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

[General Lee]

Lowecur,


The Delta honchos that came in to the lounge last Fri supposedly stated (I was flying) that a future 100 seater rate would "mirror" AA's Fokker 100 rate. That would still give a huge advantage over our current 737-200 rate. But, in Chap 11, anything is possible I guess. If they went to Jetblues rate ($89 an hour for 12th year Capt)---that would be a 60% decrease, and I don't see a judge doing that---he would go more along the AA and UA % cut. Then he would cut the other employees rates to get closer to AA and UA's rates---and then start on the leases. UA negotiated a 744 lease down to a 737 lease rate. The problem here is that with possible cuts in pensions---comes possible senior guys bailing. We have many that don't NEED to be here.

Bye Bye--General Lee

 

[lowecur]

The problem here is that with possible cuts in pensions---comes possible senior guys bailing. We have many that don't NEED to be here.

Bye Bye--General Lee

Well I would think that would initially be bad for DL, but good for you and other right seaters, plus the furloughees'. Costs would be reduced as the seniority decreases. You will have an answer to just how much smaller DL will become in the next few years when Greenjeans releases his report shortly.

 

[General Lee]

Lowecur,


He said he would not shrink Delta to profitability, and that he wanted more flying out West and INTL. We shall see.....


Bye Bye--General Lee

 

[surplus1]

Lowecur,

He said he would not shrink Delta to profitability, and that he wanted more flying out West and INTL. We shall see.....

General,

Since you are still believing what "he said" (GG), how come you don't believe it when he said he needs $1 billion?

Looks a lot like who you believe and when you believe them has a lot to do with whether or not they say whatever you want to hear at the moment. Smart move.

Maybe I should start believing what you say on the same basis.

 

[G4G5]

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

No! The fact is AA has over 2500 pilots out on furlough. Eagle has NONE!
AA continues to furlough, 123 more on Oct 1. While Eagle continues to hire, they just lowered their hiring minimums to 1000tt and 100 multi.

 

[General Lee]

Surplus1,


Well, considering that we still carry more people per month domestically than any other airline, I would say shrinking to profitability might be stupid. He also said that you guys won't be flying more than 2 hour flights, because he said that our most valued customers shouldn't be put through that. That doesn't bode well for you, now does it? I have heard a lot of things lately---some from good sources and some from the typical lounge talk. There is no doubt that we will get our costs in line---and from there Grinstein has a choice of how he wants to proceed. If he could get an extra penny out of us---then that would be one less penny he would have to take from the other groups. Sure, he wants $1 billion from us---but hasn't said much about what he will take from the others. I think it is smart to know what is on the table---and Malone is taking that path. I can see why you may not want him to do that.

Bye Bye--General Lee

 

[G4G5]

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.

The judge will try to spread the pain around evenly. The costs associated with all groups will come down evenly, hence no group will have a cost advantage over another (no shift in flying). Everyone will get an even "ding".

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.

Nobody wants to see this happen to anyone. I certianly would have prefered not to have been furloughed but that's life. The USAir pilots are in a completely different boat then the Delta pilots. What the Delta pilots can expect to see is something along the lines of what the AA/UAL pilots got. Loss of furlough protection, loss of scope, loss of pay and work rules. I truly feel sorry for those folks but USAir was never on a even playing field with Delta.

The biggest advantage of CH11 is that the value of your concessions get treated fairly. This is huge and one of the reasons why I don't expect the Delta pilots give in.

When AA mgt threated Ch11, the union ran scared. When it came down to negotiating the value of our concessions, AMR mgt was the one who put the $$$ on the value of the concession. Delta pilots will learn from this. For example, AMR mgt valued our scope clause at ZERO dollars. Their were countless other concessions that the union viewed at one figure and AMR mgt another. Guess who's numbers they used? The AA pilots according to AMR mgt gave $660 million according to the APA/AA pilots the actual value was between $880 mill to $1 billion.

The delta pilots would rather let the BK judge value the concessions the DAL mgt. They also don't want to be the only pilot group contributing (DAL mgt has already been screwing the FA, they just got pref bidding with no negotiations)

 

[On Your Six]

Pilot "investment" should not be made without a new PLAN...

Plus, who the heck would concede IF there was no strategic plan available to review?

I understand that a mythical strategic plan is out there but it hasn't been presented yet. Everyone should be patient until DAL management presents its plan going forward (it should be soon I would expect). The pilots' potential concession (or "investment in the future") would only be prudent if they had better clarity on future plans....

 

[Dave Benjamin]

No! The fact is AA has over 2500 pilots out on furlough. Eagle has NONE!
AA continues to furlough, 123 more on Oct 1. While Eagle continues to hire, they just lowered their hiring minimums to 1000tt and 100 multi.

I guess I was a bit confused. I had a jumpseater the other day with an Eagle ID who said he was a furloughed AA pilot now flying left seat in an ERJ. I asked him if he had flown at Eagle prior to AA and he said he had not. So what's the real deal then? Did AA pilots "flow down" to Eagle and displace Eagle captains back to the right seat or was there enough growth at Eagle to accomodate the flowdowns and all the existing Eagle captains? Are the Eagle FO's condemned to the right seat indefinitely because of the "flowdowns?" Is Eagle hiring more furloughed AA pilots if they're hurting so bad for new talent that the minimums are down to a mere 1000/100? Or do the furloughed AA guys prefer collecting unemployment benefits which probably pay about the same as first year pay at Eagle?

 

[ASH]

you regional guys might end up with Mesa or CHQ wages.....


I know of about 993 pilots that are highly insulted by that ignorant statement.
We do not belong anywhere near the same sentence. CHQ is a vibrant company with a happy pilot group, and decent wages ( considering the timing of our negotiations, and the fact that the MGMT walked in, threw Mesa's contract on the table, and said " That's what you have to compete with."
I'd say we pulled out mighty well in work rules, pay, etc.

No worries, apology accepted.

 

[G4G5]

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.

G4G5

The cost of Oil is a variable. DAL mgt can argue that it will reach $50 a barrel, prove it. The Delta pilots can in turn take a 5 year average and say that oil has always come down. Or compare it to what happend during the last Gulf war. A judge will have to listen to both sides. Why hasn't Delta hedged, UAL is? Why did they sell their current hedged oil futures? This will need to be explained to a judge. DAL mgt could eaisly come out on the losing side of that argument.



The other Legacy carriers have already shown they cannot make money with existing payroll and workrules in this environment.

G4G5

This can be explained by a number of reasons outside the price of oil. Anyway you cut it DAL mgt will have to come up with an executable business plan. This is what the judge will be looking at. Like how NWA, AA and CAL all manage to stay out of his court room with their current business plans.



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.

G4G5

It's not going to matter because Delta pilots will argue that DAL is nowhere near the pension mess that UAL is in. Delta's current pensions liabilities are just a fraction of what UAL's are. On top of that the PBJC is not about to be left holding the bag for every single airlines pension. They have shown, with the current UAL mess that they will do everything that they can to not have this wind up in their lap. Hence they will no doubt place all the pressure they can on the BK judge and DAL mgt to not have it reach the point of USAir. THE PBGC has no choice but to play hard ball with UAL mgt. the alternative is every single legacy carrier running to Ch11 just to hand their pensions off to the PBGC. Not going to happen.

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.

G4G5
They can argue all they want. Then the Delta pilots can counter with LUV 737 rates and AA 100 seat F100 wages or NWA DC9-10 wages (which are closer in comparison size and prevailing wages, then JetBlue). The problem in BK court is not a place to arbitrate. The judge either chooses you plan or he doesn't. If DAL mgt asks for something realisitic they run the chance of the BK judge choosing the Delta pilots concession offer.



/QUOTE]

Don't get me wrong, something has to be done DAl just announced that they burned through $744 mill in the first 6 months of the year. Thata a burn rate of over 4 mill per day. I am not arguing the fact that Delta pilots will have to give back somethings. What I am saying is that Greenjeans is asking for too much. He is asking for more then UAL and AA gave back and he is going to need to prove why he wants so much.

 

[lowecur]

G4G5

The cost of Oil is a variable. DAL mgt can argue that it will reach $50 a barrel, prove it. The Delta pilots can in turn take a 5 year average and say that oil has always come down. Or compare it to what happend during the last Gulf war. A judge will have to listen to both sides. Why hasn't Delta hedged, UAL is? Why did they sell their current hedged oil futures? This will need to be explained to a judge. DAL mgt could eaisly come out on the losing side of that argument.

Lowecur

I think that part of the arguement will come to a head once the pension deal with UAL has played out. That may not be until next summer. By that time the judge will have a good handle on whether these prices are here to stay.

G4G5

This can be explained by a number of reasons outside the price of oil. Anyway you cut it DAL mgt will have to come up with an executable business plan. This is what the judge will be looking at. Like how NWA, AA and CAL all manage to stay out of his court room with their current business plans.

Lowecur

I think the judge will take into account that these airlines are churning in place. DL needs a plan that will be long term viable to it's success.

G4G5

It's not going to matter because Delta pilots will argue that DAL is nowhere near the pension mess that UAL is in. Delta's current pensions liabilities are just a fraction of what UAL's are.

Lowecur

I assume you mean the pilots pension. DL's pension obligations are around $5.5B for all employees. UAL is estimated between $6-7B.

G4G5
They can argue all they want. Then the Delta pilots can counter with LUV 737 rates and AA 100 seat F100 wages or NWA DC9-10 wages (which are closer in comparison size and prevailing wages, then JetBlue). The problem in BK court is not a place to arbitrate. The judge either chooses you plan or he doesn't. If DAL mgt asks for something realisitic they run the chance of the BK judge choosing the Delta pilots concession offer.

Lowecur

I'm not privy to whether a form of arbitration is not part of the hearings. It would be hard to believe that the judge would have to choose between a posturing position from either party. Realistic decisions have to take precidence, and I believe a bk judge might be able to come up with a plan somewhere in between both, that would be binding.





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[G4G5]

Lowecur

I think that part of the arguement will come to a head once the pension deal with UAL has played out. That may not be until next summer. By that time the judge will have a good handle on whether these prices are here to stay.

G4G5

Geeze it's almost like I know what I am talking about

http://news.morningstar.com/news/DJ/M08/D11/200408111720DOWJONESDJONLINE000686.html

Take a look at the time it was posted, it just came out. The article echo's my thoughts exactly.this one will be interesting to explain to a judge, while you are trying to explain to him why he should except your business plan as being visble:"Those price swings are the main reason Delta Air Lines' fuel costs will rise by around $650 million this year compared with last, the airline said in a filing with the Securities and Exchange Commission this week.At the beginning of the year, Delta, Atlanta, owned hedges covering 32% of the airline's fuel needs at prices that corresponded to 76.5 cents for a gallon of jet fuel.Delta freed up much-needed cash by selling the hedges for $83 million. But if the airline had kept the hedges, it would have saved around $150 million this year, based on calculations by Dow Jones. Delta officials declined to comment on the calculations, but the airline has said it will use 2.5 billion gallons of fuel this year, and will likely pay around $2.588 billion, including the gain on selling the hedges. And Delta said in a filing if oil prices rise by 10% to $50 a barrel, that adds $260 million to the bill.
------------

Lowecur
I think the judge will take into account that these airlines are churning in place. DL needs a plan that will be long term viable to it's success.

G4G5
Delta has no choice but to come up with a plan of long term success or it can not exit CH11, it's not an option. The judge can not discount the fact that other legacy carriers like AA, NWA and CAL have all avoided BK with their current busniess plans, to say other wise would be slander and the judge would be held liable.
-------------------

Lowecur
I assume you mean the pilots pension. DL's pension obligations are around $5.5B for all employees. UAL is estimated between $6-7B.

G4G5
Thanks for bringing it to my attention, I did not realize that the Delta plan was that under funded. What I was refering to was the fact that UAL has over $4bill due within the next 4 years. Their liability is far more cumbersome then DAL's because so much is due so quickly. The one thing that you fail to mention is the interest rates and how they play into the pension liabilities. The longer that this plays out the more adventageous to for everyone. The liabilities will no doubt fall accordingly. Which will certianly help out DAL because more of their liability is defered then UAL's
--------------

Lowecur
I'm not privy to whether a form of arbitration is not part of the hearings. It would be hard to believe that the judge would have to choose between a posturing position from either party. Realistic decisions have to take precidence, and I believe a bk judge might be able to come up with a plan somewhere in between both, that would be binding.
G4G5
I think that this is the part that you are missing out on. Their is NO arbitration. The judge is not a negotiator. He is instructuted to do what is in the best interest of the shareholders. He has no ability to offer suggestions. What I believe you are refering to is the court appointed trustie. They are the ones incharge of the company. They hear offers from all sides and then make reccomendations. These trusties in no way work for DAL mgt. , they are in place to see that best interests of the shareholders/creditors/employees are taken into considersideration.

 

[lowecur]

G4G5

Geeze it's almost like I know what I am talking about. " But if the airline had kept the hedges, it would have saved around $150 million this year, based on calculations by Dow Jones."

Lowecur

You know my feelings about hedges. It has no business being part of the operating costs on the P&L, and therefore should play no part in any decision by a bankruptcy judge. It's strictly investment income. I think CA's Kellner said it best: "Ultimately, you are going to have to live with whatever the current fuel cost is a year, year-and-a-half out. And it's important to stay in sync with the industry and make sure you've got a business plan that works with whatever the current fuel price is." In other words, hedging doesn't last forever, as the market eventually evens out.

G4G5

Delta has no choice but to come up with a plan of long term success or it can not exit CH11, it's not an option. The judge can not discount the fact that other legacy carriers like AA, NWA and CAL have all avoided BK with their current busniess plans, to say other wise would be slander and the judge would be held liable.

Lowecur

This is not about avoiding bk, it's about having a viable long term plan. These three carriers fortunately have the cash to sit on the sidelines and watch how this plays out for the next 12 months. None of them has a static long term business plan in place, so they will have to change in the next 24 to 36 months or die a slow death. If it is truly the judge's decision to just place DL on par with these three, then DL won't last but another 3 to 5 years.

G4G5

I think that this is the part that you are missing out on. Their is NO arbitration. The judge is not a negotiator. He is instructuted to do what is in the best interest of the shareholders. He has no ability to offer suggestions. What I believe you are refering to is the court appointed trustie. They are the ones incharge of the company. They hear offers from all sides and then make reccomendations. These trusties in no way work for DAL mgt. , they are in place to see that best interests of the shareholders/creditors/employees are taken into considersideration.

Lowecur

Thanx for the info. In doing what is in the best interest of the shareholders, I would think the Judge is going to listen very carefully to what is presented to him by the Trustee. This should include the comparison of similar business models to DL's including but not limited to: payroll rates, work rules, pensions, and outside credit obligations. How could the judge in all good conscience tell the shareholders he is going to try and match the best features of these three carriers. I offer that none of these carriers will be able to maintain a 10-15% profit margin per year following the trashing of their individual pension plans providing oil stays above $35 per barrel. In the end, only a 10-15% profit margin will pay all the bills as they come due and give you enough surplus to survive the inevitable downturns in this industry.

 

[jtf]

How many Delta pilots are eligible for early retirement? If the majority of them do start an even more massive exodus, how quickly would that zap the cash on hand enough to force chapter 11 much more quickly? Would their early retirements be taken out of the current cash at hand or from money already in the fund- therefore not hastening chapter 11? How much notice do pilots need to give to get early retirement? I think I would be thinking long and hard about getting something out of my retirement savings before they are gone, but then again maybe they may be able to make more even at the cut rates and without the A fund if they finished at age 60 than by taking the early retirement. Crappy situation all around!

 

[General Lee]

JTF,


I read somewhere that we have over 1500 pilots over 50 years old, all of them eligible to retire. We supposedly have 500 or more that have more than 25 years of service and are over 50--which means they are eligible for FULL retirement. They need to give 24 hours notice to retire.


Bye Bye--General Lee

 

[DL_Infidel]

How many Delta pilots are eligible for early retirement? If the majority of them do start an even more massive exodus, how quickly would that zap the cash on hand enough to force chapter 11 much more quickly? Would their early retirements be taken out of the current cash at hand or from money already in the fund- therefore not hastening chapter 11? How much notice do pilots need to give to get early retirement? I think I would be thinking long and hard about getting something out of my retirement savings before they are gone, but then again maybe they may be able to make more even at the cut rates and without the A fund if they finished at age 60 than by taking the early retirement. Crappy situation all around!

I concur with General's info. Pilots only need to give DL 1 day's notice. So if 500+ leave Sep/Oct 1st, we're talking the grounding of 777,767-400 and a majority of the 757/767 fleet. There's not enough pilots in the training pipeline to cover this. The only thing that would bail DL out of this situation would be for the retirees to comeback as contract pilots for 60-90 days. I don't see DALPA approving another side letter to bail mismanagement out..yet again...of their self-induced predicament. But I have been wrong before.


DL_Infidel

 

[General Lee]

DL infidel,


I can see Dalpa doing that. They helped them with the NW/CO codeshare....wasn't that supposed to bring back up to 1000 furloughs?


Bye Bye--General Lee

 

[ATR-DRIVR]

General,
I think DL_Infidel has it pretty good on this one. I would think it would cause even more problems to have all these guys hit the street within a week or so of each other and then try to come up with some kind of contract deal. I would think also that (mis) management has thought of ALL of the downfalls of the mass exit...then again, maybe not! If the training dept is not already going full bore 24/7 now, they better. Got your bid in??

Seems to me the U-turn at the big D started during the P A admistration followed up with the L M debacle, thanks boys, 'preicate that, (slap) thanks for stopping by.
Thoughts?

 

[michael707767]

Lowecur,


He said he would not shrink Delta to profitability, and that he wanted more flying out West and INTL. We shall see.....

I once told a date that I respected her and would love her forever. That changed after the deal was done!