Management Spin

[enigma]

June 16, 2004 Delta Air Lines' Chief Executive Gerald Grinstein said Wednesday it is "completely clear" the airline cannot survive as is, as fare levels continue to erode despite an improving economy.

But he said Chapter 11 bankruptcy protection would only be used if no other path were available.

"While the situation is extremely serious and I cannot minimize that, the marketplace has just simply undergone a fundamental, structural and permanent change and we recognize it," he said.

Speaking at a transportation conference in New York, Grinstein said Delta's access to capital markets has "virtually disappeared."

The Atlanta-based airline on Tuesday said it was pulling back its September schedule for Song, its low-fare airline unit, by 25 percent but expected to resume the full schedule of 144 daily flights in October.

Delta is still negotiating with the Air Line Pilots Association on reducing pay rates. Grinstein said management would not accept concessions from unionized pilots that provide only a partial solution to the airline's cost problem.

A company review begun in January is expected to be complete by the second or third week of August, Grinstein said.

(Reuters)


You just have to love these CEO's. First he admits the problem, then proceeds to ignore his own words as he blames his employees.

Does anyone think that he will send out a press release demanding that Exxon/Mobil take immediate fuel price concessions because an airline seat isn't worth what it used to be worth? Or maybe tires, I think that Grinstein should call Goodyear and demand an immediate 33% reduction in the price of tires. How about peanuts, lets call Planters and demand a reduction in the price of peanuts, those dammed peanut suppliers, don't they realize that we can't rape people on ticket prices anymore. Tickets prices aren't what they use to be, you know. Disengenous barstards.

enigma

(personal note. Hey company is that pro labor enough for ya?)

 

[Snakum]

Grinstein said management would not accept concessions from unionized pilots that provide only a partial solution to the airline's cost problem

Soooooooo ... they're gonna work for free and pay for the fuel on their leg?

Minh

(I'm not generally a union man, but daaaaaaaaaaaaaamn .... )

 

[Timebuilder]

Respectfully, I think he is right on the money.

First is is making a recognition that the nature of the airline business has changed. Delta's competitiors either have no unions or they have unions that are partnering better with managment to obtain, retain or regain market share.

He's saying that for Delta to remain competitive, he will need a more realistic labor relationship in order to compete effectively in this new market.

I think that's a very accurate assessment. I wish it was not so, but I think he is right.

 

[FN FAL]

June 16, 2004 Delta Air Lines' Chief Executive Gerald Grinstein said Wednesday it is "completely clear" the airline cannot survive as is, as fare levels continue to erode despite an improving economy.

But he said Chapter 11 bankruptcy protection would only be used if no other path were available.

For those that are more up these things...does Chapter 11 bankruptcy mean that Delta will be able to cause a lot of grief with it's wholly owned. Not trying to stir the pot, just curious.

It seems as if this industry keeps getting wierder by the day.

 

[Publishers]

Bankruptcy.

Chapter 11 could effect it's non owned entities as it gives you some latitude to cancel contracts and renegotiate other items. Still you are back dealing with some of the same suppliers you are or have delayed payment to for new credit lines which they do not have to give you.


You could break your agreements with the non-wholly owned assuming you want to or they are not at pricing that you can obtain others. All that is a slippery slope.

The basic fact of BK life is that to get your suppliers and financors to continue to fund and supply you, you need to demonstate that something different than the satus quo is going to go forth. Their pilot contract is too big of target not to be high on the requirements.

Seigel from US was sharply criticized on these boards but you often loose a portion of your control when you go through the process. Decisions you would make are now ones by committee.

 

[pilotyip]

What are the other options?

Nobody seems to like the CEO's BK option, what other options does DL have? Is getting rid of all of the management one of the options? We forget no one here would have job if it was not for managment.
Now that being said there is good, better and bad managment is every industry.

 

[enigma]

Respectfully, I think he is right on the money.

First is is making a recognition that the nature of the airline business has changed. Delta's competitiors either have no unions or they have unions that are partnering better with managment to obtain, retain or regain market share.

He's saying that for Delta to remain competitive, he will need a more realistic labor relationship in order to compete effectively in this new market.

I think that's a very accurate assessment. I wish it was not so, but I think he is right.

Timebuilder, I just wrote a two page rant replying to this, but something went wrong and I lost it all. That's probably good.

Starting over. A few quick points if I may. Delta is less unionized than any comparable competitor. Only the pilots at Delta are unionized.

Delta's pilots are trying to work with their company. The managers don't want to negotiate, they apparently want to dictate.

Delta has much bigger problems that pilot pay, it has been said, and I suspect it to be true, that Delta pilots could work for free and Delta would still lose money.

Now, my rant. Why can't management just live up to their end of a contract? They do so with fuel contracts (unless I've been incorrectly informed about fuel hedge contracts)

Let us compare. The airline desires to obtain fuel over a long term at an agreeable price so they sign a contract to buy fuel at a set price. If fuel goes up during that contract period, the company saved money. If fuel goes down during the term of the contract, the company lost money but it gained the ability to plan. If fuel goes down, the company loses money. But they thought the gamble worth taking or they wouldn't have signed the original contract.

The airline desires to buy labor over a long term at an agreeable price so they sign a conract to buy labor at a set price. If labor goes up, the company makes money. If labor goes down, the company loses money. But they thought the gamble worth taking or they wouldn't have signed the original contract.

What is the difference between those two contracts? They both allow the company to pre-buy a need at a set price. The agreed upon price in the contracts is not affected by market forces once the contract is signed, meaning that "what other people are paying" has no meaning during the term of the contract.

Here's the only difference that I see. The airline signs the fuel contract and pays for the fuel under that terms of the contract. The airline signs the labor contract and attempts to break it at the first possibility.

Here's a tip for you management wannabees. Treat your labor the same way you treat any other supplier whom you have a contractual agreement.

Why are you willing to pay for equipment, but would rather dump on people??????????????

enigma