jetflier
Well-known member
- Joined
- Dec 22, 2003
- Posts
- 718
LEVERAGE EXPOSED
Up to now we have been arguing the merits of a YES or NO vote to the TA.
The arguments for the TA were mostly centering around a "Bird-in-the-Hand" premise, being that one shouldn't exchange an unknown for a known. This premise was supported by beliefs that those closest to the deal knew the most, a trust issue. Also there have been focus on the mathematical model of the time value of money. These and possibly the larger narrow body footprint are the basic reasons for voting YES.
These are logical arguments, but I propose they are in the micro view. Not to diminish the importance of any kind of "raise", or a diminishing 50 seat footprint, but I will illustrate, now with the data I have received from a company insider, how these are "micro view conditions" that are overshadowed, and overpowered by more important and more forceful arguments.
Pilots move to safety. Industrial psychologists know this. I am going to show you where the real safety is. Because I believe real safety is in the most truthful information, and the most honest assessments, I implore you, each of you, for your family, for your profession, your company, to listen carefully and make your decision based upon sound, sober judgement, without emotion or pretense.
The details are:
1. The company has Capacity Purchase Agreements (CPA) with "contract carriers".
These agreements extend well past 2020.
2. Delta has to honor these agreements as they are contractual.
3. Delta has to absorb the costs of these contracts, and if the aircraft operating or maintenance costs increase, Delta has to absorb these costs in addition.
4. The 50 seat aircraft are operating at a loss.
5. The 50 seat aircraft are coming up for mandatory engine maintenance/replacement costs very soon.
6. The costs to re-engine these 50 seat aircraft is between 2-2 1/2 BILLION dollars over the next 3 to 4 years. Unavoidable costs. (there are statements of 1billion on this web, those are wrong. The company has stated to me, through a person who knows, that the actual cost is 2-2 1/2 BILLION)
7. The company can replace these aircraft and avoid the 2-2 1/2 BILLION by letting the "contract carriers" fly 76 seat aircraft. These "contract carriers" would then allow the CPA agreements to be unhinged. The total deal is a deal between the Canadair and the "contract carriers", and Delta.
8. The 50 seat -76 seat agreement gives the company a one time savings of the hundreds of millions of dollars.
9. Canadair only has 11 76 seat aircraft to build and it closes down the line. There is a time crunch on Delta to get this deal done before that line is closed. This was a Canadair corporate decision.
10. The profit sharing cost savings to the company (going from 15% to 10%) was equal to a 2 1/2% pay "raise".
11. Efficiencies included in the contract were equal to a 3 1/2% pay "raise".
(are you seeing how Vice President of Labor Relations and Human Resources Mike Campbell might have been being very conservative when he said the pilot TA was cost neutral?)
12. AFTER re-engining the 50 seat aircraft, they still would operate at a revenue loss.
I can state emphatically that if the TA passes, we lose ALL LEVERAGE.
Points to be made:
For those of you who think we are hurting the company by voting NO.
The company used absolutely every ounce of leverage it has in Bankruptcy court to cut our contracts to the bone. This was after promising to "Do it once and do it right." Trust was given and then abused. This was a purely business decision by our management team. Moak did the best he could do, I presume, but was up against a management team that was willing to use every facet of coercion to diminish our careers under a paper Bankruptcy. It wasn't personal. It was a balance sheet decision leaving emotion and ramifications out of it.
If we doubled our contract to 8-17-6-6, we are still saving the company money by agreeing to this 8-17-6-6 agreement. Be assured you are still helping the company in this example. Remember the 400 million Tim O'Malley has cited is cost neutral to the company, there's 2-2 1/2 BILLION and we really don't know what the final costing of the "hundreds of millions" for the one time savings is.
Do not worry. A 8-17-6-6 is getting the company out of a bind they put their own selves in, we has nothing to do with that awful decision. We are neither responsible, nor required to help management for their erroneous decisions. These are the problems of a management with a lack of foresight. We can see this in how they deal with us also. But the point is that we only help them because we are going to be with this company for decades, they may be gone next year, and it is in our interest to help the company dispose of their bad business decisions. But in doing so, we will make the same business-only decisions in regard to what we get out of this agreement. It will cost them, not dearly, but fairly. This is the attitude of a professional, and a sober observer of the facts. I implore you who faithfully serve the company to reject this TA so as to make this a win/win for management and for the professional pilot.
For those of you who think a "Bird-in-the-Hand" should be the only factor.
A "Bird-in-the-Hand" premise is based upon grabbing and holding known values, contrasting with holding values that are unknown and estimated.
We know we have 4-8.5-3-3. We know 3 1/2 are efficiencies and 2 1/2 are profit sharing. We know that after real estate and automobiles are taken out of the government inflation numbers our 2012 inflation rate is amounting to an annual 8.1%. We also know that the Fed has increased the money supply at historically unprecedented levels. (portends inflation)
So lets do the math:
4-8.5-3-3
First, focus on 8.5%. Let's take out the known company savings, which could also be classified as concessions. This is 3 1/2% for efficiencies and 2 1/2% for profit sharing. This is 6%.
8.5%-6%=2.5%
now our agreement is this:
4%-2.5%-3%-3%
This is hardly a good agreement when the company is losing money. It certainly is way under real inflation. Considering leverage, the financial state of the company, and the good-will sacrifices we have made, this is not representative of reality.
But we are talking about "Bird-in-the-Hand".
The "Bird-in-the-Hand" is the company under our leverage. That is the "Bird-in-the-Hand" we want to focus upon. This "Bird-in-the-Hand" leverage goes away, with any chance of real gains, the second this TA passes muster. Vanished. Three and one half more years under draconian wages and complaining pilots. This is after 7 1/2 years since the first per-bankruptcy "Do it once, do it right" promise. By the way, where are they now? Gone, just like this management team will likely be in a few short years.
The real "Bird-in-the-Hand" is the leverage we hold over the company this very day. Today you can make a decision that tells management that they need to balance the cost savings more fairly. If they will not do it out of good moral principles, we will do so out of good moral principles and the power, thank God, we have been given by their relying too heavily of 50 seat contract flying of our passengers.
The "Bird-in-the-Hand" is a downed TA. The "Bird-in-the-Hand" is the current leverage we have this very day.
I was wondering why I heard over a year and a half ago, several times through Line Check Airman, that RA wanted to get an early agreement for us, unlike the other carriers with bad relations. Many thought he was being paternal and gracious. Now we know it was all about covering management mistakes, burdensome costs on an over-reliance on 50 seat aircraft, and we were the ones that he wanted to carry the water. Shame on him.
For those of you who said it the TA did not pass the "smell test"
All I can say is thank you for the guts to say what you thought was right for your professional brothers and sisters, without pandering to pressure. Continue with facts and reasoned thinking.
What to do now?
First and foremost is to look at the facts and make a decision. Definitely vote. Make your voice heard. I still run into busy family guys and girls who still haven't seen the TA! I ran into an old friend yesterday! That's June 5th!
So don't assume everyone knows. One guy said. "18% over 3 1/2 years! I'm voting YES!". We can laugh or pity those who are not acquainted with the facts, but they affect your career and mine! Engage in conversations in a congenial and calm manner. Present the facts, the arguments are overwhelming. ''
A key point to all of this discussion is that the leverage is a one time event.
As far as who does the duties after a failed TA? This is a tough one. For me I think every NC member and MEC member acted in good faith. I believe Tim O'Malley is a hard working, honest and dedicated leader. But I also believe that there have been egregious errors in the assessment of the TA landscape, the knowledge of the intentions and Achilles's heel of management's predicament, and egregious errors in the proper representative character of the pilots-especially in light of the effort of the contract survey and it's being apparently discarded by the leadership, in principle, the rates.
There is not one person who says the rates are GOOD. Not one. Even Tim O'Malley openly admits this.
With all this leverage. The company's financial state. The pricing power and new revenue streams and the moral obligation to repay past sacrifices, with "Bird-in-the-Hand" safety, why would anyone vote YES to this TA?
Only the most uninformed and reckless character would.
Up to now we have been arguing the merits of a YES or NO vote to the TA.
The arguments for the TA were mostly centering around a "Bird-in-the-Hand" premise, being that one shouldn't exchange an unknown for a known. This premise was supported by beliefs that those closest to the deal knew the most, a trust issue. Also there have been focus on the mathematical model of the time value of money. These and possibly the larger narrow body footprint are the basic reasons for voting YES.
These are logical arguments, but I propose they are in the micro view. Not to diminish the importance of any kind of "raise", or a diminishing 50 seat footprint, but I will illustrate, now with the data I have received from a company insider, how these are "micro view conditions" that are overshadowed, and overpowered by more important and more forceful arguments.
Pilots move to safety. Industrial psychologists know this. I am going to show you where the real safety is. Because I believe real safety is in the most truthful information, and the most honest assessments, I implore you, each of you, for your family, for your profession, your company, to listen carefully and make your decision based upon sound, sober judgement, without emotion or pretense.
The details are:
1. The company has Capacity Purchase Agreements (CPA) with "contract carriers".
These agreements extend well past 2020.
2. Delta has to honor these agreements as they are contractual.
3. Delta has to absorb the costs of these contracts, and if the aircraft operating or maintenance costs increase, Delta has to absorb these costs in addition.
4. The 50 seat aircraft are operating at a loss.
5. The 50 seat aircraft are coming up for mandatory engine maintenance/replacement costs very soon.
6. The costs to re-engine these 50 seat aircraft is between 2-2 1/2 BILLION dollars over the next 3 to 4 years. Unavoidable costs. (there are statements of 1billion on this web, those are wrong. The company has stated to me, through a person who knows, that the actual cost is 2-2 1/2 BILLION)
7. The company can replace these aircraft and avoid the 2-2 1/2 BILLION by letting the "contract carriers" fly 76 seat aircraft. These "contract carriers" would then allow the CPA agreements to be unhinged. The total deal is a deal between the Canadair and the "contract carriers", and Delta.
8. The 50 seat -76 seat agreement gives the company a one time savings of the hundreds of millions of dollars.
9. Canadair only has 11 76 seat aircraft to build and it closes down the line. There is a time crunch on Delta to get this deal done before that line is closed. This was a Canadair corporate decision.
10. The profit sharing cost savings to the company (going from 15% to 10%) was equal to a 2 1/2% pay "raise".
11. Efficiencies included in the contract were equal to a 3 1/2% pay "raise".
(are you seeing how Vice President of Labor Relations and Human Resources Mike Campbell might have been being very conservative when he said the pilot TA was cost neutral?)
12. AFTER re-engining the 50 seat aircraft, they still would operate at a revenue loss.
I can state emphatically that if the TA passes, we lose ALL LEVERAGE.
Points to be made:
For those of you who think we are hurting the company by voting NO.
The company used absolutely every ounce of leverage it has in Bankruptcy court to cut our contracts to the bone. This was after promising to "Do it once and do it right." Trust was given and then abused. This was a purely business decision by our management team. Moak did the best he could do, I presume, but was up against a management team that was willing to use every facet of coercion to diminish our careers under a paper Bankruptcy. It wasn't personal. It was a balance sheet decision leaving emotion and ramifications out of it.
If we doubled our contract to 8-17-6-6, we are still saving the company money by agreeing to this 8-17-6-6 agreement. Be assured you are still helping the company in this example. Remember the 400 million Tim O'Malley has cited is cost neutral to the company, there's 2-2 1/2 BILLION and we really don't know what the final costing of the "hundreds of millions" for the one time savings is.
Do not worry. A 8-17-6-6 is getting the company out of a bind they put their own selves in, we has nothing to do with that awful decision. We are neither responsible, nor required to help management for their erroneous decisions. These are the problems of a management with a lack of foresight. We can see this in how they deal with us also. But the point is that we only help them because we are going to be with this company for decades, they may be gone next year, and it is in our interest to help the company dispose of their bad business decisions. But in doing so, we will make the same business-only decisions in regard to what we get out of this agreement. It will cost them, not dearly, but fairly. This is the attitude of a professional, and a sober observer of the facts. I implore you who faithfully serve the company to reject this TA so as to make this a win/win for management and for the professional pilot.
For those of you who think a "Bird-in-the-Hand" should be the only factor.
A "Bird-in-the-Hand" premise is based upon grabbing and holding known values, contrasting with holding values that are unknown and estimated.
We know we have 4-8.5-3-3. We know 3 1/2 are efficiencies and 2 1/2 are profit sharing. We know that after real estate and automobiles are taken out of the government inflation numbers our 2012 inflation rate is amounting to an annual 8.1%. We also know that the Fed has increased the money supply at historically unprecedented levels. (portends inflation)
So lets do the math:
4-8.5-3-3
First, focus on 8.5%. Let's take out the known company savings, which could also be classified as concessions. This is 3 1/2% for efficiencies and 2 1/2% for profit sharing. This is 6%.
8.5%-6%=2.5%
now our agreement is this:
4%-2.5%-3%-3%
This is hardly a good agreement when the company is losing money. It certainly is way under real inflation. Considering leverage, the financial state of the company, and the good-will sacrifices we have made, this is not representative of reality.
But we are talking about "Bird-in-the-Hand".
The "Bird-in-the-Hand" is the company under our leverage. That is the "Bird-in-the-Hand" we want to focus upon. This "Bird-in-the-Hand" leverage goes away, with any chance of real gains, the second this TA passes muster. Vanished. Three and one half more years under draconian wages and complaining pilots. This is after 7 1/2 years since the first per-bankruptcy "Do it once, do it right" promise. By the way, where are they now? Gone, just like this management team will likely be in a few short years.
The real "Bird-in-the-Hand" is the leverage we hold over the company this very day. Today you can make a decision that tells management that they need to balance the cost savings more fairly. If they will not do it out of good moral principles, we will do so out of good moral principles and the power, thank God, we have been given by their relying too heavily of 50 seat contract flying of our passengers.
The "Bird-in-the-Hand" is a downed TA. The "Bird-in-the-Hand" is the current leverage we have this very day.
I was wondering why I heard over a year and a half ago, several times through Line Check Airman, that RA wanted to get an early agreement for us, unlike the other carriers with bad relations. Many thought he was being paternal and gracious. Now we know it was all about covering management mistakes, burdensome costs on an over-reliance on 50 seat aircraft, and we were the ones that he wanted to carry the water. Shame on him.
For those of you who said it the TA did not pass the "smell test"
All I can say is thank you for the guts to say what you thought was right for your professional brothers and sisters, without pandering to pressure. Continue with facts and reasoned thinking.
What to do now?
First and foremost is to look at the facts and make a decision. Definitely vote. Make your voice heard. I still run into busy family guys and girls who still haven't seen the TA! I ran into an old friend yesterday! That's June 5th!
So don't assume everyone knows. One guy said. "18% over 3 1/2 years! I'm voting YES!". We can laugh or pity those who are not acquainted with the facts, but they affect your career and mine! Engage in conversations in a congenial and calm manner. Present the facts, the arguments are overwhelming. ''
A key point to all of this discussion is that the leverage is a one time event.
As far as who does the duties after a failed TA? This is a tough one. For me I think every NC member and MEC member acted in good faith. I believe Tim O'Malley is a hard working, honest and dedicated leader. But I also believe that there have been egregious errors in the assessment of the TA landscape, the knowledge of the intentions and Achilles's heel of management's predicament, and egregious errors in the proper representative character of the pilots-especially in light of the effort of the contract survey and it's being apparently discarded by the leadership, in principle, the rates.
There is not one person who says the rates are GOOD. Not one. Even Tim O'Malley openly admits this.
With all this leverage. The company's financial state. The pricing power and new revenue streams and the moral obligation to repay past sacrifices, with "Bird-in-the-Hand" safety, why would anyone vote YES to this TA?
Only the most uninformed and reckless character would.
