Will a pilot take less than a 30% pay cut if Delta enters chapter 11? Agree with you that Delta is not going away ie liquidate - maybe the only one that is likely to liquidate is USAIR and that has probably been pushed out another year with the amended terms of loan that were just made public. At least in the short-term RJs are good collateral and the airlines need to continue to buy to get around as much as they can from high labor and work rules to compete. Economy is picking up but airlines are not likely to increase revenue. Maybe traffic increases but in general fares will continue to soften. Price transparency and the untenable price of unrestricted fares are here to stay. The paradigm has shifted and from most of the posts it does not seem like anyone really gets the joke. This is not unique to the airline industry - "restructuring/cost cuts" have happened in all industries. Do you really think Morgan Stanley is still holding the $325million of convertible bonds? Those are long gone and whoever holds them now is at a significant loss unless they hedged the risk with shorting the DAL stock. That offering was a bet on the improving economy. Have to commend the company for taking the money when they can get it.
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General Lee
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hoosier33,
We played the capital markets and Morgan Stanley was the sole buyer of a chunk of convertible bonds with good yearly pay backs. they would not have invested that much as one buyer without thinking that Delta was fairly stable.
Delta has gotten smaller (mainline) and with total pay cuts through out the airline, even more can be done. The problem is that only one group is being targeted here currently for an huge sum---trying to "get it all" from one group. They are trying not to bring other unions on the property, and therefore are minimizing the effects on the other groups--unfairly. They claim that the others are at "industry standard" wages--but neglect to see that most are high time employees with higher pay scales than the competition. A thirty year gate agent at Delta make 5 times more than any Jetblue gate agent, and they are the competition. To say a small pay cut to reduce costs from them is not needed is ridiculous. Everyone has a stake in this company.
Also, fares have increased a tad as of late--but the major influence now is fuel prices. We are hedged better than some of the majors (CO/NW have zero, and USAir/AA have about 20%), and eventually those prices should come down---but trying to get wage concession down permanently for a temporary problem doesn't seem right. We can see that there needs to be some concession now, but to say that we can never have it back or can't have it back in steps is wrong.
Bye Bye---General Lee
We played the capital markets and Morgan Stanley was the sole buyer of a chunk of convertible bonds with good yearly pay backs. they would not have invested that much as one buyer without thinking that Delta was fairly stable.
Delta has gotten smaller (mainline) and with total pay cuts through out the airline, even more can be done. The problem is that only one group is being targeted here currently for an huge sum---trying to "get it all" from one group. They are trying not to bring other unions on the property, and therefore are minimizing the effects on the other groups--unfairly. They claim that the others are at "industry standard" wages--but neglect to see that most are high time employees with higher pay scales than the competition. A thirty year gate agent at Delta make 5 times more than any Jetblue gate agent, and they are the competition. To say a small pay cut to reduce costs from them is not needed is ridiculous. Everyone has a stake in this company.
Also, fares have increased a tad as of late--but the major influence now is fuel prices. We are hedged better than some of the majors (CO/NW have zero, and USAir/AA have about 20%), and eventually those prices should come down---but trying to get wage concession down permanently for a temporary problem doesn't seem right. We can see that there needs to be some concession now, but to say that we can never have it back or can't have it back in steps is wrong.
Bye Bye---General Lee
XRMEFLYER
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You are right about a couple of points. Delta is much better hedged than others when it comes to fuel but this only lasts through the 1st half of the year. On fares, think it will be interesting to see how "yield" plays out this year. Leisure fares have increased marginally with business fares still declining. Ultimately, for the big network guys to grow into the depths of debt that they have - they are going to need to grow the revenue line which can only really happen with fare increases and stable traffic. This seems very unlikely to happen over the intermediate term. Cutting costs by itself will not save the airlines but it is about the only thing they have some control over. On the Morgan Stanley converts - those bonds are trading actively in the convert market - today they are trading around 77 cents on the dollar compared to being priced at 1 dollar when issued in February. Morgan Stanley was only a broker in this transaction - they were not taking risk or saying that they believe in Delta's future. At the time the stock was 13.59 with a convert premium of 30%. The same DAL stock today is 7.70. Do not have an axe to grind but mgmt is telling the investment community that only half of the projected cuts are coming from the pilots. Maybe this is false but I doubt it. This is a bad situation but it is only going to get worse if you think your group is the only one targeted. "Us against them" has to have hugely negative impact on morale. The entire industry needs to remember they are really in the customer service industry.
On Your Six
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Maybe management should also look at improving the revenue side... Delta's management is doing an AWFUL job of managing this airline. But the pilots are always the easy scape goat....
I think Leo's $14 million retirement pay package should be used to help pare down the debt... Thank GOD Fred Reid is leaving - he has helped to manage Delta into the ground - now things can only GET BETTER... Can't wait to see the stock rising again.
I think Leo's $14 million retirement pay package should be used to help pare down the debt... Thank GOD Fred Reid is leaving - he has helped to manage Delta into the ground - now things can only GET BETTER... Can't wait to see the stock rising again.
On Your Six said:
If DL management did such an awful job managing the airline shouldn't DL already be BK like UA and US or like CO and HP a decade ago?? Keep in mind that DL management has to find a way to compete against LCC's that have almost no costs and bankrupt airlines like US which are being kept alive by the government.
DL has little control over the revenue environment. Airlines with the lowest costs control the revenue environment and DL clearly isn't in that group.
The ugly reality is that pilot costs will have to come down permanently. The current DL pay structure was based on the revenue enviroment of the late 90's. However, that revenue environment was a brief anomaly in the airline industry. The overall revenue trend is downward and has been for 25 years. Any pilot that thinks revenues will return to the late 90's is delusional. They might briefly spike up again if we get a big boom, but you can't base long-term contracts on temporary spikes.
General Lee
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Medflyer,
I agree that pilot costs need to come down, but I think OUR management wants your costs at Comair down too---and if you ever want to grow again, you will give in--just like we will. You are right, we will ALL give pay back and we will be paid less in the future, but everyone (all pilot groups) will get pressure from the top. The economy has been getting better overall, but now we have a gas crunch. Expect everyone to get sqeezed here. I bet when this is all over you and I will get close to a 20-30% pay cut....
Bye Bye---General Lee
I agree that pilot costs need to come down, but I think OUR management wants your costs at Comair down too---and if you ever want to grow again, you will give in--just like we will. You are right, we will ALL give pay back and we will be paid less in the future, but everyone (all pilot groups) will get pressure from the top. The economy has been getting better overall, but now we have a gas crunch. Expect everyone to get sqeezed here. I bet when this is all over you and I will get close to a 20-30% pay cut....
Bye Bye---General Lee
On Your Six
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Revenue management includes marketing - something that Delta doesn't do on any grand scale... On the cost management side, pilot pay is just one of many aspects up for review. What about fleet management? Why is Delta still flying gas-hog 737-200s? Why should JetBlue take the lead with regard to the 70-100 seat aircraft? Delta should have made a decision by now but instead must wait in line for years to get a decent fleet replacement (EMB, Airbus, 717, 736, etc.).
Delta's management has fumbled the ball again and again. Sure, pilot costs will have to come down, but that alone won't fix the problems - Delta needs GOOD LEADERSHIP and it is devoid of it at the moment - Grinchstein has started off on the wrong foot by blaming everything on the pilots...
Delta's management has fumbled the ball again and again. Sure, pilot costs will have to come down, but that alone won't fix the problems - Delta needs GOOD LEADERSHIP and it is devoid of it at the moment - Grinchstein has started off on the wrong foot by blaming everything on the pilots...
General Lee
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No cuts until BK judge says so...
No cuts, next contract will have to be the same or better or we will strike again. It won't matter...
My guess is they will get all the cuts they want in bankruptcy, burn through all the cash this year, high oil prices, poor overseas demand due to weak dollar, LCC with ACA and Virgin on the horizon... here it comes, better prepare now.
No cuts, next contract will have to be the same or better or we will strike again. It won't matter...
My guess is they will get all the cuts they want in bankruptcy, burn through all the cash this year, high oil prices, poor overseas demand due to weak dollar, LCC with ACA and Virgin on the horizon... here it comes, better prepare now.
General Lee
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Flaps30,
We will have great demand this Spring and Summer---even overseas because more of them will fly us back to the States due to it being cheaper to fly our airlines with the weaker dollar. This will really hurt the European airlines most. The fuel prices will be more expensive though, and it will hurt all of us---even some of the LCCs. I think our domestic flying will be full, and most of the INTL. We do have some debt maturities due this year, and that will be eaten up by any profits we make being full this Summer. I think we will still have more than $2 billion in cash at the end of this year (with $2.9 billion now)--and we will still have that near full negotations next year if we haven't settled by then. Also, I don't think the introduction of Indy or Virgin will hurt us--maybe other carriers directly competing in those markets. I think also some other legacy carriers may stop operating---which will decrease capacity and help us all. It will be interesting.....
Bye Bye---General Lee
We will have great demand this Spring and Summer---even overseas because more of them will fly us back to the States due to it being cheaper to fly our airlines with the weaker dollar. This will really hurt the European airlines most. The fuel prices will be more expensive though, and it will hurt all of us---even some of the LCCs. I think our domestic flying will be full, and most of the INTL. We do have some debt maturities due this year, and that will be eaten up by any profits we make being full this Summer. I think we will still have more than $2 billion in cash at the end of this year (with $2.9 billion now)--and we will still have that near full negotations next year if we haven't settled by then. Also, I don't think the introduction of Indy or Virgin will hurt us--maybe other carriers directly competing in those markets. I think also some other legacy carriers may stop operating---which will decrease capacity and help us all. It will be interesting.....
Bye Bye---General Lee
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General Lee said:Medflyer,
I agree that pilot costs need to come down, but I think OUR management wants your costs at Comair down too---and if you ever want to grow again, you will give in--just like we will. You are right, we will ALL give pay back and we will be paid less in the future, but everyone (all pilot groups) will get pressure from the top. The economy has been getting better overall, but now we have a gas crunch. Expect everyone to get sqeezed here. I bet when this is all over you and I will get close to a 20-30% pay cut....
Bye Bye---General Lee
I expect Comair will continue to feel pressure from the top. But unlike at DL, where there is potential for serious growth someday, I believe the bulk of the heavy growth is now behind Comair. The CRJ200 has already hit its peak and those last 32 birds going to SKYW and ASA will probably mark the end of CRJ200 deliveries in the DCI system.
After that, growth at Comair will be frozen. If negotiations between DL and DALPA eventually allow more CR7's, Comair will probably pick up a few, but not a lot. DL isn't distributing the RJ's according to cost, they're distributing them according to size. DL doesn't want any Connection carrier to get too much bigger than the rest. Right now, Comair is the largest Connection carrier hence Comair growth will be the slowest in the future.
The only other way I see Comair getting any major growth in the next five years would be if DALPA gives away the 90-100 seat market. This is where a lot of growth potential lies in the next 5 years. I don't think DALPA would be crazy enough to give it away, but you never know. DALPA has sold its junior members down the river for far less.
Personally, I don't think the 90-100 seater belongs at Comair. It's a mainline plane and should be flown by mainline pilots.
The economics of the CRJ (particularly the -200) are slowly degrading. No amount of concessions in the world will stop that....the CRJ is not the plane of the future.
General Lee
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Medflyer,
I also agree that the 100 seaters belong at mainline---and people at DCI should want to "move up" to mainline and enjoy the better benefits--rather than bringing the planes down to the lower pay scales. Thank you for that statement and I will try not to slam you AS MUCH in the future.
Bye Bye--General Lee
I also agree that the 100 seaters belong at mainline---and people at DCI should want to "move up" to mainline and enjoy the better benefits--rather than bringing the planes down to the lower pay scales. Thank you for that statement and I will try not to slam you AS MUCH in the future.
Bye Bye--General Lee
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And so it goes...just like anything else. Have and have nots......just like an obsolete kingdom that can not and will not change with the times. Delta is doomed. It reminds me of the United employees reaction a few years back. Wearing the blinders, passing the buck. Well, look at them now. Your lack of acceptance of any truths is laughable. But it's ok. I will have a good laugh when this "General Lee" is writing future posts proclaiming how RJ pilots should be paid more after he is out of a job and a new hire FO at an airline like Mesa. He will once again be a have not. I hope you are saving some of that bloated pay. Take a break....your posts are boring at best.
Funny, several years ago, one of the supreme DBA's on this board who went by the name "FlyDeltasJets" used to take great pleasure in the continued pointing out and dissection about CAL's lousy contract. Also, he gloated about our other problems on a continued basis.
My opinions then were forthcoming furloughs, losses and DAL coming after the pilots for major pay concessions. The laughter and arrogance came through loud and clear. Continued advice from me was not to throw stones in glass houses.
Let's see. PG has been on furlough now almost 2 years, DAL is on track to lose over $1.5 Billion this year and all their new CEO can talk about is getting in the pilots pockets. When viewing from the outside the only plan announced is that he seems bent on fixing their problems mainly on the backs of the pilots. Wait, I forgot about the millions being spent to change uniforms.
Really a very sad situation.
P.S. FDJ.......in the immortal words of Al Pacino in Scarface:
"Look at you now" (apply heavy Cuban accent)
My opinions then were forthcoming furloughs, losses and DAL coming after the pilots for major pay concessions. The laughter and arrogance came through loud and clear. Continued advice from me was not to throw stones in glass houses.
Let's see. PG has been on furlough now almost 2 years, DAL is on track to lose over $1.5 Billion this year and all their new CEO can talk about is getting in the pilots pockets. When viewing from the outside the only plan announced is that he seems bent on fixing their problems mainly on the backs of the pilots. Wait, I forgot about the millions being spent to change uniforms.
Really a very sad situation.
P.S. FDJ.......in the immortal words of Al Pacino in Scarface:
"Look at you now" (apply heavy Cuban accent)
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General Lee
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Minor league,
Just like USAir and United. We still have more cash, more assets, and a heck of a lot more time with the economy getting better. The only hang up now is the fuel, and that will get better over time. You have no clue what you are talking about. Take Care!
Bye Bye--General Lee
Just like USAir and United. We still have more cash, more assets, and a heck of a lot more time with the economy getting better. The only hang up now is the fuel, and that will get better over time. You have no clue what you are talking about. Take Care!
Bye Bye--General Lee
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Ohhh....you're an expert. (fart noise)
Just funnin with you. Remember, nobody likes a pompous Little Lord Fauntleroy.
On a serious note, the industry is changing very fast. Big bloated airlines need to get serious about change.
I hope for Delta's sake that the lessons of the past are learned.
Just funnin with you. Remember, nobody likes a pompous Little Lord Fauntleroy.
On a serious note, the industry is changing very fast. Big bloated airlines need to get serious about change.
I hope for Delta's sake that the lessons of the past are learned.
General Lee
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Minor League,
Just funnin with you too. But, you can't just say "adios" without looking at the facts---we are not in the exact location as UAL or USAir---and they have done very very poorly and are still around. I am not saying that we could never end up that way---but right now we still have time. How much? I don't know. But, we still have cash to burn, assets to sell (ASA/Comair if needed), and the economy is getting better. I printed our new INTL schedule, which will help, and even the analysts say we will be "profitable" (?) in 2005---why? Because we will have a new contract probably by then with pay cuts. That ususally means they think the combination of a better economy and suffiecient cash will get us through. What about those gas prices? They suck. Yes they do. But, apparently our Delta hedger guy sold the gas futures for a $100 million gain, then we will take a $17 million charge assocaited with that. That means we gain $83 million. The thought is that prices will actually go down eventually, and we supposedly will SAVE money. I would like to see that happen--but those guys are supposed to know what they are doing.....
I know we should change the way we do things over here, and we have tried (Song--a success?? I don't know yet...We are full now) and we have gotten leaner (16,000 less employees)--and now wages need to come down a bit. I just would like to see a bit more participation from everyone involved....
Tim,
General Baghdad Lee? I like it. It is all about the spin....
Bye Bye--General Lee
Just funnin with you too. But, you can't just say "adios" without looking at the facts---we are not in the exact location as UAL or USAir---and they have done very very poorly and are still around. I am not saying that we could never end up that way---but right now we still have time. How much? I don't know. But, we still have cash to burn, assets to sell (ASA/Comair if needed), and the economy is getting better. I printed our new INTL schedule, which will help, and even the analysts say we will be "profitable" (?) in 2005---why? Because we will have a new contract probably by then with pay cuts. That ususally means they think the combination of a better economy and suffiecient cash will get us through. What about those gas prices? They suck. Yes they do. But, apparently our Delta hedger guy sold the gas futures for a $100 million gain, then we will take a $17 million charge assocaited with that. That means we gain $83 million. The thought is that prices will actually go down eventually, and we supposedly will SAVE money. I would like to see that happen--but those guys are supposed to know what they are doing.....
I know we should change the way we do things over here, and we have tried (Song--a success?? I don't know yet...We are full now) and we have gotten leaner (16,000 less employees)--and now wages need to come down a bit. I just would like to see a bit more participation from everyone involved....
Tim,
General Baghdad Lee? I like it. It is all about the spin....
Bye Bye--General Lee
FlyBoeingJets
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General,
I hate to see everyone bagging on you.
I don't think the fuel hedge person should be fired, no one can guess where fuel prices will go. If they had started going down before selling they would also have been in hot water. The whole point to the hedging is to sell them at some point. Its good to see a $100 million profit. Too bad the huge pilot retirements will suck it up before it hits the floor.
I get your point about not getting TAKEN in negotiations. But you have been taking the company on a ride since shortly after 9/11 with your current contract. Stories of managements debauchery do not mitigate this. Most management's will do that sort of thing, it is expected and you can't change it.
I wish you well General but there seems to be too few at Delta like you. All the arrogant socially challenged individuals who LOVE their fat paycheck want to keep it till the end. Delta pilots as a group may be financially aware but airline history lessons don't seem to be offered by DALPA.
The Eastern story ought to be in your DALPA magazine as a warning to all. The Braniff, TWA, and PanAm stories would also be helpful. Please don't tell me you are just "Better off" than UAL and USAir. Do you really want to be just "Better off" than the two basket cases in the airline industry, or do you want to be strong? By strong I mean buying big aircraft, not just RJs.
I hate to see everyone bagging on you.
I don't think the fuel hedge person should be fired, no one can guess where fuel prices will go. If they had started going down before selling they would also have been in hot water. The whole point to the hedging is to sell them at some point. Its good to see a $100 million profit. Too bad the huge pilot retirements will suck it up before it hits the floor.
I get your point about not getting TAKEN in negotiations. But you have been taking the company on a ride since shortly after 9/11 with your current contract. Stories of managements debauchery do not mitigate this. Most management's will do that sort of thing, it is expected and you can't change it.
I wish you well General but there seems to be too few at Delta like you. All the arrogant socially challenged individuals who LOVE their fat paycheck want to keep it till the end. Delta pilots as a group may be financially aware but airline history lessons don't seem to be offered by DALPA.
The Eastern story ought to be in your DALPA magazine as a warning to all. The Braniff, TWA, and PanAm stories would also be helpful. Please don't tell me you are just "Better off" than UAL and USAir. Do you really want to be just "Better off" than the two basket cases in the airline industry, or do you want to be strong? By strong I mean buying big aircraft, not just RJs.
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General Lee
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skydraulic
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General Lee
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