Part 1
ALPA Council 1 Update, May 31, 2012
By now, most of you have had the opportunity to review the details of the TA. I think that now is a good time for me to explain my NO vote on the MEC and to give you my thoughts on the good, bad, and ugly of the agreement.
I think we all were hopeful that this agreement would finally be a “wow” moment for all 12,000 pilots at Delta Air Lines after a decade of pay cuts and stagnant career progression. Unfortunately this is not the case. Management is smart. They do not need 12,000 yes votes, they only need 6,001.
Through the feedback that I have received from phone calls, e-mails, lounge visits, PUB events, LEC meetings, and personal conservations, it became pretty clear what the pilots of C1 were expecting from the first post-merger Section 6 negotiations—an industry-leading contract. This feedback also showed that payand scope were by far the most important issues for the pilots.
Pay
This is one of the easiest sections to evaluate with respect to the direction given to us by the C1 pilots. The direction was clearly that the Delta pilots expected to be the highest-paid in the industry. Not by year three or four, but immediately. While this TA does increase pay by 19.7 percent by 2015, in my opinion, it comes too late. Also consider that to achieve this increase, the lower-tier profit sharing was reduced by 33 percent (<$2.5B, the range from which we’ve received our profit sharing). This reduction in profit sharing equates to approximately 2.5 percent of pay, assuming profits near $2.5B. In reality, that 8.5 percent pay increase in 2013 is offset by the profit-sharing reduction for 2013 (paid in 2014), so that it’s actually more equivalent to a 6 percent pay increase. While I do agree that, in general, it is better to have pay in the form of pay rates than profit sharing, I would note that, for the term of this TA, it has been widely forecasted that the airline industry is poised for large profits. I would also suggest that in this case, taking money from profit sharing to add to pay rates is similar to taking money from your savings account and depositing it in your checking account. After the transaction is complete, you are no richer than when you started.
Other areas of compensation that were changed include:
• Increase in reserve guarantee (72-80 hrs) GOOD
• Increase in reserve maximum to ALV+15.
Increase in pay GOOD; potentially working every day on reserve BAD
• Average Daily Guarantee (4:30/day) GOOD
• CQ training (3:45/day) GOOD
• Distributed training pay from1 minute for 3, to 1 to 2 GOOD
• Vacation pay from 3:00 per day to 3:15 per day GOOD
• International pay increased to $6.50/Captains and $4.50/First Officers GOOD
• Per diem increased $.10 in 2013 and $.10 in 2014 GOOD
Scope
While the changes to scope are harder to quantify than pay, I do believe that there is an overall improvement in scope. I do not, however, believe it is a “home run” as others have stated. Block hours will transfer from the DCI carriers to the mainline under this agreement. I think we can all agree that the transfer of flying from DCI to mainline is a good thing. However, when we look at the scope section closely, it is not as rosy as some will have you believe. Note also that the pilot group did not receive any “negotiating credit” for the scope changes that the Company wanted.
Current RJ Limits
• Unlimited propeller-driven aircraft up to 70 seats
• Unlimited jet aircraft up to 50 seats
• 255 limit on 70/76-seat jet aircraft. Currently there are 102 70-seat jet aircraft and 153 76-seat aircraft. Total 255.
• 3 to 1 growth of 76-seat aircraft/mainline once there are 767 aircraft on the mainline, up to a maximum of 255 76-seat aircraft.
TA Limits
• Hard cap of 450 DCI aircraft (with a few limited exceptions). GOOD
• Hard cap of 125 50-seat aircraft. GOOD
• Hard cap of 102 70-seat aircraft EVEN
• Hard cap of 223 76-seat aircraft. (Must take delivery of all 88 B-717 aircraft.) BAD
While we have accomplished setting a “hard cap” on the DCI carriers’ fleets, we have allowed the company to outsource an additional 70 76-seat jets. Under the current PWA, the company could exchange 70-seat RJs for 76-seat RJs if the mainline fleet exceeded 767. While technically they could increase the number of 76-seat aircraft up to a limit of 255, this scenario is highly unlikely. I doubt the company could justify the additional expense of (in most cases) swapping to a 76-seat jet just to add 6 seats. The additional 76-seat RJs are equivalent to “two Compass Airlines.” The key point is that there will be 325 70/76-seat jets that will be outsourced under this agreement. I remember that when I got hired at Northwest, the number of DC-9s on the property (note that this was before the small RJs were born) totaled around 180 aircraft. In the ensuing 17 years, the numbers of RJs have increased by the hundreds, while mainline aircraft have dwindled. That is a hard pill to swallow. Also understand that the block-hour (BH) ratios in place between domestic mainline and DCI do not make a distinction between which DCI aircraft block hours would be pulled down if the Company fell out of compliance due to a domestic mainline BH reduction. This means that if DCI needs to reduce their block hours, the carriers (and Delta) could choose to further reduce 50-seat block hours and leave the 76-seat block hours untouched. In an extreme example that incorporated a significant domestic mainline BH reduction, it could be possible that the DCI flying would be comprised of only 76-seat RJs.
So, in an increasing BH environment, DCI can only add 76-seat RJs as 717s arrive at mainline. That’s positive. However, in a decreasing BH environment, the disincentive/penalty for the company isn’t as great, since they can return to compliance by reducing usage in the smaller, more inefficient aircraft that they want to ultimately “park” anyway. It’s more negative for the pilot group when potentially larger domestic mainline aircraft are reduced than the Company’s disincentive for doing so.
This high level of fleet flexibility that the Company receives from this agreement is one of the key reasons that expectations for this TA were so high.
Continued...
ALPA Council 1 Update, May 31, 2012
By now, most of you have had the opportunity to review the details of the TA. I think that now is a good time for me to explain my NO vote on the MEC and to give you my thoughts on the good, bad, and ugly of the agreement.
I think we all were hopeful that this agreement would finally be a “wow” moment for all 12,000 pilots at Delta Air Lines after a decade of pay cuts and stagnant career progression. Unfortunately this is not the case. Management is smart. They do not need 12,000 yes votes, they only need 6,001.
Through the feedback that I have received from phone calls, e-mails, lounge visits, PUB events, LEC meetings, and personal conservations, it became pretty clear what the pilots of C1 were expecting from the first post-merger Section 6 negotiations—an industry-leading contract. This feedback also showed that payand scope were by far the most important issues for the pilots.
Pay
This is one of the easiest sections to evaluate with respect to the direction given to us by the C1 pilots. The direction was clearly that the Delta pilots expected to be the highest-paid in the industry. Not by year three or four, but immediately. While this TA does increase pay by 19.7 percent by 2015, in my opinion, it comes too late. Also consider that to achieve this increase, the lower-tier profit sharing was reduced by 33 percent (<$2.5B, the range from which we’ve received our profit sharing). This reduction in profit sharing equates to approximately 2.5 percent of pay, assuming profits near $2.5B. In reality, that 8.5 percent pay increase in 2013 is offset by the profit-sharing reduction for 2013 (paid in 2014), so that it’s actually more equivalent to a 6 percent pay increase. While I do agree that, in general, it is better to have pay in the form of pay rates than profit sharing, I would note that, for the term of this TA, it has been widely forecasted that the airline industry is poised for large profits. I would also suggest that in this case, taking money from profit sharing to add to pay rates is similar to taking money from your savings account and depositing it in your checking account. After the transaction is complete, you are no richer than when you started.
Other areas of compensation that were changed include:
• Increase in reserve guarantee (72-80 hrs) GOOD
• Increase in reserve maximum to ALV+15.
Increase in pay GOOD; potentially working every day on reserve BAD
• Average Daily Guarantee (4:30/day) GOOD
• CQ training (3:45/day) GOOD
• Distributed training pay from1 minute for 3, to 1 to 2 GOOD
• Vacation pay from 3:00 per day to 3:15 per day GOOD
• International pay increased to $6.50/Captains and $4.50/First Officers GOOD
• Per diem increased $.10 in 2013 and $.10 in 2014 GOOD
Scope
While the changes to scope are harder to quantify than pay, I do believe that there is an overall improvement in scope. I do not, however, believe it is a “home run” as others have stated. Block hours will transfer from the DCI carriers to the mainline under this agreement. I think we can all agree that the transfer of flying from DCI to mainline is a good thing. However, when we look at the scope section closely, it is not as rosy as some will have you believe. Note also that the pilot group did not receive any “negotiating credit” for the scope changes that the Company wanted.
Current RJ Limits
• Unlimited propeller-driven aircraft up to 70 seats
• Unlimited jet aircraft up to 50 seats
• 255 limit on 70/76-seat jet aircraft. Currently there are 102 70-seat jet aircraft and 153 76-seat aircraft. Total 255.
• 3 to 1 growth of 76-seat aircraft/mainline once there are 767 aircraft on the mainline, up to a maximum of 255 76-seat aircraft.
TA Limits
• Hard cap of 450 DCI aircraft (with a few limited exceptions). GOOD
• Hard cap of 125 50-seat aircraft. GOOD
• Hard cap of 102 70-seat aircraft EVEN
• Hard cap of 223 76-seat aircraft. (Must take delivery of all 88 B-717 aircraft.) BAD
While we have accomplished setting a “hard cap” on the DCI carriers’ fleets, we have allowed the company to outsource an additional 70 76-seat jets. Under the current PWA, the company could exchange 70-seat RJs for 76-seat RJs if the mainline fleet exceeded 767. While technically they could increase the number of 76-seat aircraft up to a limit of 255, this scenario is highly unlikely. I doubt the company could justify the additional expense of (in most cases) swapping to a 76-seat jet just to add 6 seats. The additional 76-seat RJs are equivalent to “two Compass Airlines.” The key point is that there will be 325 70/76-seat jets that will be outsourced under this agreement. I remember that when I got hired at Northwest, the number of DC-9s on the property (note that this was before the small RJs were born) totaled around 180 aircraft. In the ensuing 17 years, the numbers of RJs have increased by the hundreds, while mainline aircraft have dwindled. That is a hard pill to swallow. Also understand that the block-hour (BH) ratios in place between domestic mainline and DCI do not make a distinction between which DCI aircraft block hours would be pulled down if the Company fell out of compliance due to a domestic mainline BH reduction. This means that if DCI needs to reduce their block hours, the carriers (and Delta) could choose to further reduce 50-seat block hours and leave the 76-seat block hours untouched. In an extreme example that incorporated a significant domestic mainline BH reduction, it could be possible that the DCI flying would be comprised of only 76-seat RJs.
So, in an increasing BH environment, DCI can only add 76-seat RJs as 717s arrive at mainline. That’s positive. However, in a decreasing BH environment, the disincentive/penalty for the company isn’t as great, since they can return to compliance by reducing usage in the smaller, more inefficient aircraft that they want to ultimately “park” anyway. It’s more negative for the pilot group when potentially larger domestic mainline aircraft are reduced than the Company’s disincentive for doing so.
This high level of fleet flexibility that the Company receives from this agreement is one of the key reasons that expectations for this TA were so high.
Continued...