Flybywire44
Flies With The Hat On
- Joined
- Mar 31, 2006
- Posts
- 991
Interesting words from DALPA Council 20 Chairman:
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To: Council 20 Pilots
From: Council 20 Chairman
Subject: Frequently Asked Questions
In the last few weeks, I have been repeatedly asked questions concerning the tentative agreement (TA). Here are the most common questions, a question of my own, my responses, and my comments.
Q. When did Richard Anderson propose the expedited negotiations?
A. The MEC met for a special MEC meeting in January in Washington D.C. The guest speaker was Linda Puchala, Chairman National Mediation Board. Mr. Anderson has a standing invitation to speak to the Delta MEC. He occasionally attends a quarterly MEC meeting, but not special MEC meetings. Mr. Anderson requested to speak to the MEC at this MEC special meeting. He brought Ed Bastian and Mike Campbell with him to the meeting. The MEC was well aware that the leadership of Delta Air Lines does not take a day off of work to speak to the MEC without delivering a message. Mr. Anderson explained in very general terms his wish to park 50-seat aircraft, increase 76-seat aircraft, and buy additional narrow body aircraft.
Q. Who was at the table negotiating for the Company?
A. Among others there were: Captain Steve Dickson, Executive Vice President Mike Campbell, and Brendan Brannon-Labor Relations.
Q. Is it true that the MEC was not informed of the TA pay rates until after the Negotiating Committee had agreed to the TA? If this is true, when did the Negotiating Committee agree to the TA and when was the MEC presented the pay rates?
A. Yes, we were not informed of the TA pay rates before the MEC meeting. The Negotiating Committee agreed to the TA on Monday, May 7, 2012. The MEC was travelling to the MEC meeting that day. The MEC was informed of the TA pay rates on Tuesday, May 8, 2012 at the MEC meeting. I (we) had not been provided any information on the Company’s pay rate opener or where negotiations stood on pay rates except for an informational conference call, held the weekend (3 days) prior to the MEC meeting. The conference call concerned converting profit sharing to pay rates. I assumed the Negotiating Committee was having difficulty reaching the level of pay that was directed by the MEC. I commented at that time that I would have to wait to see the overall pay before I could provide an opinion. Informational conference calls cannot provide direction to the MEC Officers or the Negotiating Committee.
Q. On the FAQ section of the MEC website it is stated that “this TA is not a ‘zero cost’ TA. For the pilot group the end-run pay increases alone are valued at over $400M/year (each one percent increase in compensation equates to about $20M)”. You had a different opinion. Please explain.
A. The $400m cost is the net additional pay to the pilot group in 2015. We will receive additional pay in the form of hourly compensation in this TA, but at the expense of work rules and productivity enhancements. The $400m cost to the company does not include the savings from work rule changes. As an example, you go into a Chevrolet dealer to buy a new $40,000 Tahoe. If you have $3,000 of GM credit card points and $4,000 of dealer incentives then the “net cost” to you is $33,000. The same holds true for the Company; the net cost of this TA for total pilot compensation is far less than the $400m stated for 2015. As I previously stated, “This is a reduction in work rules for pay; pure and simple.” If our only concern is pay rates, then we can continue to surrender additional work rules for pay in future contracts. It is your choice.
As for the net cost to the Company for a new pilot contract, which in my opinion is offset by the savings of parking 50-seat regional jets, Delta Executive Vice President Mike Campbell stated, “The fleet changes provided by this agreement, coupled with the productivity and profit sharing changes, cover the investments in our employees.” I happen to agree with Mr. Campbell’s perspective on the cost to the company for pilot payroll.
Q. I read that the TA reduces the number of 76-seat aircraft?
A. Delta currently has 153 76-seat aircraft. The company can currently increase that number of 76-seat aircraft to 255 by adding 44 mainline aircraft. For each mainline aircraft above 767, the company can add 3 76-seat aircraft. The total number of 70 and 76-seat aircraft cannot be greater than 255. Thus, the Company would have to park most 70-seat aircraft to add more 76-seat aircraft; for the most part, they cannot just add six seats. The TA allows the company to increase the 76-seat aircraft to 223 from a current total of 153 planes and keep the 102 70-seat aircraft. Though the current contract allows the Company to have 255 76-seat aircraft, they would be required to add more mainline aircraft and convert or park 70-seat aircraft for this to occur. In order to convert / transition all 102 70-seat aircraft to 76-seat aircraft, the mainline would have to grow to 801 aircraft. This is an unlikely event, especially since, according to a recent Negotiators’ Notepad, in the case with “no TA” and a very optimistic, best-case scenario 6% annual capacity growth, the projected mainline fleet would only grow to 781, which would only allow 42 additional 76-seat aircraft. So yes, relative to the current PWA the TA is a reduction in potential 76-seat aircraft, but in practicality the TA will increase the number of large RJ (70 and 76 seat) aircraft flown for Delta Air Lines.
Q. What is this value you believe we did not receive in the TA?
A. As I mentioned in my earlier Chairman’s letter, this TA allows Delta to remove 50-seat aircraft from service at a faster rate than they could under the current PWA. This is a significant savings for Delta through increased revenue and efficiencies with the 76-seat aircraft vice the smaller 50-seat aircraft. There is even greater savings in removing older 50-seat aircraft from the fleet before major and extremely expensive engine overhauls are required. We were presented projections on these savings. I contend that a percentage of these one-time costs should be considered and amortized over a period of time as a credit to Delta pilots. Even if a small percentage of these savings were categorized as a “credit” to pilots in this TA, the result could be a significant addition to the proposed pay raises for Delta pilots. This credit could be paid in a one-time expense as cash or stock or over the life of this agreement. Though the maintenance costs are “one-time savings” there will also be a continuous and ongoing financial benefit to Delta Air Lines from the upgauging of the DCI fleet that only the TA would allow. That benefit of these scope changes to the Company will remain well past the amendable date of this contract.
Without this TA, Delta will not be able to retire the 50-seat aircraft at the desired rate. The Company will not be able to even begin to increase the number of 76-seat aircraft without first increasing the mainline fleet by over forty aircraft. Delta pilots did not receive consideration, “credit”, nor compensation for agreeing to this significant change in scope. The question about the negotiating credit was asked of the MEC Leadership and Negotiators at least twice during the MEC direction and deliberation phases. The savings to the Company is substantial. Based upon the known net pilot cost of the TA and the savings from these scope and fleet changes, I suspect that these savings are the ones noted in Mike Campbell’s statement, “The fleet changes provided by this agreement, coupled with the productivity and profit sharing changes, cover the investments in our employees.”
To put it another way, the scope changes included in this TA began as a “supposal” presented by Richard Anderson. First, these scope changes allow for a marked increase in 76-seat aircraft that is practically impossible under our current PWA. Second, this allows for the reduction of the number of 50-seat aircraft, setting a limit on the total number of RJ aircraft, and reducing the total number of RJ seats. . Even if you trade the first items for the second, there is still the “substantial” one time cost savings the company will receive that is not possible without pilot approval of this TA. I contend that not receiving compensation/finder’s fee/commission/bonus for this significant change in scope is passing on an opportunity. Both former NWA and DAL pilots received stock during the merger as an incentive to approve the JCBA and unlock value to the company. I believe the same model is appropriate during these negotiations. The pay rate increases in the TA can be broken down as: a small actual increase in pay, trade of profit sharing for guaranteed pay, work rules for pay, and small cost of living increases. Even Richard Anderson has commented publicly about his concern for inflationary increases in the near future. Will a 3% raise cover inflation?
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