Delta/NWA Question?

[Crash Pad]

Sorry other thread turned into some union thread.

I have a question for any air lawyers. Is a merger like bankruptcy? Can Delta and NWA throw out all the connection agreements and start over because they are a new company?

 

[Cpt Oveur]

Not necessarily, depends on if that was a clause in the contract with the connection carrier.

 

[DrewBlows]

Not likely. Though, I wouldn't be surprised if most, if not all "connection" agreements have buy-out clauses where one party or the other can terminate the agreement for a price. Also, there are performance criteria that must be met. Perhaps an airline post merger would be more likely to hold "connection" carriers accountable. That's just speculation though.

 

[~~~^~~~]

Sorry other thread turned into some union thread.

I have a question for any air lawyers. Is a merger like bankruptcy? Can Delta and NWA throw out all the connection agreements and start over because they are a new company?

Let me give you a lawyer like answer "it depends."

As others already noted, it hinges on the language and successorship obligations in previously written contracts. The ASA asset purchase agreement appears to have been very well written in favor of SkyWest, enough that Delta has pulled down their own flying to remain in compliance - transferring Comair assets to cover shortfalls. The same pattern appears to be playing out in KMCO.

Mesa apparently does not have this advantage. I would guess that Republic's contracts are pretty well written. These deals are held highly confidential for competitive reasons.

I've seen parts of the deals and they are compltely different fromeach other, which tells me the Corporate Counsel for these airlines do not get to copy each other's home work (when all the contracts start to read the same, with boilerplate language).

Based purely on the numbers and comments from Delta's fleet planners, as well as back office rumors, part of the DAL/NWA deal may be a sale of Comair with an additional flying award to seal the deal. Delta needs money to finance this plan and says buyers have come forward for Comair after Delta initially pulled Comair off the market. Also, the numbers on the RJ's, particularly the larger RJ's are better than people on this board would lead you to believe. I think Delta will shed the DC9's and some MD88's as quick as they can get the large RJ's delivered.

Scope should be a constraint, but no one is talking about it and Doung Steenland says NWA is not scope restricted. I had also heard that part of the reason the DAL/NWA management needed pilot agreement prior to execution of the merger was to seek a resolution of conflicting scope in the Delta and NWA pilots' working agreements.

 

[Speedtape]

A contract is a contract! It is nothing but words on paper, written by lawyers between 2 parties, with the intent to be ambiguous. If either party feels that they have been harmed by the other party because a duty was not performed, then you have a dispute, either major or minor. If the two parties cannot come to an agreement on the dispute, then "Friendly" lawsuits are filed to have a third party interpret either, intent, harm, and remedy, or that no merit to harm in the dispute exists. Usually compromises are reached before the third party, a Judge or even possibly an arbitrator, if both parties agree to binding-arbitration, has to rule.

Really, the only thing a good contract will guarantee is a claim, if harm can be shown. A Judge can order compliance to a duty, a remedy for not performing the duty, or an interpretation, that part of a contract is not valid and enforceable, and/or that the whole contract is not valid--very rare.

To answer your question, if there is a contract it generally cannot be voided or modified except by mutual consent (resolution through $), end of term, or Bankruptcy. The business world could not run if contracts could easily be ignored!

 

[Nevets]

Keep in mind that anything is negotiable.

 

[BlueRidger]

When ACA was terminated by Delta becuase the bought Airbuses, Delta gave 6 months notice and had to take over the leases on the DoJets. The contract was considered terminated with out cause, hence the 6 month buyout.

 

[IronCityBlue]

When ACA was terminated by Delta becuase the bought Airbuses, Delta gave 6 months notice and had to take over the leases on the DoJets. The contract was considered terminated with out cause, hence the 6 month buyout.

True, and Delta had no intention to operate those DoJets. They looked into a SkyWay deal, but they didn't really want those planes anyway, and now would REALLY not want them, with 30 something seat jet costs with an orphaned hangar queen.

But as it applies to the 70 and 90 seaters, those are something Delta wants to operate. The only question is who will operate them. Several of them are on Delta's books anyway, and the rest could be taken over since Delta is paying for 100% of all their associated costs anyway, via guaranteed profits to outsource providers, plus the added expense of a third party profit margin. The only thing standing in the way is a market based cost side letter for labor. Negotiating that, especially with the threat of thousands of furloughs on the horizon, could be possible.

 

[FORESTGUMP]

True, and Delta had no intention to operate those DoJets. They looked into a SkyWay deal, but they didn't really want those planes anyway, and now would REALLY not want them, with 30 something seat jet costs with an orphaned hangar queen.

But as it applies to the 70 and 90 seaters, those are something Delta wants to operate. The only question is who will operate them. Several of them are on Delta's books anyway, and the rest could be taken over since Delta is paying for 100% of all their associated costs anyway, via guaranteed profits to outsource providers, plus the added expense of a third party profit margin. The only thing standing in the way is a market based cost side letter for labor. Negotiating that, especially with the threat of thousands of furloughs on the horizon, could be possible.

for what its worth, you can have 'em. BUT, anyone with a brain (that apparently does not include you) know's you won't get 'em. If you want to sit shotgun in an RJ for $40/hr. offer that to big D and "take 'em back"....please. Or shut the Fcuk up already.

 

[~~~^~~~]

But as it applies to the 70 and 90 seaters, those are something Delta wants to operate. The only question is who will operate them. Several of them are on Delta's books anyway, and the rest could be taken over since Delta is paying for 100% of all their associated costs anyway, via guaranteed profits to outsource providers, plus the added expense of a third party profit margin. The only thing standing in the way is a market based cost side letter for labor. Negotiating that, especially with the threat of thousands of furloughs on the horizon, could be possible.

"Could be possible" leaves a wide range of possibilities.

Delta has itself tangled up on these DCI contracts and has to maintain certain levels of flying. This limits Delta's flexibility and SkyWest was smart to insist on longer terms.

Delta may do more of these deals as regional airlines buy in to get contracts.

Unfortunately I do not see Delta bringing any of the current generation RJ's on the property for many reasons. For one, keeping the 88 fleet staffed and trained is a big job. Many new hires bid off before getting a couple hundred hours. A RJ would be a revolving door as long as 757 and 767 slots remained available.

I am hopeful the next generation of 80 to 150 seat narrowbody jets serve as an opportunity to rationalize this end of the market.

 

[IronCityBlue]

"Could be possible" leaves a wide range of possibilities.

Delta has itself tangled up on these DCI contracts and has to maintain certain levels of flying. This limits Delta's flexibility and SkyWest was smart to insist on longer terms.

Delta may do more of these deals as regional airlines buy in to get contracts.

Unfortunately I do not see Delta bringing any of the current generation RJ's on the property for many reasons. For one, keeping the 88 fleet staffed and trained is a big job. Many new hires bid off before getting a couple hundred hours. A RJ would be a revolving door as long as 757 and 767 slots remained available.

I am hopeful the next generation of 80 to 150 seat narrowbody jets serve as an opportunity to rationalize this end of the market.

The revolving door could be addressed with an initial training equipment freeze. Problem solved. While its nice to bounce around after a couple months, if the price for that luxury is 500 outsourced jets while you furlough 1500 or more every so often, then the "value" of the no freeze initial training deal becomes very, very low.

All I would advocate would be taking the 90's back, which as I understand it if there is one furlough at mainline, all 90's revert to 70 seaters anyway. They could go back to 76 or more if they were flown by Delta pilots. At that point, bringing the 70 back, slowly as ACMI contracts expire, could be facilitated. It could be done by putting them on the DALA certificate, or starting another WO, which could be spun off if necessary to raise cash, but in any case the pilots would do the flying.

Leave 50 seaters jets to the ACMI prodivers for the next 10 to 15 years. By then they will all be parked anyway, unless there is a replacement type (new gen RJ with 787 efficiencies, etc) and those, being a new type, could go back to the mainline or the WO branch.

How long was SKYW's conttract anyway? 10 years, 3 or 4 years ago? It doesn't specify 90's anyway, just airframes I believe. The 90's could be brought back in house now, and the rest when the contract was up.

 

[IronCityBlue]

And yes, SKYW was smart, but they are not invincibile for all time, and its time to stop funding their Independcance Air II ambitions (its only a matter of time). Delta is not saving one penny by outsourcing to SKYW. Every dime they "save" will equal more than that in losses when SKYW uses those profits against them at some point.

 

[IronCityBlue]

for what its worth, you can have 'em. BUT, anyone with a brain (that apparently does not include you) know's you won't get 'em. If you want to sit shotgun in an RJ for $40/hr. offer that to big D and "take 'em back"....please. Or shut the Fcuk up already.

That was constructive debate.

 

[FORESTGUMP]

That was constructive debate.

It's no debate.

It's obvious that you are much more intelligent than any of the airline executives and have the whole industry figured out. Now, if you'd just get off this waste of time message board and go to your CEO suite, you could save Delta singlehandedly and put your millions in the bank already.

Oh. whats that? you're not Delta's CEO? oh. never mind.

 

[outtahere]

Iron City, don't you work for Jet Blue? Why not troll their threads and leave all the delta stuff to the interested parties. Or are you trying to suck up so you can hopefully get hired on?

 

[IronCityBlue]

Iron City, don't you work for Jet Blue? Why not troll their threads and leave all the delta stuff to the interested parties. Or are you trying to suck up so you can hopefully get hired on?

Outsourcing is a trend that will harm all of us equally. It was a large part of the reason the initial 190 rates were so low, to compete with rock bottom 170 and RJ700 and 900 rates already (Neeleman basically delt himself an ace based on market rates caused by outsourcing). Outsourcing is bad and I'm against it at any airline.

 

[IronCityBlue]

It's no debate.

It's obvious that you are much more intelligent than any of the airline executives and have the whole industry figured out. Now, if you'd just get off this waste of time message board and go to your CEO suite, you could save Delta singlehandedly and put your millions in the bank already.

Oh. whats that? you're not Delta's CEO? oh. never mind.

Praising airline CEO's now, are we? Yes, they always know best. That's why they've trashed the customer service portion of the industry, an industry that hasn't made one penny under their watch, yet they ride off into the sunset with record breaking bonuses every day.

Of course CEO's want to oursource everything to the lowest bidder. Of course its up to pilots to stop that. Not sure where you're going with your argurment. You want to fly shiny new 777's for Delta Connection? Um, ok, go for it. I guess that makes about as much sense as praising airline CEO's.

 

[ACL65PILOT]

He has options you do not.

 

[ohplease!]

Outsourcing is a trend that will harm all of us equally. It was a large part of the reason the initial 190 rates were so low, to compete with rock bottom 170 and RJ700 and 900 rates already (Neeleman basically delt himself an ace based on market rates caused by outsourcing). Outsourcing is bad and I'm against it at any airline.

I'll bet the Legacy guy's think of you and your airline as just as much of a problem to the industry as ANY regional airline. After all, your airlines mode of operations (and your by way of your willingnes to work there at SUB-mainline rates with NO union representation) is to come into traditionally "legacy" cities and undercut (sometimes at losses) to "take their flying".

But since thats in your best interest, I guess that makes it alright....huh?

 

[IronCityBlue]

I'll bet the Legacy guy's think of you and your airline as just as much of a problem to the industry as ANY regional airline. After all, your airlines mode of operations (and your by way of your willingnes to work there at SUB-mainline rates with NO union representation) is to come into traditionally "legacy" cities and undercut (sometimes at losses) to "take their flying".

But since thats in your best interest, I guess that makes it alright....huh?

We would all benefit from a significant reduction in competition, including the prohibition of future start ups. But that's not a reality. As for "SUB-mainline rates" I assume you realize that no start up in modern history (ever?) has paid, out of the gate, established legacy rates. I'm sure you also realize that there are unionized pilot groups that fly JetBlue's sized aircraft (and much larger) for a larger percentage below "mainline rates" than JetBlue pays.

However part of your point, that some pilots are upset that JetBlue doesn't pay more, is accurate. No one knows that more than most JetBlue pilots. We are working as hard as we can to increase our pay rates, work rules, retirement contributions, etc. And yes, there is even a union drive in progress. (Actually a preliminary card campaign in advance of a full fledged drive that should officially start pretty soon).

But in any case, I hope you can tell the difference between a different airline flying for less than another airline (we ALL undercut SWA anyway on the pax side, now don't we?) and airline management within a company being free to shop its own lift around to the lowest bidder.

There is a profound difference between JetBlue flying for less than a legacy mainline rate and JetBlue underbidding another pilot group to fly A-320's and E-190's within the same company for less. I do hope you appreciate that immense difference.

And as far as coming into "traditional legacy cities" goes, the ONLY reason JetBlue was ever able to come into JFK and BOS (the VAST majority of our operation) is because of poor legacy management and corporate tactical blunders worthy of a History Channel special 20 years from now.

In any case, outsourcing is bad for everyone. The fact that you presently benefit from it (or percieve some benefit from it) doesn't mean everyone should burry their head in the sand and hope it just goes away. The first step is admitting we (collectively as pilots) messed up big time allowing planes to be outsourced. Only after first admitting that can we begin to discuss how to take corrective action.