cash. We are once again
taking a leadership role in attempting to re-start the talks. It is my
sincere hope that given the magnitude and scope of our proposal, management
will seriously engage in meaningful negotiations. The time to reach
agreement with the pilots is now.

I have stated repeatedly that Delta's financial problems cannot be cured by
pilot concessions alone. Everyone with knowledge of the industry agrees.
Without all stakeholders participating, any restructuring attempt is doomed
to fail and our sacrifices may be meaningless. ALPA's participation on the
ad hoc creditors committee along with many of Delta's secured and unsecured
creditors clearly demonstrates our commitment to this process. Our offer
will hopefully enable management to quickly address the company's costs with
all the other stakeholders.

Make no mistake: the pilots' part of a comprehensive restructuring will be
significant. Many of us will be faced with tough personal decisions based
on reductions in pay and changed work rules. Your MEC and Negotiating
Committee do not take lightly the responsibility of restructuring our
contract. The aim of your union remains the preservation of our profession,
and every decision your representatives make is measured against this goal
and with the overriding imperative of allowing Delta to be a competitive and
profitable airline. With your ongoing support and with the unity you
continue to demonstrate, I am confident we can succeed.

Fraternally,

Capt. John J. Malone
Chairman, Delta MEC

 

[FDJ2]

"I have stated repeatedly that Delta's financial problems cannot be cured by pilot concessions alone. Everyone with knowledge of the industry agrees. Without all stakeholders participating, any restructuring attempt is doomed to fail and our sacrifices may be meaningless."


Although the Delta MEC had been saying this for quite sometime, it is interesting that Grinstein basically said the same thing yesterday. I think Grinstein is now setting up the other "stakeholders" for deep cuts immediately after he gets a TA from the pilots.

 

[lowecur]

As can be seen by this article, getting serious reductions from creditors and stakeholders is almost impossible without filing chapt 11. Note the deal AMR got on reducing plane leases as compared with UAL and UAIR.

I have my doubts the pilots would radify the $1B that Greenjeans is looking for. My guess is they will offer somewhere in the neighborhood of $700M along with work rule changes plus the agreement to fly the Ejets at $10. more than B6. With what Greensjeans is looking to do (ie: closing DFW/SLC hubs), it just doesn't make sense for him to accept the deal, unless there is a magic bullet to get rid of the SKW CL 65's and the gate lease contracts at those hubs. Add on top of that the pension mess, and 11 is almost impossible to stay out of. Time unfortunately, is DL's worst enemy.

http://www.11alive.com/news/news_article.aspx?storyid=49390

 

[rjcap]

Recently, after months of requests from ALPA, management has
been cooperative in providing us the information necessary for us to
understand the gravity of the situation.

Exactly what information were you waiting for to finally understand the "gravity," of the situation.

 

[FDJ2]

Exactly what information were you waiting for to finally understand the "gravity," of the situation.

It certainly wasn't going to come from press releases or even the well informed contributors of flightinfo. When you are asking for 100s of millions of dollars per year in concessions, you should at least be expeditious in providing the data that supports your request so that the MEC can make its own analysis and draw its own conclusions as to how much might be appropriate.

 

[lowecur]

It certainly wasn't going to come from press releases or even the well informed contributors of flightinfo. When you are asking for 100s of millions of dollars per year in concessions, you should at least be expeditious in providing the data that supports your request so that the MEC can make its own analysis and draw its own conclusions as to how much might be appropriate.

I thought DALPA hired consultants to advise them? Certainly, the first Q financials were in the hands of these consultants, and the outside analysts had a fairly good handle on what the second Q would look like. Since these paid consultants are probably more astute than some of the analysts, I would think that they could have seen the "gravity" of the situation after the 1st Q numbers + the recent oil price situation. I have a hard time understanding why Malone & Co. needed more information before adjusting their original proposal.

The word negotiations are still being used. There is really no time left to negotiate. You need to take the billion dollar hit and throw the ball in the court of Greenjeans. I don't think he expects that, and would be forced at that point to save his credibility and remove Bankruptcy from the equation. DALPA needs to face the fact that Bankruptcy is a very seductive alternative for Greenjeans, and I think he has every intention of going that route and using DALPA as his scapegoat. In bankruptcy he will get his billion and much more. It's a game of chicken where the employees are the losers, not Greenjeans. He still can go home and count his millions.

 

[General Lee]

Lowecur,


A lot of this also is that Malone and CO wanted to know if there was an actual "plan" to go along with the cutbacks---and Grinstein has continually pushed back that strategic review date to late AUG now. In the mean time, Dalpa was available to negotiate. Since the fuel situation has gotten worse (thanks to management selling the fuel hedges early--even though they didn't have to thanks to pension reform......) Dalpa used those hired analysts to look at the situation---and obviously they deemed it necessary to be proactive so we could evade a Chap 11. They would not be negotiating if they thought there would be an imminent Chap 11---because why would you give yourself a 30% pay cut, and then go into the court system and probably give up another 15%? Probably wouldn't happen like that. So, I would have to SPECULATE that a lot of this has been done to help pressure the creditors into giving up some cash (via lease payments etc...) also----not just one unionized group giving a "bandaid treatment" to a larger problem.

Bye Bye--General Lee

 

[MedFlyer]

It certainly wasn't going to come from press releases or even the well informed contributors of flightinfo. When you are asking for 100s of millions of dollars per year in concessions, you should at least be expeditious in providing the data that supports your request so that the MEC can make its own analysis and draw its own conclusions as to how much might be appropriate.

DALPA's had all the information they've needed since last year. The excuses they are throwing out now are just lame. DALPA has been stalling...trying to milk everything they can out of the current contract before they take the big hit.

I don't blame them for doing it...may as well live good as long as you can. This is how the game is played.

 

[General Lee]

Medflyer,


That is your opinion---and opinions are like a$$holes--everyone has one. You have no proof and the MEC letter---in MY OPINION---is very accurate. I bet you think we(the pilots and Dalpa) sold the fuel hedges early too--even though pension reform should have prevented them(management) from having to sell them early....but you knew that too....

Bye Bye--General Lee

 

[MedFlyer]

Medflyer,


That is your opinion---and opinions are like a$$holes--everyone has one. You have no proof and the MEC letter---in MY OPINION---is very accurate. I bet you think we(the pilots and Dalpa) sold the fuel hedges early too--even though pension reform should have prevented them(management) from having to sell them early....but you knew that too....

Bye Bye--General Lee

The selling of fuel hedges had nothing to do with the pensions. DL would have sold the hedges regardless. The hedges were sold in an effort to wake DALPA up and make them realize it was time to get serious or the company would be burned to the ground.

Yes, this is my opinion...just like all the stuff you spew is you opinion.

 

[Ty Webb]

It seems to me that the Delta pilots have been reasonable on the matter of concessions. They were smart enough to not just throw in the towel, but instead they want to see a plan, and are holding management to producing one. Simply cutting pilot wages won't get them out of the position they are in right now.
I don't understand where all this animosity towards DALPA and the General is coming from. This board has a history of driving away the more knowlegable and reasonable posters . . . . like FDJ, UAL78, JeffG, etc.

Eventually, you're just left with guys like me . . . .

 

[wms]

I don't know what's happening at SLC, but DFW is not closing as a hub. It may shut down as a DAL pilot base, but will still be a passenger hub. The rumor is DAL is moving assets east in in case U shuts down. I know that in Q403 and possibly Q104 DFW was the only profitable hub.

 

[General Lee]

WMS,

I don't know for sure, but from what I have heard in the lounge (take that for what it is worth...)--DFW as a DL base may be gone early next year. That is what happens when you take out most of the mainline flights.....

Ty Webb,

A lot of people don't like what I have to say---but I just hit 3000 posts---and gosh darn it---I want 3000 more. I also like to be the thorn in Medflyer's side...

Medflyer,

Ok, what? I was told by the ATL Chief pilot that we "had to" sell the hedges to pay off the pensions (the non-pilot pensions at that)---and right afterwards Congress passed pension reform which allowed a two year extension on required payments. The "pension talk" was already in the air--so Delta probably knew about what was going on over in D.C. They actually pre-paid the pensions early. That is not an opinion---that is FACT.

Bye Bye--General Lee

 

[wms]

It's too bad. With most of our flights over sold, it would be a good time for a ML expansion. We received notice today that CA is pulling out of ATL to cover ACA in the northeast. Our flying will increase big-time in ATL. Some former ATL guys may regret coming to DFW. Hopefully ML flying will increase in ATL to cover some of the additional flying.

 

[FDJ2]

I thought DALPA hired consultants to advise them? Certainly, the first Q financials were in the hands of these consultants, and the outside analysts had a fairly good handle on what the second Q would look like. Since these paid consultants are probably more astute than some of the analysts, I would think that they could have seen the "gravity" of the situation after the 1st Q numbers + the recent oil price situation. I have a hard time understanding why Malone & Co. needed more information before adjusting their original proposal.

The word negotiations are still being used. There is really no time left to negotiate. You need to take the billion dollar hit and throw the ball in the court of Greenjeans.

Lowecur, this may come as a surprise to you, but not all the numbers appear in an SEC filing. Additionally, for you to be so cavalier about 7,500 pilots taking a $1,000,000,000/year hit for the team is rediculous on it's surface. Do the math yourself on that. Do you truly think that the future of this company, which is 82% non union, depends on wrestling concessions from the pilots which account for roughly 12% of the costs? This might also come as a surprise to you, but the Delta MEC has advisors on this matter which might have a little more insight then you or me and have access to more information then is provided in an SEC filing. As far as taking a $1B hit just to throw it in the court of Greanjeans, you got to be kidding me. If Greanjeans doesn't have a plan for the other 88% of the costs, I'm afraid I'd rather keep my money, thank you very much, then purchase a few more months of solvency without a real plan.

 

[FDJ2]

The selling of fuel hedges had nothing to do with the pensions. DL would have sold the hedges regardless. The hedges were sold in an effort to wake DALPA up and make them realize it was time to get serious or the company would be burned to the ground.

So Medflyer, is your position that DAL sold the fuel hedges in order to incur large cash loss to "wake Dalpa up?"

 

[FDJ2]

It seems to me that the Delta pilots have been reasonable on the matter of concessions. They were smart enough to not just throw in the towel, but instead they want to see a plan, and are holding management to producing one. Simply cutting pilot wages won't get them out of the position they are in right now.

Geez, I agree with Ty. Well said!!!

 

[General Lee]

Ty is turning to "the dark side"....... He sure would have made a good deltoid...


Bye Bye--General Lee

 

[FLB717]

Ty could never be a good Deltiod, the hats would all be too small, even for him.


Honestly I agree with Ty in his support for the DALPA's. And General every now and then you still get a full of the Delta Kool-Aid, but I do the same on my side of the fence so I am happy that you love your company so, even if not all share you love. But while not every thing you say (or me) is always right you are at least informed and not always full of crap. And thank God you don't cram that E-jet down our necks on every blessed post. As far as your cuts, I would never take a cut when the bosses have no clear plan. If you do they have no vested interest to try harder. I thought you guys would have taken your bets in court, well done so far, good luck.

 

[MedFlyer]

So Medflyer, is your position that DAL sold the fuel hedges in order to incur large cash loss to "wake Dalpa up?"

Yes.

DL is bleeding to death, but the blood loss has been relatively slow since 9/11 (relative to the likes of UA, AA and US). Because of this slow blood loss, DALPA has been loathe to negotiate seriously. Not long ago, DALPA's position was that concession were unnecessary because this was only a "temporary downturn."

In order to get DALPA to wake up, DL has been forced to speed up the blood loss (sell the hedges). Apparently the strategy is working as the package DALPA is offering today is substantially more than they were offering five months ago.