Malone to DALPA: DAL demands "far exceed" needs

[vc10]

Anyone have a copy of this yet?

**************

WSJ: Delta Union: Management Demands 'Far Exceed' Needs
By Evan Perez

Of THE WALL STREET JOURNAL



MIAMI (Dow Jones)--Delta Air Lines Inc.'s (DAL) pilots union accused

management of trying to "attack" the profession with its latest proposal seeking

$1 billion in annual wage and productivity concessions, but said it would

continue negotiations aimed at saving the airline from its financial crisis.

The third-largest U.S. airline last week raised its concessions request, as it

had previously warned it would do., to a 35% wage cut, up from 30%, and pension

plan changes. The latest proposal represented an increase of nearly 20% from

management's previous request, which was valued at more than $800 million.

The Air Line Pilots Association at Delta last month tried to narrow the gap

with management with an offer it valued at up to $705 million in annual savings,

including a 23% wage cut and productivity improvements. Delta had previously

warned that while the yearlong talks with the pilots dragged on, the tally of

red ink was putting the airline into an ever more precarious financial position.

Since 2001, Delta has accumulated more than $5.6 billion in losses, including a

recently reported second-quarter net loss of nearly $2 billion.

(This story and related background material will be available on The Wall

Street Journal Web site, WSJ.com.)

In a letter to pilots Wednesday, John Malone, chairman of the pilots union

leadership committee, said Delta management had responded to the pilots' most

recent offer by "foisting upon us a set of demands that far exceed the economic

situation the company faces." He said the union was planning to continue

negotiations. Malone added, "Management's proposal appears to have only one

purpose - to exploit the current situation and attack our profession by

destroying our contract."

Among the changes Delta is demanding, according to the union, are: elimination

of limits on how much flying Delta can outsource to its lower-cost regional

subsidiaries and affiliates, a higher cap on the number of hours pilots fly each

month, less vacation time and a less-costly pension plan. Delta also didn't

respond to the union's request that it be granted future profit-sharing, a seat

on Delta's board and an equity stake in the airline in exchange for the

concessions, the union said.

Reaching an agreement with Delta's only major union is key to the carrier's

efforts to avoid filing for bankruptcy court protection. Delta is under growing

pressure to keep pace with huge cost cuts made by its larger rivals, AMR Corp.'s

(AMR) American Airlines and UAL Corp.'s (UAL) United Airlines. It's also facing

intense competition from low-cost carriers such as AirTran Holdings Inc.'s (AAI)

AirTran Airways, which are expanding into Delta's East Coast turf.

In his letter, Malone questioned whether Delta was trying to use the union as

an excuse to take the company into bankruptcy court protection. "Is management

trying to fix the problem or affix the blame?" Malone asked.

A Delta representative wasn't immediately available for comment Wednesday.

By Evan Perez, The Wall Street Journal; 305-341-1253



(END) Dow Jones Newswires

 

[DLslug]

vc10:


Just saw a similar letter by Malone on the Dalpa web site.

I say...WAY TO GO!!

Management has gone above and beyond with this one. Unfortunately, I don't think GG knows how much they really need from us, they are just trying to get as much as possible.

Like Malone says in his letter, if this is the way things are going, "we will take another path."

All for now,

DLslug

 

[MedFlyer]

vc10:


Just saw a similar letter by Malone on the Dalpa web site.

I say...WAY TO GO!!

Management has gone above and beyond with this one. Unfortunately, I don't think GG knows how much they really need from us, they are just trying to get as much as possible.

Like Malone says in his letter, if this is the way things are going, "we will take another path."

All for now,

DLslug

The "other path" is called Chapter 11.

 

[formerdal]

We All Know What The Other Path Is Called!!

 

[DLslug]

So Be It.

 

[ferlo]

Let them go Ch11. You'd be better off taking your chanses with the judge instead of lowing your pay drastically and then filing BK. You just lowered the bar that much further. MAX PAY TO THE LAST DAY.

 

[FurloughedAgain]

You are never, ever better off with a bankruptcy judge who has virtually no knowledge of aviation, the airline industry, or the airline pilot profession.

At least outside of bankrtupcy you can attempt to negotiate. Within chapter 11 management need only convince the judge that a section of your contract is not competitive and "poof"! It's gone.

 

[ATR-DRIVR]

AKA USAir.

 

[DL_Infidel]

Kudos

Malone's letter was exceptional. Right man for a tough job.



DL_Infidel
Be It So!!

 

[JohnDoe]

Heard from a friend that one of the concessions the company wanted was the cockpit jumpseat....... What the heck is that about?? What does eliminating the use of the cockpit jumpseat have to do with returning to profitability?

From some of the other items and $ amounts he listed, sounds like management came up with the most outrageous "plan" they could come up with in hopes that it would be turned down..

 

[lowecur]

Malone's letter was exceptional. Right man for a tough job.l
Be It So!!

At the end of the day it all boils down to posturing. I'm sure John Malone and Greenjeans can posture all they like, but come October or November, Greenjeans holds all the cards.

Holly Hedgeman writes in this weeks Planebusiness.com:

Dan McKenzie, analyst with CitiGroup/Smith Barney wrote in a note Monday, for example, that he does not think the $1 billion is enough. Furthermore, he does not think it is enough, even if the airline changes the pilots current defined benefit pension plan to a cash balance plan.

In addition, he feels that management at the airline knows this, and is foreshadowing this, because of the way in which management worded their proposal. "We are watching United closely, as I am sure you are, because what happens there could have far-reaching effects throughout our industry. Our options are limited by the marketplace and the requirement of viability....However, our goal in this proposal with respect to the pension plan is to preserve and protect your accrued benefits."

McKenzie pointed out that management talked about "this proposal" in their comments. Dan thinks this wording leaves the door open to subsequent management proposals.

McKenzie calls Grinstein's counter offer to the pilots a "high wire act", balancing the level of savings he can secure from the pilots without instigating a pilot revolt before they can even sit down for negotiations).

By the way, while United Airlines' pension plans are underfunded by approximately $7 billion and change, the plans at Delta Air Lines are underfunded by some $5.7 billion.

The pilots need to read between the lines here. My bet is that United is going to seek termination of its pilot pension plan. This means the Delta pilot pension plan is going to go -- as it is structured now. But it is up to the pilots as to how it goes. Either the pilots work out a new cash balance plan as part of a concessionary agreement, or if not, the airline will have no choice but to seek bankruptcy protection, during which it can then terminate the plan.

As a result, if I were a Delta pilot, I think I'd try and work out a concessionary deal that accepts this. Accept the change to the pension plan, but seek to improve the contract in other ways to compensate.

 

[storminpilot]

You are never, ever better off with a bankruptcy judge who has virtually no knowledge of aviation, the airline industry, or the airline pilot profession.

At least outside of bankrtupcy you can attempt to negotiate. Within chapter 11 management need only convince the judge that a section of your contract is not competitive and "poof"! It's gone.

Very true statements. Bankruptcy should be avoided.

"Raise the bar" yeah, wait until "lowerer the bar" in bankruptcy.

 

[DLslug]

Of course...

BK is the last resort, certainly not my choice. I hope we can work something out. I trust Malone to do the right thing. If it is even close, I will vote "yes".

Hey LowOccurance...good post. Thanks for the info.

All for now,

DLslug

 

[JohnDoe]

Again, does anybody have any explanation for the ridiculous request for a concession on the cockpit jumpseat??

What sort of monetary amount is there to that??

 

[CTS]

so be it???

So be it? You want Ch11? Guess you haven't looked outside your golden cockpit lately. US Airways and United pilots are two good examples. Even National airlines, oh yea, there gone. What about PanAm. Oh, they will never go out of business, well they did. Hope you have a masters degree and 10 years or more of good business management experience to even make half of what you make now. But from a comment like that, I don't have much hope. Sell the house in Nantucket, make up with the wife, get rid of the girlfriend, sell the Bentley, and learn to live with working harder and still recieving a $100,000 + salary. After 6 years when the contract expires and Delta is in the $$$ and the LLC have higher expenses get it all back. (well some anyway) The rest of the Delta employees have taken paycuts through Pension, healthcare, and more to be announced in September. You guys got pay raises during 7.4. This time it is serious, fire you stupid MEC and get one that understands the current state of your airline. I know, I know management gets paid to much to right? Look at your own management. Duane gets 320K + in Salary plus a 24K per month housing allowance + a GM car + a driver for the car + who knows how much "under the table" benefits! While all the working pilots get pay cuts. Clean up your own house. Flying is fun until you land and have to open the door and deal with greedy unions and greedy management. Hope I am wrong, but DAL pilots need to take one for the company this time. Its just like General Lee says, I am rooting for you because I want to be there some day, but right now there is a 50/50 chance, according to the analyst the job will be there but on a 717 at Airtran after they buy routes from DAL in CH7.

 

[Dave Benjamin]

If I'm not mistaken DALs jumpseat used to be far more restricted than it is today. I'm pretty sure they didn't allow any OAL folks in there. I'm not even sure if their own pilots could use it. We're very appreciative that we're able to jumpseat on DAL. Hopefully that doesn't change. I know a lot of guys that rely on the actual to get to work, especially in the summer with these load factors.

The mere fact that it's an issue shows that DAL managment is being a bit disingenuous. Yes cutbacks may be warranted but I'm not convinced the additional fuel burn to carry a typical pilot and rollerbag will add up to much.

My hat is off to Malone and the DAL MEC leadership. There's no way that the pilot group should be the only ones making a sacrifice, especially to the tune of 1 billion. It think the difference between the 700 or 800 million and whatever they need to float the ship can come out of the pockets of other employees. Pilots are doing their share.

 

[Heavy Set]

IF Chapter 11 happens, then every labor group at Delta can SHARE in the cost savings efforts. Grinstein will not get the "hero" status he is seeking in Chap. 11.

 

[ATR-DRIVR]

Heavy Set,

Just curious, why would you think his trying to be a hero? No slam or sarcasm here either, just interested in your thinking.
thanks

 

[General Lee]

Dave,


I just got back from a 4 day and I think I know what you are talking about. As far as the jumpseat goes---we did ask for multiple--and I think the company turned it down--for no reason. That is what we are dealing with I guess.

As far as what Malone said---I agree of course. I don't think we mind giving the "lion's share" of concessions--but everyone who has a stake in this must give something. That includes creditors, lessors, vendors, and other employee groups. I am sure we WOULD make the largest sacrifice----but leaving other groups out because they don't want them to unionize is crazy IMO. If this thing does roll over to Chap 11--then EVERYONE will take a large pay cut. (the creditors will make sure of that) I hope it doesn't get that far---but this statement today wasn't very assuring....

Bye Bye--General Lee

 

[FLB717]

I don't think for one minute that GG wants the pilots to give anything. He has bet on CH.11 from day one. Everything he has done has been a smoke and mirrors show to say "Hey I tried but the pilots wouldn't let me " If the pilots did or do give this cut with the outstanding payments due on 20 Billioon in debt and 5 billin in A-Fund payments, 1.5 Billion due by Delta over the next few years, CH.11 will still happen and the pain would be even more. He is setting the other employee groups up for the picking by pushing the pilots to the point that in CH.11 he then can get cuts from all groups and put the blame on the pilots because they didn't play ball sooner. If Delta had wanted to save money and resources they would not have waited three years since 9-11 to start working on a plan.

 

[DL_Infidel]

So be it? You want Ch11? Guess you haven't looked outside your golden cockpit lately. US Airways and United pilots are two good examples. Even National airlines, oh yea, there gone. What about PanAm. Oh, they will never go out of business, well they did. Hope you have a masters degree and 10 years or more of good business management experience to even make half of what you make now. But from a comment like that, I don't have much hope. Sell the house in Nantucket, make up with the wife, get rid of the girlfriend, sell the Bentley, and learn to live with working harder and still recieving a $100,000 + salary. After 6 years when the contract expires and Delta is in the $$$ and the LLC have higher expenses get it all back. (well some anyway) The rest of the Delta employees have taken paycuts through Pension, healthcare, and more to be announced in September. You guys got pay raises during 7.4. This time it is serious, fire you stupid MEC and get one that understands the current state of your airline. I know, I know management gets paid to much to right? Look at your own management. Duane gets 320K + in Salary plus a 24K per month housing allowance + a GM car + a driver for the car + who knows how much "under the table" benefits! While all the working pilots get pay cuts. Clean up your own house. Flying is fun until you land and have to open the door and deal with greedy unions and greedy management. Hope I am wrong, but DAL pilots need to take one for the company this time. Its just like General Lee says, I am rooting for you because I want to be there some day, but right now there is a 50/50 chance, according to the analyst the job will be there but on a 717 at Airtran after they buy routes from DAL in CH7.

If you've paid any attention the last 3 years, this pilot group has given DL substantial relief. Do you really think every DL pilot lives a lavish Hollywood lifestyle?....wrong. Many of us live within our means and are prepared financially for the worst. And, no, we don't need a master's with experience to command the income we're making now. Anyone in this industry who has not developed a plan B after 9/11 is, well...foolish.

Our MEC has approached this like every professional pilot should in the cockpit...calm, unhurried and deliberate in their actions.

Flying is fun...period.

"I am rooting for you..." Contradicts your entire post. I don't care for another cheerleader.

Most of what you typed is wrong and misguided.

Cheers.


DL_Infidel
So Be It!

 

[General Lee]

CTS,


I think you are way way ahead of yourself. USAir and United have lasted in and out of Chap 11 through te worst downturn in aviation history. Saying Airtran will buy Delta routes in Chap 7 is a little bit too much right now----Delta still carries more people than anyone else, and has the largest hub in the world. The main problem, besides high priced fuel, is a cost problem--and once they are under control---Delta will be better off. The pilots did not cause any of the current problems---they have been a fixed cost. That cost is now deemed too high, and it will be resolved---but the company as a whole has to take "one in the shorts" because the company has fallen victim to higher priced fuel, lower fares, and more competition. None of that is because of the pilots. We just drive the bus.

Bye Bye--General Lee

 

[Heavy Set]

ATR,

I think Grinstein would like to retire with a "bang" and demonstrate that he can force the union to its knees... He's got plenty of cash and he could retire to Aspen tomorrow. I think he wants to leave the business world proving that he, and not Leo or the others, could force the pilots union to accept cuts that were not possible earlier. Sure, the changing LCC environment has dictated a lot of this and change is inevitable and necessary to compete. But I am sure he still has a hero complex and he would love to prove to everyone that he has "saved" Delta.... We are talking about "old school" beliefs about management vs. labor.

 

[ATR-DRIVR]

Thanks, hadn't thought of it like that. Could be real interesting the next few months...

 

[CTS]

If Delta had wanted to save money and resources they would not have waited three years since 9-11 to start working on a plan.[/QUOTE]



Mullen's game plan was to sell assets until one of the other big boys went out of business, which would help equalize the market. Worked real well!



General,

As much as we pilots think of ourselves, you’re right we are the bus driver. The pilots are not the problem in this business (well if you don’t count some of the crazy tactics from ALPA). However the customer is not willing to pay anything more than a bus fare to fly. So, the LCC's stepped in and our fellow pilots have agreed to fly for alot less money. In order to compete, Delta has to lower its cost, not to just break even, but way below that in order to have the flexibility to regain the lost market share.





I am getting tired of DAL pilot whinning about this paycut and demanding that the other employees take cuts as well. DAL employees have taken many cuts. Many jobs have been eliminated, with the work redistributed to others without more compensation. Pay cuts in the form of reduced benefits. Ie. Healthcare, Pension. Downgrading jobs to lower pay scales. The avg delta employee makes 41K a year. 35% of 40K and these people will start behaving like US Air employees and many would quit, because with the unemployment is so low in ATL, they could find better paying jobs. Stop being behaving like children!




Why would GG want to force DAL into Ch11? In CH11 you lose control of your company. It's easier to work with creditors outside of Ch11 where you have more leverage. Plus the pilots don't stand a chance in CH11.

 

[ferlo]

You guys missed my point. Five bucks says they're going to be filing Ch.11 regardless of what the pilots give back. If you're going anyway, hold on to the cash as long as you can.

 

[MedFlyer]

There's no way that the pilot group should be the only ones making a sacrifice, especially to the tune of 1 billion. It think the difference between the 700 or 800 million and whatever they need to float the ship can come out of the pockets of other employees. Pilots are doing their share.

No one has ever said the pilots would be the only one to make a sacrifice. DL is looking in total to get around 2.5 Billion in cost cuts. DL is asking the pilots for 1 Billion...where do you think the other $1.5 Billion will come from??

 

[FLB717]

Cuts at Comair and ASA?

 

[ATR-DRIVR]

I think that has been hashed out also on these boards. Even if we were to take a 20% cut, the total amount saved would be a pittance, a couple of million. Would not even make the slightest difference except in the lives of the pilots who alot of could or do qualify for food stamps.

 

[General Lee]

I don't know exactly where the extra $1.5 billion will come from---but part of it will come from the employees, and then the rest will come from the lessors, vendors etc.


As far as managment's latest offer and then Malone's response---After the Malone response our VP of Flt Ops Joe Kolshack (or new VP title--VP Air Czar etc.) quickly wrote a response saying that a lot of the managment proposal was negotiable---and that none of it was "demanded." He stated that the only real thing they need is the $1 billion a year in savings, which is dictated by the marketplace. A lot of people think managment was taken aback by Malone's sharp response, but there are also people out there that believe that management knew this all along. Regardless, I still don't think that Malone would negotiate anything if HE KNEW that we were going to go into Chap 11 anyway. I also don't think that Grinstein wants to bring this into Chap 11--and he was just fishing to see what he might be able to get, or to see reactions to their proposals. I saw the proposals, and there are a lot of items that don't even have to be there. Others, as you can expect were there--like 35% pay cuts, 85 hour cap, 2 year seat hold on equipment, no cap on 70 seaters, no cap on INTL code sharing, sick leave reduction, per diem cuts, and others. You can bet that Malone will fight for guarantees on each of those---and there will not be any negotiations until Management comes done on many of them. And, before you Comair and ASA guys jump up and down about the extra 70 seater request--I bet they would go to the lowest bidder---which equals MESA.

This will be interesting, and I think Malone will get another offer from Management and then they will hammer out something. If not....we may take "another path"--and that wouldn't be good for anyone--management or labor.

Bye Bye--General Lee