Delta Creditors do NOT support Delta's plan.....

[jetblue320]

"Gotta run for now and answer some posts from guys wanting help about getting on at JB. I thought that was what this board was for anyway?"

That's what I thought too, but you are starting to lead me to think otherwise. Maybe it's time to lighten up a little Batsy, remember...you're the one in a pretty good position.

Yes, you are right. Maybe it is time.......

C yaaa

 

[bramafear]

I would call it "Bad Attitude" from DAL's Sr Mgmt

If they want a plan, the creditors should talk to McKinsey (Leo's management consulting firm). DAL has probably paid them $millions to come up with a super-innovative plan. OR they could just ask Dave Siegel of USAirways fame - just cut everyone's wages to the bone...

Now do you see why the DAL pilots have been RELUCTANT to accept any major wage cut proposals? There has been no plan to review... How much is DAL's management earning in huge salaries and retention bonuses? And they can't formulate a plan in time (how long has it been - 6-9 months)? Ridiculous!

A little note I faxed to the DAL Tower in downtown Atlanta,

Wednesday, June 23, 2004

An Open Letter to Delta Airlines' Chairman Smith & Ceo Grinstein



Michael L. Masters, Principal
Masters & Masters

Gerald Grinstein, CEO
Delta Air Lines, Inc
1030 Delta Blvd.
Atlanta, Ga 30320-6001

CC: John F. Smith

June 23, 2004

Subject: Delta Air Can’t Survive as Is – CEO, by Reuters Jun 16, 2004


Since late 2001, I have been monitoring Delta’s struggle for survival. I know all to well what you are up against --- I had been there and done that with my Atlanta based International Transportation Corporation.

The beginning of the end occurred in 1997-98 when our stock hit new lows, like yours today, that forced us to bring in Arthur Anderson to camp with us for an entire year to the tune of $1.2M to satisfy the appetite of Wall Street. Their recommendations were right on the mark, even though the current senior management team dismissed them at the time. I still have that study in a safe place for historical purposes.

We too knew of the impending recession as of the summer of 1999 from our common carrier relationships. Because of the unique nature of our services, we were spared the initial brunt of the recession. I believe the bottom fell out of the market for us and others the following summer which was most likely caused by the stock market crash involving the Telecom & Technology sectors.

If that wasn’t enough to rock-the-boat, our $100M bond liability was coming due by the 3rd quarter of 1999, and we had been fortunate enough to have only paid $20M on those bonds since 1995. What to do?…

In order to bring the bondholders to the bargaining table, we had to do what you fear you might have to do soon too: file Chapter 11 bankruptcy protection.

Once the decision was made, our CEO canvassed our top 200 customer base to get their pulse and reassure them that our company was a very viable future company; however, we had a financial commitment we just couldn’t meet at this time.

Our customers were put at ease by the leadership and persuasiveness of our charismatic CEO. And these were not just anybody’s customers either: DOD, DOE, NASA, Boeing, Lockheed-Martin, Harris Corp, GE, Siemens-Westinghouse, TVA, ABB Power, John Deere, Caterpillar, Hitachi, JI Case, Home Depot…

The plan was so successful that the board promptly appointed the CEO, Chairman & CEO along with a three-year business plan to turn the company around. And this is the point in time where I got involved.

When 2nd quarter of 2000 rolled around I was asked by the Chairman & CEO to assist his special advisor to seek out more cost cutting opportunities. After witnessing three or more reductions in workforce since 1999, I decided to take a chance and deflect this knee-jerk desire --- I said stop looking at the low hanging fruit and start looking here where we are diluting our profit margin. We were running a 101% operating ratio at the time according to our SPA software analysis provided by Sabre.

I had developed a model that illustrated where the discounting of our service had impacted our business over the recent 2 ½ years. He hit the brakes on that path and the solution light went on to the tune of $76M (which by mid 2001 reached $96M). Seems like we could have paid off those bonds had we been watching the hen house a little bit better during that time.

Therefore, a new path was cut and pursued… only to be later resisted by the senior management team. Getting these people to change was like performing a series of root canals on a pack of hyenas. Finally, sides were being chosen and in the end it was 3 against some 15 so-called team members: The three underdogs were the Chairman & CEO, his advisor, & myself.

Unfortunately, one of the conditions of the bondholders after the deal was made in the 1st quarter 2000 was that they would have a presence on the board – we had to let the fox inside the hen house. The fox was patient for awhile, but in October 2000 he blew the house down and had the Chairman & CEO abruptly fired. Mind you, remember that they had signed a three year business plan with this gentleman. Everybody was so bewildered and in shock & awe at just what had transpired that even the Chairman & CEO kept showing up at the office until they secured a restraining order against him; not to mention jeopardizing his golden parachute. To further make matters worse: the CFO had resigned in private to the Chairman & CEO just a month earlier. When CIT (Tyco) got a hold of that information, they cut our revolver to half or less --- ouch!

The rest of that year and the following year were the most amazing, bazaar, and turbulent moments of my life, and it should not to be wished upon anybody in a senior management position to endure.


The Bottom Line:

We lost a $450M specialized transportation legend. A legend that even went as whole units (cargo, tractor, & trailer) to Kuwait to facilitate the logistical needs of the Armed Forces in Desert Storm. And for our efforts, we received a special “Thank You” letter from the President of the United States, President George H. W. Bush.

Please don’t let this happen to Delta. Instead, be innovative and find a productive way out and save another legend (Pan Am) from the corporate scrap-heap of time.

The Chapter 11 process can be ugly, and a time of quiet desperation. A time where executives whip out their own personal credit cards to pay for such simple items as computer paper in order to have the substance to print their daily operational reports on. I can remember a time when the CIO did this very act to the tune of $25k or more over a short period of time in the best interests of supporting this company.

I too recall the many deaf ears of our elected officials; both locally and in Washington DC. I called upon them many times – trying to reach out for viable solutions before the internment of my company during 4th quarter 2001. Those acts also include the White House as well, where I encountered an amazing amount of arrogance and indifference beyond belief. Afghanistan was just cranking up and one of our subsidiaries carried about 80% of the total ordnance to port.

However, later on I didn’t feel so bad since they didn’t give any quarter to Ken Lay of Enron either in the fall of 2001.

In conclusion, I do have some far reaching, creative ideas that you might want to pursue. One of them involves beneficial payroll concessions that we discovered that might recover $100-150M over a year’s time. And that’s just for starters. Also, I am sure we could come up with some creative capacity solutions as well.

To lose a legendary, viable company over a fraction of its worth is a terrible thing to waste and endure for a lifetime of regret. Out there… somewhere, there has to be a compromise available to sustain such an entity from uncertain death.

If I can be of help in any capacity, please don’t hesitate to call on me.

Regards,
M

PS: Gerald, I am pretty sure you knew 100% players that created my company and some that came on board as senior management members all of which came from Burlington, and a couple from CSX. It’s a small world for sure. Have you ever heard of Ron Sorrow?

Pan Am: More Information on a Legend Beyond Belief at Pan Am Org


I had been there... and done that with my company: http://trism.blogspot.com/