Delta to Give Cash to Employees

[FDJ2]

Delta to Give Cash to Employees
Wednesday March 7, 3:44 pm ET
By Harry R. Weber, AP Business Writer Delta Gives More Details on Post-Bankruptcy Employee Benefits

ATLANTA (AP) -- Delta Air Lines Inc. plans to issue a lump-sum cash payment to many employees when the airline emerges from bankruptcy this spring, according to a newsletter sent this week to workers from Chief Executive Gerald Grinstein.


The exact amount of money was not disclosed, but the newsletter said all regular employees, not including officers and directors, will receive a lump-sum payment representing a percentage of their pay.

A majority of employees also will receive grants of unrestricted stock in the reorganized Delta.

About 1,000 leaders of the company will be granted ownership stakes in Delta, but those shares will come in different forms, such as restricted stock, stock options and performance stock, and will vest over periods of up to three years, the newsletter said. In addition, some pieces of the management awards will require Delta to meet specific performance goals for them to have any value.

Profit-sharing and other reward programs also will be set up, the newsletter said, adding that profit-sharing will pay at least 15 percent of the company's annual pretax profit, which is what's left after subtracting expenses from net revenue.

Grinstein said the company would move to an industry standard pay structure, on par with other carriers, and he said some employees would receive their first pay increases this summer.

Atlanta-based Delta has said before that employees would share in Delta's successful emergence from bankruptcy, but previously had not released details. The newsletter said employees would receive further details later.
The news follows several years of heavy pay and benefit cuts for all employees, including executives and pilots. Since 2001, Delta also has announced it would cut more than 30,000 jobs.

"Delta's transformation is a remarkable success story from a bankrupt company nearly out of cash to a company that some speculate will once again be the industry leader -- and that is certainly our goal," Grinstein said in the newsletter.
Delta, the nation's third-largest carrier, filed for bankruptcy in September 2005. It projects it will be worth $9.4 billion to $12 billion when it emerges from Chapter 11, possibly as early as next month.

 

[doh]

Isn't this the money ascarpe was talking about? I think he said it will amount to about $160,000 for him. Remember, God gave you 2 hands to grab as much money as you can from this deal!

 

[Pat Fabin]

No this is a cash "bonus" given to all the non-contract (non-pilot) employees...basically a "thank you" for sticking it out through some very trying times.

This is not the same as the unsecured claim that DALPA negotiated.

 

[601Pilot]

No this is a cash "bonus" given to all the non-contract (non-pilot) employees...basically a "thank you" for sticking it out through some very trying times.

This is not the same as the unsecured claim that DALPA negotiated.

Great idea! DAL is still losing money, but they are out of bankruptcy......yea!!!! Did Leo call with this suggestion for handing out money? DAL might want to MAKE some money and have some in the bank before they start throwing cash around to their employees.

 

[Wiskey Driver]

No this is a cash "bonus" given to all the non-contract (non-pilot) employees...basically a "thank you" for sticking it out through some very trying times.

This is not the same as the unsecured claim that DALPA negotiated.

WHAT!!! THE PILOTS
GET NO MONEY?????

That is simply not cool not after you guys stood arm and arm with management singing keep Delta my Delta aka kumbayah
:laugh: :laugh:

Seriously, many carriers have programs like this that reward non contract and or non union employees for their service. This is every employee group at DAL except the pilots which is their only unionized work group. FDJ2 or general is this true?

WD.

 

[Ty Webb]

"Way to go, Delta!".

The employees have been through hell. They deserve it. The pilots will get theirs, too, it just may take a little longer, and if it isn't offered, they will get it on their own!

Congratulations to the Delta employees for getting to this point and good luck on the continued scramble for the high ground.

A rising tide lifts all ships.

Ty Webb

 

[FDJ2]

Seriously, many carriers have programs like this that reward non contract and or non union employees for their service. This is every employee group at DAL except the pilots which is their only unionized work group. FDJ2 or general is this true?

WD.

Not necessarily true. Pilots will participate in any profit sharing, and we have a "me too" clause in our contract which covers any broad employee pay increases. We have minimum pay rate increases also in our PWA, however if the company continues to track along as described in its disclosure statement, could be more substantial than the contractually agreed to increases. Additionally, pilots participate in any monthly performance bonuses.

I believe there might be a small cash pay out to the employees once we exit BK, but it will hardly match the pilots $2.1B claim.

 

[FDJ2]

"
A rising tide lifts all ships.

Ty Webb

Very true, and may I add, good luck with your contract negotiations.

 

[Wiskey Driver]

Not necessarily true. Pilots will participate in any profit sharing, and we have a "me too" clause in our contract which covers any broad employee pay increases. We have minimum pay rate increases also in our PWA, however if the company continues to track along as described in its disclosure statement, could be more substantial than the contractually agreed to increases. Additionally, pilots participate in any monthly performance bonuses.

I believe there might be a small cash pay out to the employees once we exit BK, but it will hardly match the pilots $2.1B claim.

Serious question, DALPA has 2.1 billion claim against DAL now will the issue of new stock under what might be a new name cause any problems with getting your pay back on that??

WD

 

[General Lee]

Serious question, DALPA has 2.1 billion claim against DAL now will the issue of new stock under what might be a new name cause any problems with getting your pay back on that??

WD

We have already sold the claims (some have said close to 65 cents on the dollar, and United got 24 cents on the dollar). Most of our pilots have sold their stake, so they will get atleast $200,000 if they did so( maybe double that for Captains). Some of that is put directly into last years and this year's IRA contributions, and then the rest is taxed at the standard 35%. We also get a $650 million note from Delta for our pension loss, which will give each pilot another $45,000 at least, and more for people who have been here longer. Not bad. And, if they fill up our 401K limits for this year and next year, Delta still has to give us 9% of our monthly take home pay in cash (for our DC fund that would be full if they filled it to the limit of $44,000 per year), and also another 2% for a 401K match that is also full. In otherwords, we would be getting an 11% raise atleast for the next two years, on top of the big money from the claim and the pension note.


Bye Bye--General Lee

 

[Pat Fabin]

The general is basically correct, the payouts from the 2.1b claim and the 650m note will far surpass anything given directly to the employees. AND, as pointed out earlier, we have a "me too" clause (hate that term), that allows us to tag along to any broad-based pay increase or cash bonuses given to other employee groups.

It is good to see the other employees get something though. We negotiated what we have, but most of the other employees don't make very much and have worked hard in very uncertain times. Its amazing that so many people stuck with this crazy company.

Hopefully brighter times are ahead!

 

[007]

I can't wait to see what they come up with next so they don't have to pay that note......

 

[Wiskey Driver]

I can't wait to see what they come up with next so they don't have to pay that note......

That was my thinking when I asked the original question.

WD.

 

[HomerJ]

How many Billions did DL lose before BK?

 

[FDJ2]

That was my thinking when I asked the original question.

WD.

The "note" and the "claim" are two different animals. The claim floats on the market and its value may vary depending on who buys it and when, apparently it sold and is selling at better than expected rates. Most pilots have already pre sold their claim and whatever financial institution bought it, pays out on that claim once we exit BK. That money then get's distributed to the pilots in our 401k up to the IRS 415 limit for both 2006 and 2007 immediately upon bk exit, 44k and 45k respectively. Any remaining funds are distributed as cash with applicable tax deductions.

The "note" has a guaranteed value, $650M. It is issued within 120 days of bk exit and is converted to cash thereafter. The cash from the note must equal $650M and it is then distributed within 6 to 12 months of bk exit, once again into the 401k up to the IRS 415 limit. The note will most likely be distributed in early 2008, in order to maximize the tax benefit.

Both the note and the claim are part of DAL's court approved POR and they are binding on the company and any successor.

Once the claim and the note are distributed the company is still on the hook for a 9% defined contribution and 2% 401k contribution (not match), since the IRS 415 limit will be met for all DAL pilots on the seniority list as of June 1 2006, for tax years 2006 and 2007 and most likely 2008, each pilot will receive the 9% DC and 2% 401K money as ordinary income. Effectively an 11% pay raise on top of our contractually agreed upon pay raises and any profit sharing or performance pay outs.

DAL is on track to exit BK in less than 2 months. The company has stated that it is ahead of it POR at this time and actually posted an operational profit for the full year 2006. Confirmation hearings are scheduled for April 25th.

 

[General Lee]

The "note" and the "claim" are two different animals. The claim floats on the market and its value may vary depending on who buys it and when, apparently it sold and is selling at better than expected rates. Most pilots have already pre sold their claim and whatever financial institution bought it, pays out on that claim once we exit BK. That money then get's distributed to the pilots in our 401k up to the IRS 415 limit for both 2006 and 2007 immediately upon bk exit, 44k and 45k respectively. Any remaining funds are distributed as cash with applicable tax deductions.

The "note" has a guaranteed value, $650M. It is issued within 120 days of bk exit and is converted to cash thereafter. The cash from the note must equal $650M and it is then distributed within 6 to 12 months of bk exit, once again into the 401k up to the IRS 415 limit. The note will most likely be distributed in early 2008, in order to maximize the tax benefit.

Both the note and the claim are part of DAL's court approved POR and they are binding on the company and any successor.

Once the claim and the note are distributed the company is still on the hook for a 9% defined contribution and 2% 401k contribution (not match), since the IRS 415 limit will be met for all DAL pilots on the seniority list as of June 1 2006, for tax years 2006 and 2007 and most likely 2008, each pilot will receive the 9% DC and 2% 401K money as ordinary income. Effectively an 11% pay raise on top of our contractually agreed upon pay raises and any profit sharing or performance pay outs.

DAL is on track to exit BK in less than 2 months. The company has stated that it is ahead of it POR at this time and actually posted an operational profit for the full year 2006. Confirmation hearings are scheduled for April 25th.

Don't talk logically to WD, he doesn't understand it.

Bye Bye--General Lee

 

[retired guy]

BTW..the money that is to be given to the non-contract people is the same money that my former employers screw me and the rest of the retired pilots out of. (Sorry to end a sentence with a preposition.)

 

[Heavy Set]

BTW..the money that is to be given to the non-contract people is the same money that my former employers screw me and the rest of the retired pilots out of. (Sorry to end a sentence with a preposition.)

Did you have to go? You could have stayed and gambled, and maybe gone to age 65 if it happens. What about the guys that didn't have the choice you had, like the 49 year olds? It was your choice.

 

[dtfl]

Not necessarily true. Pilots will participate in any profit sharing, and we have a "me too" clause in our contract which covers any broad employee pay increases. We have minimum pay rate increases also in our PWA, however if the company continues to track along as described in its disclosure statement, could be more substantial than the contractually agreed to increases. Additionally, pilots participate in any monthly performance bonuses.

I believe there might be a small cash pay out to the employees once we exit BK, but it will hardly match the pilots $2.1B claim.

Interesting how the releases I have read are worded so it seems only the salaried folks (ie non contract) are getting the pay raises.

 

[BILL LUMBERG]

Hey FDJ and GL,

Where exactly is the me-too clause written in the PWA......I know it's urban legend but I can't find the exact language......Is it in our stellar attempt at a recovery compact??

Thanks