Do DAL pilots have more to lose in a Chap 11 filing or in giving $1bil

[shon7]

Do DAL pilots have more to lose in a Chap. 11 filing or giving in to concessions of $1 Billion?

Also, if in Chap. 11 when the contracts are voided who writes up the new contracts and are these new contracts also negotiated? Finally, how can one assume that the judge will rule in favor of management and not the unions (stranger things HAVE happened).

 

[Heavy Set]

$1 billion won't be enough in management's eyes...

Here's the deal. DAL management won't stop at $1 billion for the pilots. Once the pilots give in, DAL management will say that's not enough and say that $1.3 billion is the minimum (knowing that this negotiating window will be open for just a little while - take advantage of the situation and get more). Under Chapter 11, negotiations will be structured better and OTHER stakeholders will be asked to contribute as well - not solely the one union on the property. Notice that it's a classic negotiating move that they now put more issues on the negotiating table (jumpseats, etc.) so that they can "take more away" in order to get what they want.

How can you trust a management who has made so many blunders in the past and now has sought to make the pilots union the scapegoat for all of its problems? Sure, pilot costs need to come down - the LCC environment forces the issue. No argument there. But DAL management will likely try to take advantage of the situation (super negative "sky is falling" public relations campaign) to get as much as they can from the pilots union as possible right now...

 

[vc10]

Exactly how will negotiations be "structured better" in Chapter 11? In Ch 11, negotiations (if any) will be performed under the threat of a Sec 1113 filing, in which management petitions the judge to unilaterally change the pilot agreement. The minute United went to the judge with a Sec 1113 petition, its unions caved.

American and United both got restructured labor deals at about the same time last year. American did it outside of bankruptcy, United did it inside bankruptcy. Both got contributions from other "stakeholders", but United got more because it was in Ch 11. Despite that, however, American has performed better since the restructuring. Why? Because there are costs to being in bankruptcy too, including (but not limited to) a couple hundred million in "professional fees" (lawyers, bankers, other parasites) annually. So if you, as Delta pilots, want to finance the lifestyles of the rich and useless, go right ahead and select the door labeled "Ch 11".

Here's the deal. DAL management won't stop at $1 billion for the pilots. Once the pilots give in, DAL management will say that's not enough and say that $1.3 billion is the minimum (knowing that this negotiating window will be open for just a little while - take advantage of the situation and get more). Under Chapter 11, negotiations will be structured better and OTHER stakeholders will be asked to contribute as well - not solely the one union on the property. Notice that it's a classic negotiating move that they now put more issues on the negotiating table (jumpseats, etc.) so that they can "take more away" in order to get what they want.

How can you trust a management who has made so many blunders in the past and now has sought to make the pilots union the scapegoat for all of its problems? Sure, pilot costs need to come down - the LCC environment forces the issue. No argument there. But DAL management will likely try to take advantage of the situation (super negative "sky is falling" public relations campaign) to get as much as they can from the pilots union as possible right now...

 

[Ganja60Heavy]

... But DAL management will likely try to take advantage of the situation (super negative "sky is falling" public relations campaign) to get as much as they can from the pilots union as possible right now...

...you got that right. Buy DL stock.......a gamble, but BK is much less likely than the public believes, thus at $4, it's a bargain.

 

[bladeusa]

maybe you have been smoking to much ganja...

u think its a bargain at 4 bucks? how much are u buying?

i wouldnt touch it.

 

[46Driver]

How can you trust a management who has made so many blunders in the past and now has sought to make the pilots union the scapegoat for all of its problems?

And this is different from United, American, USAir, etc how????

 

[flaps30]

debt rating cut again,

Reuters
Moody's cuts Delta Air's unsecured debt rating
Tuesday August 10, 5:53 pm ET

NEW YORK, Aug 10 (Reuters) - Moody's Investors Service (News - Websites) on Tuesday downgraded its debt ratings on Delta Air Lines (NYSE:DAL - News), citing the company's deteriorating finances and grim cash flow outlook.

The agency slashed its senior unsecured debt rating to Ca, the second lowest rating, from Caa3.

The outlook on the ratings remain negative, Moody's said. "Delta's ability to generate positive operating cash flow is highly dependent on successful renegotiation of the company's labor agreement with its pilots," Moody's said in a statement. "A rapid resolution of these negotiations is not expected in the near future."

 

[skykid]

Buy Delta stock at $4?? Don't think so. I wouldn't buy any airline stock. Whichever airline is the darling of Wall Street today is only a few lapses in judgement away from being in the can. I bought a very modest amount of airline stock once, once. I suggest if you have some money burning a hole in your pocket spend it on women and whiskey - the rest you can spend foolishly.

 

[Gulfstream 200]

buy DAL stock????

you gotta be insane...

it aint woth .10 a share - nevermind 4$.

 

[G4G5]

It all depends upon the judge.

AA avoided ch11 BUT only the AA employees were part of the concessions. The Eagle pilots gave NOTHING. What you need to remember is that AMR avoided CH11 not just AA.

This was not such a big deal at UAL because they do not own their regional feed.

At Delta it becomes huge because DAL consists of Delta, ASA and Comair. By law A BK Judge has to share the pain equally. He can not concentrate on one labor group alone. So all labor groups will be forced to sit down at the table. Whch really becomes intersting when you consider that the only union on the property is ALPA, all other employees are non union represented by DAL mgt., who just happens to be the one running the books. So when it comes down to give backs DAL mgt has only one place to go, the pilots. What the Delta pilots have to consider is will they lose more under CH11? My guess is it will be about the same because anything above what the AA pilots gave back will no doubt come from the ASA/Comair pilots, who so far have been left untouched.

Another thing to remember is that their is no arbitration in BK court. Each side give it's offers and the it's up to the judge to determine which offer he thinks is in the best interest of the shareholders. IMHO, it will be extremely difficullt for DAL mgt to squeeze anything more then what the UAL/AA pilots gave back. They just won't be able to sell it to the judge. So, it's just plain stupid on GG's part to consider that $1 bill is a good place to start from.

 

[MedFlyer]

The judge does NOT have to ensure everyone shares the pain equally. The judge will look at prevailing rates (pay and benefits) of other airlines and make decisions from there.

I think the DL pilots clearly have more to lose in BK. Their pay will be cut, no matter what. However, it's the things beyond pay that are the problem. For example, the judge may make major modifications to things like the no-furlough clause and scope clause.

But the really big loss is the pension plan. If DL goes CH 11, it's likely they won't be able to get out without terminating the pension plans (see US and soon UA). DL has $5.7 Billion in pension underfunding. Unfortunately, the longer this drags out, the more the pilots will likely have to give because of what is going on at other airlines.

If the pilots stay out of BK, they can probably save most of the pension plan.

 

[On Your Six]

Medflyer,

And you're not biased in this case? You just don't want to have to contribute to the pot - and that could be likely under Chap. 11 - nobody knows... If the judge looks at industry average, you regional guys might end up with Mesa or CHQ wages... Who knows? It's a crap shoot but I think the DAL pilots will get screwed either way... One thing is for certain, in Chap. 11 it is a lot less likely that JUST ONE LABOR GROUP will get beat up on over and over and over. Everyone can share in the fun! I think you are going to see a mass exodus of senior pilots at DAL very, very soon....

 

[G4G5]

The judge will make sure that all employee groups contribute equally. Once DAL files CH11 ALL contracts, Delta pilots, Comair pilots, ASA pilots, vendors, suppliers, creditors, yada yada become open for negotiation.

Don't get caught up in the prevailing rates BS. Are the LUV 737 pay rates, AA pilots pension, NWA pilots work rules considered prevailing? I'll take anyone of those.

Or for the regional guys could it be the Mesa pay rates and Eagle work rules?

Prevailing is open for discussion based upn how good your arguments to the judge are. The Key thing is: ALL CONTRACTS become open for renegotiation. Right now GG is just going after the Delta pilots. Which IMHO is stupid. He has no chance of securing a deal that is any worse/better then what UAL and AA currently argeed to (which would be the worst case prevailing contracts) so why try?

The ones who will take the hit are the commuters because prevailing for a legacy carrier of DAL's size would be, UAL, AA, NWA and CAL. For ASA/Comair the prevailing can be much worse. The Delta pilots fully understand this and aware that other labor groups/suppliers/vendors will have to chip in to get to GG's $1 billion dollar figure. Unless GG is willing to take the pilots offer, IMHO they will take their chances with CH11.

 

[On Your Six]

G4G5,

Good post. I agree - the mainline pilots are going to get screwed either way... At least in Chapter 11 all groups will likely be required to contribute to the pot - that is much more fair in my opinion... The pension situation will be a mess - you can count on a significant number of DAL pilots ejecting soon to if their retirement benefits are in jeopardy - time to bail out now!!!!!!!

 

[General Lee]

Of course Medflyer would like us to take the $1 billion cut right now, saving himself from eventual pain. I wouldn't expect any less from him. Dalpa and Malone will have to look at what may happen in both senarios, and I don't think Grinstein wants to go into Chap 11, but he knows he may have to. In Chap 11 the company loses control to bankers, lawyers, and a judge---which can't be fun for our management. But, we still have to negotiate--even though it would be a tougher process on our part. Also, to emerge from Chap 11--the company would actually have to have a VIABLE business plan, which is absent right now to us anyway. Everyone would have to share in the pain---the creditors would make sure of that---every employee group.


And yes, we might have a lot of pilots leaving soon--a lot. The pension issue was put on the table by Grinstein, and that doesn't settle well with any of our senior guys.


Bye Bye--General Lee

 

[MedFlyer]

G4G5,

Good post. I agree - the mainline pilots are going to get screwed either way... At least in Chapter 11 all groups will likely be required to contribute to the pot - that is much more fair in my opinion... The pension situation will be a mess - you can count on a significant number of DAL pilots ejecting soon to if their retirement benefits are in jeopardy - time to bail out now!!!!!!!

If the DAL pilots want to sacrifice their pensions, furlough protection, scope clauses and future growth (paycuts at ASA/CMR will only encourage DAL to grow DCI and let mainline stagnate), so that they can ding someone who makes 35K a year, so be it.

I'd rather be an AMR pilot that makes crap, but still has a chance of getting a decent retirement, than a UA/US pilot that makes crap and has crap for retirement too. But I guess that's just me.

 

[General Lee]

Medflyer,


Grinstein has continually said that he wants to change the pensions. That is his number one plan here. It seems non-negotiable. He is scaring away our senior pilots---in droves. That may create more of a mess. It may not be as bad for guys like me--with 21 years left---to have a cash balance type of program--where at the end of my career I would take the lump sum of whatever I made in the program---and just leave. That is what they want, instead of paying you a monthly pension the rest of your life. Going from a defined benefit program (what we have now) to a cash balance program (one lump sum) lowers the "future obligations" tremendously---and the pension shortfall could evaporate quickly--since most of it (I believe) is based on those future obligations. It wouldn't be a bad deal for me--with time to make it up--but it will hurt anyone in their late 40's.

Bye Bye--General Lee

 

[Dave Benjamin]

It all depends upon the judge.

AA avoided ch11 BUT only the AA employees were part of the concessions. The Eagle pilots gave NOTHING.

Nothing? Didn't a lot of them lose their jobs so furloughed AA guys would have something to fly while on furlough?

 

[lowecur]

He has no chance of securing a deal that is any worse/better then what UAL and AA currently argeed to (which would be the worst case prevailing contracts) so why try?

Sorry, but I have to disagree with you on this one. Remember, DL's arguement to the judge will be what's good for the viable future of DL in todays high cost oil scenerio. The other Legacy carriers have already shown they cannot make money with existing payroll and workrules in this environment. Before contracts can be negotiated the pension deal with UAL will have to play out. Once UAL's pension issue is settled, then the rest of legacy's and the judge will have a starting point. DL will argue that it needs a base 737/MD88 rate similar to B6 rates and work rules on the 320. They then will ask for equitable reductions on the larger a/c. They would actually have an arguement that rates should be below B6 because of the high cost of operating multiple a/c. Then they can argue they need a 100 seater for mainline, and will need B6 rates on that.

The above are all very formidable points of view based on the limited one year history at UAL, AMR, and UAIR, and the future of this industry with the possibility of the permanant high cost of oil. Add to that the fact that similar rates and work rules for UAIR plus their trashing of the pension plan, still haven't provided the carrier with a viable future.

Greenjeans will tell the judge he wants to do this right the first time and not have to come back to bankruptcy a second time or request further concessions from employees. All employees for DL will share in the reorganization, but the pilots may take the largest hit.

 

[General Lee]

Oh yeah, and our employees also won't be doing all of the hurting, probably all of the DCI contract airlines will also take a hit--because Delta will demand lower payments per departure. Yes, a Chap 11 would hurt everyone except the lawyers.....


Bye Bye--General Lee