March 17, 2008
Dear Fellow Pilot,
The intensity of media reports related to Delta’s role in consolidation has increased substantially over the course of the past several weeks, many with quotes attributed to "sources familiar with the talks."
The intensity of media reports related to Delta’s role in consolidation has increased substantially over the course of the past several weeks, many with quotes attributed to "sources familiar with the talks."
During this period, I have declined to speak to the media because it would not have been in the interests of the Delta pilots to do so. In the same vein, as an MEC we have been necessarily brief and general in the communication we have provided to the pilot group because anything we provided would have almost immediately made its way to the media which might well have been detrimental to the Delta pilots. Additionally, Security Exchange Commission laws and confidentiality agreement restrictions limit what can be said.
This has been frustrating to many pilots, and it is time to provide you with an update of what has recently taken place keeping in mind the continuing restrictions we find ourselves under.
Under the direction of the Delta MEC, the MEC administration, including the extended committee structure, has been meeting with counterparts from another MEC in an attempt to provide the pilots of both carriers with an [FONT=Times New Roman,Times New Roman]alternative [/FONT]to the traditional merger process should the two carriers elect to merge. Today, I can report that while much was accomplished during a relatively short period of time, we have been unable to reach an agreement on a seniority list integration.
Throughout Delta’s bankruptcy and beyond, our goal has been to work for a financially viable airline that will provide the Delta pilots with pay, benefits and a retirement commensurate with the responsibility and experience we bring to the cockpit. Anger, fear and denial of the economic environment that surrounds us are not strategies that will achieve that goal; they are emotional reactions. Instead, the MEC has pursued every opportunity to aggressively engage Delta’s senior executives, legislators at all levels of our government, the financial community and any other parties who might have an effect on our careers as Delta pilots. As discussions of industry consolidation intensified last fall, your MEC’s engagement in this arena intensified as well.
Over the past several months, we have been consistent in our consolidation message, a message that continues to be overwhelmingly supported by input we receive from line pilots through Wilson Polling, LEC meetings, hundreds of e-mails and direct contact with the pilot group. We have made it clear to every interested party that for any proposed merger to possibly draw our support, it would:
[FONT=Wingdings,Wingdings]�� [/FONT]Require the involvement of the pilots from the earliest formative stages of the process
[FONT=Wingdings,Wingdings]�� [/FONT]Provide meaningful protections and added value to the pilots for their participation as stakeholders in the process
[FONT=Wingdings,Wingdings]�� [/FONT]And most importantly, produce an even stronger and growing airline that will vigorously and successfully compete in the domestic and international marketplaces for years to come
Over the past several months, we have been consistent in our consolidation message, a message that continues to be overwhelmingly supported by input we receive from line pilots through Wilson Polling, LEC meetings, hundreds of e-mails and direct contact with the pilot group. We have made it clear to every interested party that for any proposed merger to possibly draw our support, it would:
[FONT=Wingdings,Wingdings]�� [/FONT]Require the involvement of the pilots from the earliest formative stages of the process
[FONT=Wingdings,Wingdings]�� [/FONT]Provide meaningful protections and added value to the pilots for their participation as stakeholders in the process
[FONT=Wingdings,Wingdings]�� [/FONT]And most importantly, produce an even stronger and growing airline that will vigorously and successfully compete in the domestic and international marketplaces for years to come
Much to the surprise of the pundits, financial analysts, and some of the more vocal critics within our own ranks, we made ourselves relevant in a process where labor has historically been excluded. Earlier this year, Delta’s senior executives approached your MEC to advise us of their intent to seek the Delta Board’s approval to enter merger discussions with one or more carriers and to include the MEC in the process. The Delta MEC immediately began to implement the unprecedented strategy we had been developing for months, fully prepared to either support or oppose any proposed merger depending upon the particular circumstances and the outcome of our own analysis.
As merger preparations progressed at the corporate level, the Delta MEC executed its strategy which included reaching out to the MECs of the carriers that might be involved in a potential merger with Delta. Delta management shared their confidential merger analyses for various scenarios with the Delta MEC, and the MEC was able to independently validate the analyses.
Soon, it became apparent that Delta would focus its interests on one major carrier. This scenario had the potential, under the right set of circumstances, to draw our support.
Soon, it became apparent that Delta would focus its interests on one major carrier. This scenario had the potential, under the right set of circumstances, to draw our support.
Since January, and under the direction of the respective MECs, committees from the ALPA MECs of both carriers have been meeting in an effort to provide the pilots of both carriers with an [FONT=Times New Roman,Times New Roman]alternative [/FONT]to the traditional merger process. Our intent was to accomplish what has never before been done in our industry—reach a three-party agreement between two MECs and management [FONT=Times New Roman,Times New Roman]in advance [/FONT]of any corporate merger announcement. If an agreement could be reached, each MEC would decide independently whether or not to adopt the agreement which would include terms to protect the flying of each pilot group during the transition to a single carrier; a joint pilot contract, subject to membership ratification, which would take effect at the close of the corporate transaction; and a fair and reasonable integrated seniority list which would also become effective at the close of the corporate transaction.
As I wrote in my last letter, labor integration issues are often an extremely difficult and contentious part of traditional mergers. As a result, when and
[FONT=Times New Roman,Times New Roman]if [/FONT]such mergers are eventually completed, many of the corporate synergies originally envisioned are unable to be fully realized or at least significantly delayed. A labor agreement in place ahead of a merger announcement would provide substantial value and flexibility to the merged corporation. In exchange for making this ground-breaking concept a reality, the combined pilot group would receive significant contractual improvements and an equity stake in the merged corporation.
Committees from both MECs worked diligently through many long days, over weekends and through holidays in an effort to reach an agreement on a joint pilot contract and an integrated seniority list.
[FONT=Times New Roman,Times New Roman]if [/FONT]such mergers are eventually completed, many of the corporate synergies originally envisioned are unable to be fully realized or at least significantly delayed. A labor agreement in place ahead of a merger announcement would provide substantial value and flexibility to the merged corporation. In exchange for making this ground-breaking concept a reality, the combined pilot group would receive significant contractual improvements and an equity stake in the merged corporation.
Committees from both MECs worked diligently through many long days, over weekends and through holidays in an effort to reach an agreement on a joint pilot contract and an integrated seniority list.
During the third week of February, the Negotiating Committees of both MECs and management were able to conclude negotiations on a joint pilot contract subject to approval by both MECs and membership ratification by both pilot groups. The contract would have provided significant improvements to the current contracts of both pilot groups in the areas of pay, sick leave, defined contribution plan percentages, and included furlough protections. In the area of pay, for example, during the term of the joint agreement, the pay rates would have increased so as to not only eliminate the pay rate concessions of Letter 51, but also gain ground on the pay rate concessions of Letter 46. As another example, the DC Plan percentage contribution would have increased by 33 percent. The joint contract would also have provided the Delta pilots with a voting pilot director position on the Delta Board of Directors at the front end of the merger and codified the terms for pilots to receive an equity stake in the merged corporation.
With the remarkably successful results achieved by the Negotiating Committees and terms of the pilot equity in place, the one unresolved element of the overall package was the integration of a joint seniority list.
In a traditional merger scenario, it is common for each Merger Committee to enter negotiations in a very adversarial role with negotiating positions that are very far apart as they posture for the benefit of their pilot group. In a successful negotiation, over time, both parties will find common ground and reach a solution that represents a compromise between the two positions. Almost always, however, the process ends in an abdication of leadership and subsequent binding arbitration.
With the remarkably successful results achieved by the Negotiating Committees and terms of the pilot equity in place, the one unresolved element of the overall package was the integration of a joint seniority list.
In a traditional merger scenario, it is common for each Merger Committee to enter negotiations in a very adversarial role with negotiating positions that are very far apart as they posture for the benefit of their pilot group. In a successful negotiation, over time, both parties will find common ground and reach a solution that represents a compromise between the two positions. Almost always, however, the process ends in an abdication of leadership and subsequent binding arbitration.
