Dalpa Concession package

[General Lee]

Delta Pilots Offer New Concessions Package

By HARRY R. WEBER, AP Business Writer

ATLANTA - Delta Air Lines' pilots union offered management a new wage concession proposal late Tuesday that it says will save the struggling carrier as much as $705 million annually.


The committee representing Delta's 7,500 pilots said in a statement to the company that its new offer includes a 23 percent pay cut as well as numerous productivity and work rule changes.


The union valued the relief package at $655 million to $705 million in annual savings.


Delta, which has lost more than $5 billion and laid off 16,000 employees in the last three years, has said it may have to file for bankruptcy if it doesn't get deep concessions from pilots.


The union said the proposed concessions will be contingent upon a comprehensive restructuring of all Delta's costs. In exchange for the concessions, the union said it is seeking financial returns and corporate governance.


The statement did not elaborate, and union spokeswoman Karen Miller did not return several calls seeking comment.


Delta spokeswoman Meghan Glynn told The Associated Press in a telephone interview that the Atlanta-based airline wants time to study the proposal to determine for itself the value of the concessions.


"We certainly would appreciate any movement in the right direction," Glynn said.


The latest offer from the union is nearly twice as large as its previous one. Earlier this year, the pilots offered Delta a 9 percent wage cut and to forgo a 4.5 percent raise pilots received in May.


Delta has asked pilots for a 30 percent pay cut and to forgo the May raise. Delta has estimated the value of its proposal to be about $850 million annually.


Chief executive Gerald Grinstein said recently that the airline's previous proposal is no longer enough and has suggested the company may ask for more cuts.


Delta's pilots are among the highest paid in the industry, earning between $100,000 and $300,000 a year, according to the company.


Delta is the nation's third-largest airline behind United and American.



Will $705 million a year be enough? Would they turn that down? Will the creditors be involved with more cuts (of their own)? It sure is better than the 14% originally offered..... We shall see........


Bye Bye--General Lee

 

[FDJ2]

Well we will see what happens. The details should be interesting.

 

[General Lee]

23% pay cut and productivity changes. Hmmmm. Yeah, that might get interesting.


Bye Bye--General Lee

 

[CSY Mon]

23%?


What a co-incidence...

That is what us AA boys took up the tush.
With a 7.5% snap-back a year later..
(Actually 9% according to some sources deep inside AMR)

Then the work-rule changes that eliminated hundreds of jobs..Also medical benefits and other stuff tasted the ax on the skin.

$660 mill according to some, much more according to the militant union guys.

Good luck to Delta.

 

[General Lee]

Well, the difference with the work rule changes and elemination of jobs is that we are actually SHORT right now---we have lost 450 or so captains since May 1st alone. We are down about 800 total pilots (captains) from last September. I am sure there will be medical premium increases, and a slight raise in the cap (from 75 hours to....) but I do not know the specifics. We shall see tomorrow.


Bye Bye--General Lee

 

[CSY Mon]

Hmm, ya still short after the 1000 furloughed boys are back on property..?


SO, that means the big guys won't negotiate no further furloughs so as to keep the pay-cut from going as high as 30%..?

(A few more guys on the street will keep the pay higher for the senior guys...Is this a great business or what..?.. )

 

[lowecur]

Delta Pilots Offer New Concessions Package

By HARRY R. WEBER, AP Business Writer

ATLANTA - Delta Air Lines' pilots union offered management a new wage concession proposal late Tuesday that it says will save the struggling carrier as much as $705 million annually.

The committee representing Delta's 7,500 pilots said in a statement to the company that its new offer includes a 23 percent pay cut as well as numerous productivity and work rule changes.

Boy, you have to admit my guess of $700M is a little scarey. I'm beginning to believe I am psychic or is that psycho?

 

[miles otoole]

Boy, you have to admit my guess of $700M is a little scarey. I'm beginning to believe I am psychic or is that psycho?

A clock is right twice a day.

 

[Vortilon]

Uncanny Lowecur!

Can you guess what the FINAL concession amount will be? GG already said this one's not enough. (Sadly, that was kindof expected)

I don't have a good dollar prediction....howzabout 900 million. In any case, I say a TA will be reached by the end of July and ratified by the end of August.

Any takers on that bet?

 

[FDJ2]

Unofficial details leaking out.


Summary of ALPA Proposal 20 July 2004

Compensation and Value:
Reduce May 2004 pay table by 23%
Reduce night pay
Reserve guarantee to be prorated on a daily basis as 1/18th per on-call day (as opposed to the current 1/30th or 1/31st per day for the total number of days in the bid period).
International category pay changes (some reductions in when it applies)

Annual Average Savings: $655-$705M

Duration:
Amendable Date: 31 December 2008

Work Rules:
Develop and implement a Preferential Bidding System (PBS)
Match reserve availability to need.
• Goal is to double reserve utilization
• Utilize a reserve assignment system that helps level reserve hours
Allow LOT value to vary over a wider range.
Increase monthly pay cap.
Reserve guarantee at 70 hours until CAP exceeds 80 hours, then it will trail 10:00 behind CAP.
Pilot removed for another pilot’s OE is subject to 23 K recovery flying
Company has more freedom to reroute before triggering reroute premium pay
Reduce Vacation Bank value to 3:15 per day and eliminate 48 hours
Allow expanded use of Non-Seniority List Instructor (NSLI)
Replace VM with Duty Period Average (DPA)
Expand Distributed Training
Allow Bank deposits as long as current Furlough Recall agreement is complied with
Category freeze increased to two years from date of award

Benefits:
Adopt the 2004 Standard & Enhanced non contract medical plans (pilot and retiree premium to be negotiated) and add a third high deductible no premium plan

Other R&I items:
• Require lump sum transfer within 45 days of retirement
• Allow diversification of Delta stock held in the 401K at age 50

Safety and Oversight:
• Require the Central Air Safety Committee (CASC) be notified in the event of accident or incident
• Grant CASC access to the safety database
Scope:
Extend 1 E. and 1 F. numbers to match duration
Improvements in scope:
• Fragmentation protections
• Merger protections
• Improvement of Profit Loss agreements protections
• Information sharing
• Labor disputes
• Brand scope

Returns:
Profit sharing based on pre-tax earnings
Equity in the form of stock options
Annual Performance Incentive Program

Bankruptcy Protection LOA to buffer against further concessions in the event of bankruptcy

ALPA elected full member of Delta Air Lines BOD

Jumpseat (J/S) Improvements
• Flight Attendant J/S access
• Flow back
• International partner J/S access

PS(Y) transportation on DCI for travel to/from training and ALPA business

Company to pay the cost of these negotiations

Other:

Agreement effective upon ALPA’s acceptance of a comprehensive restructuring of Delta Air Lines that involves all stakeholders

 

[michael707767]

Uncanny Lowecur!

Can you guess what the FINAL concession amount will be? GG already said this one's not enough. (Sadly, that was kindof expected)

I don't have a good dollar prediction....howzabout 900 million. In any case, I say a TA will be reached by the end of July and ratified by the end of August.

Any takers on that bet?

I'll take that bet. Here is my prediction. Final dollar amount just short of 800 million, TA by mid August, ratified by Oct. (ratification takes longer than a month)

 

[46Driver]

ALPA elected member on the BOD? Didn't United do that????????

 

[lowecur]

No scope offer on the E-jets? MMMmmm...makes you wonder.

As far as my prediction. I have already said he will get the full $1B, and it will come either a few days before 11, or in 11. There will be no seats on the board or ownership/profit-sharing.

 

[Networ-King]

GG wants Chapter 11....... he needs Chapter 11 to get that huge debt down. Hence the quick reply.......

BURN BABY BURN!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

Associated Press
Delta CEO Says More Cuts Needed at Company
Wednesday July 21, 9:39 am ET
By Harry R. Weber, AP Business Writer
Delta CEO Says Latest Pilots Wage Cut Proposal a Good Start, but More Cuts Are Needed


ATLANTA (AP) -- Delta Air Lines Inc. chief executive Gerald Grinstein told the pilots union Wednesday its latest wage concession proposal to save the company up to $705 million annually is a good start, but he indicated deeper cuts will be needed to save the struggling carrier.
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In a letter to Capt. John Malone, chairman of the union's executive committee, Grinstein said Delta's deteriorating financial situation means the pilots will need to give up even more. He did not say how much the company is looking for.

"Still, I believe this latest offer provides a foundation for meaningful negotiations and a platform from which we can continue to work together to chart a secure -- although forever altered -- future for our airline and its employees," Grinstein wrote.

Grinstein scheduled a meeting for July 28 to discuss the proposal, the letter said.

Late Tuesday, the union representing Delta's 7,500 pilots offered the company a 23 percent pay cut as well as numerous productivity and work rule changes.

The union valued the relief package at $655 million to $705 million in annual savings.

The union said the proposed concessions will be contingent upon a comprehensive restructuring of all Delta's costs. In exchange for the concessions, the union said it is seeking financial returns and corporate governance.

The statement did not elaborate, and union spokeswoman Karen Miller did not return several calls seeking comment.

"Delta's financial problems cannot be cured by pilot concessions alone," Malone said. "However, we are once again taking a leadership role in attempting to restart the talks. It is my sincere hope that given the magnitude and scope of our proposal, management will seriously engage in meaningful negotiations."

Delta spokeswoman Meghan Glynn told The Associated Press in a telephone interview that the Atlanta-based airline wants time to study the proposal to determine for itself the value of the concessions.

"We certainly would appreciate any movement in the right direction," Glynn said.

The latest offer from the union is nearly twice as large as its previous one. Earlier this year, the pilots offered Delta a 9 percent wage cut and to forgo a 4.5 percent raise pilots received in May.

Delta has asked pilots for a 30 percent pay cut and to forgo the May raise. Delta has estimated the value of its proposal to be about $850 million annually.

Grinstein said recently that the airline's previous proposal is no longer enough and has suggested the company may ask for more cuts.

In his letter to Malone, Grinstein said the need for resolution to the negotiations is urgent.

"It is irrefutably clear that our situation has worsened and our cost savings needs have grown significantly since our proposal last year due to skyrocketing fuel prices, lower yields, burgeoning debt and increased fare pressure brought on by competitors pricing actions," Grinstein wrote.

Delta's pilots are among the highest paid in the industry, earning between $100,000 and $300,000 a year, according to the company.

Delta, which has lost more than $5 billion and laid off 16,000 employees in the last three years, has said it may have to file for bankruptcy if it doesn't get deep wage concessions from pilots.

The new pilots proposal comes as Delta's financial situation worsens by the day, intensified by the industry's struggle with steep fuel costs and the onslaught of low-cost rivals. On Monday, Delta reported a nearly $2 billion second-quarter loss -- its worst ever in a three month period.

Delta is the nation's third-largest airline behind United and American.

 

[FlyBoeingJets]

Does this article have a hidden agenda...everyone has an agenda. Does Morgan Stanley want to impress potential clients? You betcha.

Knowing that I still find the bottom of the article disturbing. AMR is rated as healthier. And the latest earning numbers seem to support that.

Odds even on Delta bankruptcy?
JP Morgan analyst makes call as part of downgradeBy Brendan January, CBS.MarketWatch.com
Last Update: 2:30 PM ET July 20, 2004 E-mail it | Print | Discuss | Alert | Reprint | RSSNEW YORK (CBS.MW) -- The chances that Delta will declare bankruptcy, according to an analyst report Tuesday, are basically the same as flipping a coin: 50-50.


JP Morgan analyst Jamie Baker, who previously put the chances of a Chapter 11 filing at 25 percent, made this declaration in a note to clients, while downgrading the carrier's stock (DAL: news, chart, profile) to "neutral" from "overweight."

Shares of the Atlanta-based airline, the nation's third largest, fell 53 cents, or 8.9 percent, to $5.42 in afternoon trading. The stock has dropped 20 percent since the end of June.

Baker said the stock is fairly valued at current levels based on the higher probability of bankruptcy. However, he advises investors to be prepared to sell their shares if management works out a cost-cutting compromise with its pilots union.

Such an agreement, which the firm thinks could be reached in September, would probably be worth at least $850 million.

While news of the deal could push the stock up "closer to $10," Baker thinks the timing of the settlement actually "poses the greatest danger to equity holders" because Delta won't exactly be in the clear.

The company will still need to save another $425 million, he estimates, and this is likely to force it to embark on a major debt-restructuring effort that could leave "little if anything for current equity holders, as debt holders likely demand [and receive] significant equity in return."

Once the deal with the pilots is closed, "our suggestion to equity holders is to gracefully exit," he indicated.

Baker also disputed the perception that American Airlines' success in avoiding bankruptcy bodes well for the chances of Delta doing the same.

He sees Delta's bid as "a significantly more Herculean task" than the one faced by its rival American, which is owned by AMR (AMR: news, chart, profile).

"AMR didn't substantially go after creditors, whereas Delta has to. AMR didn't substantially fix its balance sheet; Delta intends to try," explained Baker.

In the event Delta enters Chapter 11, Baker assumes "a price in the low $1 range and post-pilot upside potential closer to $10. [...] Delta shares appear to imply a 50-50 Chapter 11 probability, in our view, the same as our number," justifying the "neutral" rating.

 

[FlyBoeingJets]

Before you Delta folks get too mad at me... I remember when AMR posted a couple of quarters of HUGE losses before the concessions. Now AMR is posting a profit, small, but a profit in the face of fare cutting and rising fuel prices. Some of the pilot concession was returned to the AMR pilots last year. I don't understand the accounting tricks in play but I'm sure Delta management is making the most of them.

So I'm undecided on the health of Delta. Stock recommendations are often not about company health, just a guess on changing investor sentiment.

One thing I do know is the Delta pilot retirements will hurt the case to match AMRs concessions. Also, remember how AMR worked out the details of the massive layoff to help optimize training? Delta, unless I'm ill-informed, will spend tons on retraining in the face of call-backs and retirements. DALPA should work out a deal to reduce training costs.

 

[General Lee]

You have to remember that if the crap continues to look like it will hit the fan, the creditors and others will likely contribute to that additional $425 million needed. I bet we will raise our offer up to around $800-850 million, and then they will go for the rest with the non-union employees. We will be giving the lion's share by far. At least there is a better offer on the table, and I think there will be a larger offer eventually.

Another thing--this seems to be all planned out. I was flying all weekend and more than once I heard "expect an announcement on Mon from the company (the huge loss I guess) and then a union response on Tues." (the offer) I didn't know about the huge loss report (although I suspected some sort of loss). As I said before--I read an article that said Malone and Grinstein talk at least once a week--and I think that will continue.

Bye Bye--General Lee

 

[Swaayze]

No scope offer on the E-jets? MMMmmm...makes you wonder.

Well, it did say:

Improvements in scope:
.....
*Brand scope


So there's something there I'd guess.

 

[ATR-DRIVR]

was i the only one to see the word "flowback" in there...? i sure hope it is for something else.....

 

[wms]

Flowback was in the category of Jumpseat. I don't know what that means. If it is what we're suspicious of, it will only work with a staple. Empty promises of how we "might" benefit later on won't work. I do like the Brand Scope bullet, so far.