Delta CEO Speaks

[Freebrd]

Dow Jones Business News
Delta CEO: Will Only Accept Long-Term Pilot Contract
Wednesday January 28, 4:03 pm ET
By Evan Perez, Staff Reporter of The Wall Street Journal


ATLANTA -- Delta Air Lines' pilots must agree to long-term concessions to help the nation's No. 3 carrier compete in the new difficult industry environment, Gerald Grinstein, the company's new chief executive, said.
Mr. Grinstein, a longtime board member who took over as CEO earlier this month from Leo Mullin, said Delta is more vulnerable than other major carriers to the many low-fare carriers that have changed the airline industry in recent years. The airline recession that followed the Sept. 11, 2001, attacks in the U.S. only added to the industry's problems, he said. He spoke at a luncheon hosted by an Atlanta business and civic leaders group.

The lower costs of its rivals, including those of larger major carriers such as AMR Corp. (NYSE:AMR - News)'s American Airlines and UAL Corp.'s United Airlines, is putting pressure on Delta to do the same. The company is in difficult wage- cut negotiations with its Air Line Pilots Association (News - Websites) unit, which is Delta's only major unionized group.

Delta's recent fourth-quarter earnings report continued a string of losses and offered a grim outlook for the year, prompting some Wall Street analysts to infer the company was raising the possibility of a bankruptcy filing. Mr. Grinstein, responding to a question, said the prospect of bankruptcy "was not something we planted" and dismissed any suggestion he was using the threat as leverage with the pilots union. "Bankruptcy is not a first choice," he said. "My goal is never to use it."

Pilots union officials have said the group will contribute to Delta's recovery but only if their concessions are treated as an investment in the airline. In their most recent offer, the union offered a 9% wage cut plus work rules changes, far short of the company's most recent 30% wage-cut request.

Mr. Grinstein said any concessions the pilots make must help the company recover long term. "They have got to come to the table with the understanding of what it means to their future," Mr. Grinstein said of the pilots.

-By Evan Perez, The Wall Street Journal; 404-865-4383

 

[General Lee]

Why would we want a short term contract?

As far as giving in a lot of money, I bet we would be more willing to give more than the other reported 9% (which really was 13.5% with the May raise), and I think it could be closer to 20% now, which is significant. I don't know what Delta wants now, even though their last request was 30%, because they requested to come back to the table tomorrow. I think they will get a lot more than the 13.5%, but nothing close to 30%. Maybe a 20% cut plus the 4.5% raise we haven't gotten yet scheduled for May.... Here is another carrot given by our VP of Marketing:

"To support the expansion, Delta will bring 10 airplanes out of storage and offer 200 furloughed flight attendants there jobs back, said executive vice president and chief marketing officer Vicki Escarra. About 100 more airport gate and ticket agents also will be brought back from furlough or brought in from other airports, she said.

The airline is still evaluating how many of its 1,000 furloughed pilots to bring back, Escarra said. Delta is in the midst of a protracted battle to get deep wage concessions from its pilots.

Escarra also said Delta, along with other major carriers, is considering purchasing assets from US Airways -- which emerged from bankruptcy last year."


Hmmmmmmmm. Sounds good, and I know a paycut is coming....

Bye Bye--General Lee

 

[sabreliner]

Hostages???

Why would we want a short term contract?

The airline is still evaluating how many of its 1,000 furloughed pilots to bring back, Escarra said. Delta is in the midst of a protracted battle to get deep wage concessions from its pilots."

Bye Bye--General Lee

Taking hostages it seems??

Great. Talking to guys on the line, it sounds like they are already running the operation short staffed in many categories. They'll have to bring people back if they want to expand.

 

[General Lee]

Well, I guess we wouldn't like a "long term" contract if we take larger paycuts. (We would want to get them back sooner) So, I can't see us taking a large paycut without a chance to get some of that back. So, it looks like there is a better chance for a mid-sized paycut for a longer period (20% for 4 years rather than 30% for 4 years etc...).

Also, the Delta spokesman (Peggy Estes) just stated that Delta did NOT plan to call back any of the 1000 furloughed pilots. That won't make Dalpa happy, and I am sure they will try to include some sort of eventual recall....It's called negotiations. (not threats)

Bye Bye--General Lee