Maybe DELTA needs to pull out of ATL too

[Flying Freddie]

The prospect of retirement is proving very popular with Delta (DAL:NYSE - commentary - research) pilots as labor negotiations wear on, so much so that the company must book a $140 million charge to cover its cost in the fourth quarter.

The expense will swell Delta's expected loss in the quarter to $365 million to $415 million. It previously estimated the loss at $225 million to $275 million.

In addition, the company must record an additional $700 million noncash pension charge under an accounting standard known as SFAS 87, which covers pension plan minimums. While the charges will affect Delta's balance sheet, the carrier said, they won't impact operations.

Delta also said that it was suspending dividends on series B preferred stock, which is a part of the employee stock ownership plan. It will now pay out preferred ESOP stock in Delta shares instead of the $72, plus accrued and unpaid dividends, series B shareholders used to receive.

"To comply with Delaware law, Delta's board of directors changed the form of payment Delta will use to redeem shares of ESOP Preferred Stock when redemptions are required..." said the company, in a statement. "For the indefinite future, Delta will redeem the ESOP Preferred Stock with shares of Delta common stock rather than cash."

 

[~~~^~~~]

The part of the articles on this that bothered me were

As a result of the expected loss and the charge to shareholders equity, Delta said it expects to finish the year with negative equity of $600 million.

Whoa. Sounds like Airtran's business strategy should be just to survive until Delta takes itself out of the marketplace. Ironic, wonder if any of the Eastern guys are still flying at Airtran watching this happen....

The longer ALPA pushes Delta into a corner the more dramatic Delta's actions to survive will have to be. Has anyone seen the latest report regarding Delta's cash position?

 

[General Lee]

It seems like we can't do anything right. If we stay with the large payscale, we cost the company a lot of money. If the guys leave, they cost the company money. We had 281 Capts leave on Sept 1st--and 208 of them were "early outs"---all getting lump sum payments. That is why there was a large one time charge----that hurt us in this quarter. If guys want to leave, they are allowed to leave---but what do you suggest happen? Change the retirement rules on them now? Right after 9-11 happened, the math wizards over at accounting came up with the magic number "1700"----that was how many pilots we needed to get rid of to compete again. So far, we are down 2500 pilots. We have 2500 less pilots now on the payroll than pre-9-11.

Oh yeah, I just read on the Dalpa.net that DCI is asking for proposals for 45 more 50 seat RJs--to be delivered starting in 2005. Where did they get money for that? (Maybe from selling the 10 737-800 orders?) You would think that if we were really hurting we would stop all capital expenditures and save cash to spend on servicing our debt. Right? I guess not. But, it is all our fault again.

Bye Bye--General Lee

 

[46Driver]

Is Delta buying the RJ's for Comair or ASA or subcontracting them to SkyWest or Chautaqua on a fee for departure basis? If it is the latter, it wouldn't involve a capital expenditure (I could be wrong on that...)

 

[General Lee]

What I saw on the Dalpa. net had a little article from atwonline.com---or Air transport world. It said that DCI was asking for proposals. If it were somebody else, then wouldn't that company be asking for them? I don't know.

Bye Bye--General Lee

 

[MedFlyer]

Oh yeah, I just read on the Dalpa.net that DCI is asking for proposals for 45 more 50 seat RJs--to be delivered starting in 2005. Where did they get money for that? (Maybe from selling the 10 737-800 orders?) You would think that if we were really hurting we would stop all capital expenditures and save cash to spend on servicing our debt. Right? I guess not. But, it is all our fault again.

Bye Bye--General Lee

Actually, DL may not really be spending anymore for these planes. In fact, this RFP could be used as a way to move debt off DL's books.

DL doesn't need more 50 seaters (DL's management has said as much) unless they plan on really rebuilding a hub like LAX (ie take back the Eagle feed), but I doubt that. So DL takes some of the 50 seaters currently operating for CMR or ASA and hands the plane off to a contractor. The contracted regional takes the plane (and the debt) and operates as DCI. The net result is no increase in the number of CRJ's flying for for DCI, just a reallocation of the portfolio.

It's a dirty way to treat the CMR/ASA folks, but in Leo's little banking and finance world it makes sense. I'm not saying this is what is really going to happen...just hypothesizing.

 

[General Lee]

That may be true---I don't know. So, they would be new airplanes that Delta HAD ordered, but would give to somebody else (and the debt with that) to still be used at DCI. Amazing.

Bye Bye--General Lee

 

[Heavy Set]

What about management pay cuts? Any mention of that? Of course not....

 

[~~~^~~~]

General - which is it? You brag about Delta's cash position then argue that we can not afford profitable equipment.

The RJDC analysis of your scope turned out to be accurate and there is room for 40 to 45 additional aircraft under the currrent block hour limits. The company would prefer 70 seat jets, -700's would do the most to avoid over flow going to Airtran, but your limits are your limits. They harm you and your employer more than anyone else.

The E145 is marginally less expensive to operate than the CRJ. As a result Chautauqua and MESA are thought to be the front runners in the DCI bid. Chautauqua is a relatively new airline, with new airplanes and new crews. ASA has been around 25 years and as our seniority increases, and our airplanes age, we are less competitive. So, my expectation is more flying goes outside the "Delta" family with the usual cancellation provisions that leave Delta on the hook for the airplanes.

ASA has asked us to forgo our 2002 amenable date and push this to 2004 to secure this flying. Our MEC will meet in early December to figure out a reply.

Maybe you can jet for jobs with MESA, or CHQ.

~~~^~~~

 

[General Lee]

Looks like we will with our current furloughs. They could have added as many 70 seaters as they wanted----as long as our furloughs would fly them.

Bye Bye--General Lee

 

[Flying Freddie]

Just think how much airlines could save if they got rid of all their pilots!!!

 

[FDJ2]

The company would prefer 70 seat jets, -700's would do the most to avoid over flow going to Airtran, but your limits are your limits. They harm you and your employer more than anyone else.

I've got to raise the BS flag on this one. There is NO limit on the number of 70 seaters that DAL can operate. There is only a limit on how many can be outsourced. If DAL needs more RJ70s we have plenty of pilots who could fly them. Unless of course you would prefer that we allow DAL to outsource that flying to the lowest bidder.

 

[General Lee]

That's what I said!!!

 

[Pilotbob3]

It is interesting to read post by pilots not working for a dinosaur legecy airline. While you rejoice over the succes of the few that are hiring you are slowing watching the demise of the profession in regards to compensation and benefits. The way things are going in 10 years we will be looking back and remembering how great a job this was. Meanwhile the managers will be banking your "will" to fly for anything. I don't blame any pilot for this but if you are young and having a great time someday you will be trying to figure out how to pay for your kids college, how to invest in a retirement etc. It will be hard to do on the pay we are driving oursevles to. I also gave a $200 donation to ALPA during the ComAir strike. Comair MEC did more for the regional profession that anyone with their strike. They drove the regional rates up and started a pension plan. Read the AA Eagle contract, its criminal for the job the pilots do.They also did more for Delta mainline contract that Delta MEC themselves.

really great post there hostage! you hit the nail on the head.

 

[FlyBoeingJets]

If they are anything like AMR then the quote will be "We must provide the bonuses and incentive to keep the top management teams intact" OK, if they are so red hot then how did we get here.

Amen. They will say anything to keep executive pay high.

 

[General Lee]

Delta calls it a "retention bonus"---to keep the team together. Where else would they go? The LCCs pay a lot less to their managment.

Bye Bye--General Lee

 

[~~~^~~~]

Richard Branson has made some nice offers. He would love to pick up where your scope is going to leave ACA. The President of JBlue and Southwest both make approimately 4 to 17 times the $2,196,188 Mullins made. Stock options of course making up the difference. Where do you get your figures?

Do not know if there is any correlation, but 700 million in additional charges for 620 pilot retirements suggests an additional 1.13 million per pilot to not work, on top of whatever monies were already set aside in their defined benefit plans. Wow!

Again, you can tell me how this correlates, but it appears some Delta pilots are getting - drum roll please - T W E N T Y years of my pay, on top of what even money was already set aside for doing, er' uhm' nothing!?!

You guys are going to have to find something else to complain about rather than Executive Compensation. That DOG won't hunt.

 

[General Lee]

What are you talking about? Neelman made $200,000 in Salary last year---and I know that he could make more in stock options or that he is worth more. The two people running Southwest (not Kelleher) made near $500,000 in Salary last year. Leo made over $1 million in salary and total of about $12.9 million last year with options etc. (we lost over $1 billion)--which equates to $35,000 a day--everyday of the year. The top 6 executives at Delta make more in salary than any of the LCC management teams. They want us to make LCC wages, and they will not themselves. As far as Branson offering more, I guess you didn't know that Virgin Atlantic has the lowest paying salaries for pilots, flight attnedants, etc in Europe and the lowest paying 747 pilots in the world. Morale over there sucks. Sure, he could offer the management a huge starting salary, but the morale of his workers over a year or two would make his job really tough. Beauveis isn't going to offer much more for the Pittsburg LCC either.


As far as retirement is concerned, not everyone can get that type of bucks. Only guys with over 25 years of service with mainline Delta (not Western or Pan Am guys) got even close to that, and they probably invested well. Delta agreed to the Gatt rate deal in the contract, and now they are paying for it. The problem was that when the Gatt rate fell to an all time low, our fund manager had to come up with a way to pay for the lump sums, and our stock at the time was at an all time low. Who's fault was that? Not the pilots. They served their time and then wanted out with the Gatt rate being so low. Now we are very short on widebody Capt's, and some XMAS vacations are being cancelled, and they are handing out greenslips. Who's fault is that? They didn't man the airline properly, and we just filed a grievance because of that---they have not been following the manning formula in the contract since last May. Instead, they have been paying senior guys double pay (greenslips) rather than man the airline properly. They pay twice so they don't have to pay benefits for extra people. That is there fault.

Bye Bye--General Lee

 

[~~~^~~~]

As far as Branson offering more, I guess you didn't know that Virgin Atlantic has the lowest paying salaries for pilots, flight attnedants, etc in Europe and the lowest paying 747 pilots in the world. Morale over there sucks. Sure, he could offer the management a huge starting salary, but the morale of his workers over a year or two would make his job really tough.

General :

Are we the new paradigm for happy, well paid, employees? You and I are both tops in our respective equipment.

You are right about managements agreements and the effects. But the good news is that hopefully you guys will turn down the holiday green slips and force the company to recall pilots. I know the furloughees are important to you and I appreciate your stand.

~~~^~~~

 

[Ninja]

Folks,

These senior captains have been around and know they don't have the trust funds established (using company $) by Leo & his bandits to protect their futures. I think most of us would take the money and run (after many years of dedicated flying) if we were in their shoes. It's an ugly situation!

 

[General Lee]

Fins,

I wish we could, but last time we tried to turn down greenslips (overtime)---we LOST in court. How? Good question. I can't believe that we are FORCED to do overtime. I have not ever gotten a greenslip, nor asked for one. Others have their own opinions, and that is up to them. I do want our furloughs back sooner than later, and I hope we can get our manning problem fixed with extra pilots, not extra greenslips. We shall see.

Bye Bye--General Lee

 

[skykid]

General, I remember telling you that many retirements was impossible and I stand corrected. I hope you moved up a bunch of numbers!

 

[no_land_3]

Again, you can tell me how this correlates, but it appears some Delta pilots are getting - drum roll please - T W E N T Y years of my pay, on top of what even money was already set aside for doing, er' uhm' nothing!?!

You guys are going to have to find something else to complain about rather than Executive Compensation. That DOG won't hunt.

Fins,

I'll be one of those 205 guys getting paid $XXX.XX/hr "...for doing, er' uhm' nothing!?!" It's the least that is due me and my fellow furloughees (along with 6 months of back pay) because of what this "talented team" of executives have put us and our families through these past 6 months.

Waste of money? Absolutely! However, management brought it on themselves with their short sightednesss and lack of planning...same with the mass exodus/early retirements.

DL is severely undermanned in several categories...not the pilot groups fault. We have pilots willing and able to fly. Instead of putting us to work, the company is cancelling Christmas Vacations...nice 'eh? DL is hemoraging because management chooses to bleed it.

DALPA has filed another grievance because the co. has not been in compliance with minimum staffing levels based on our manning formula (since May 1st)...that confirms that our furlough was unnecessary. Also, management has not been in compliance with block hours with respect to our international code-share partners.

My position is that we should not even be at the table until we have full contractual compliance. Management also needs to address our, as my MEC puts it, "philisophical differences."

As far as Executive Compensation...that dog will hunt with many DL pilots. We have a contract that is not amendable until '05. No need to open it earlier. NO concessions.


land_on_3

 

[Tim47SIP]

FDJdood

I've got to raise the BS flag on this one. There is NO limit on the number of 70 seaters that DAL can operate. There is only a limit on how many can be outsourced. If DAL needs more RJ70s we have plenty of pilots who could fly them. Unless of course you would prefer that we allow DAL to outsource that flying to the lowest bidder.

You guys spout this stuff out all of the time. But as I have brought up in past posts, your MEC does NOT want any aircraft less than 100-110 seats. When asked about putting 70 and 90 seat aircraft on mainline or in a subsidiary for the furloughed guys he stated that:
1. The payrates would be to low. There would be nothing we could do to prevent Delta from buying a whole bunch of them and increasing the number of small jets while decreasing the number of large jet positions.
2. We do not want any type of intermediate company to place these small jets for the furloughed pilots to fly because of the Express scenario with different pay rates for pilots on the same seniority list.

I for one am all for the furloughed guys flying any additional 70+ seaters. I just dont think DALPA will let them on the property for the pay needed to keep them profitable. I think an additional subsidiary with seperate seniority numbers would work where all of the undesired 70+ aircraft would be placed, seperate pay rates and work rules, furloughed Delta pilots would bid to fly them and any unfilled Cpt positions could be filled by ASA/Comair Cpts bidding up or Delta pilots bidding down. But then we are right back at the age old problem of gaining to many small jet positions and loosing large jet salaries. Bottom line here is that something has to be done OTHER THAN J4J so Delta can remain competitive. Keeping their hands tied or farming out more flying is not the answer.

As far as those additional 45 aircraft, I can't see Delta buying any more 50 seat RJ's. 70+ seaters maybe. I personally think that ASA is already the cheaper one of the DCI carriers. But if we do manipulate our contract to secure these aircraft, it will create one hell of a rift with the Comair folks. To bad we couldn't just split them up, although ASA has been fairly stagnant over the last year or so. Those 45 aircraft would put us close to Comairs size and we could hire a bunch of the Delta furloughed guys. I do have a bad feeling that Shttytaco will get the contract with 145's. Who knows? Will be an interesting next year.

 

[FDJ2]

Re: FDJdood

I've got to raise the BS flag on this one. There is NO limit on the number of 70 seaters that DAL can operate. There is only a limit on how many can be outsourced. If DAL needs more RJ70s we have plenty of pilots who could fly them. Unless of course you would prefer that we allow DAL to outsource that flying to the lowest bidder.

You guys spout this stuff out all of the time. But as I have brought up in past posts, your MEC does NOT want any aircraft less than 100-110 seats. When asked about putting 70 and 90 seat aircraft on mainline or in a subsidiary for the furloughed guys he stated that:
1. The payrates would be to low. There would be nothing we could do to prevent Delta from buying a whole bunch of them and increasing the number of small jets while decreasing the number of large jet positions.
2. We do not want any type of intermediate company to place these small jets for the furloughed pilots to fly because of the Express scenario with different pay rates for pilots on the same seniority list.

Who said that? What's your source? The bottom line is there is NO limitation on RJ deployment in the DAL PWA. There is only a limitation on outsourcing of RJ flying to the lower bidders.

 

[General Lee]

Skykid,

I was surprised too. The company had known for awhile that many people were looking at retirement---in fact, the pilots interested in retirement had to call Delta and ask for the paperwork to be ready well in advance---so Delta knew that the Gatt rate was getting lower and there could be an influx of early outs. They actually knew about it in early March---and just watched along with the pilots as the Gatt rate went lower and lower until they knew that Oct 1st would have an increase----which meant that Sept 1st would be the lowest, and pilots would bail out. I talked to a 777 check airman in June and he said the company thought that 150 total would leave--and it ended up 281 on Sept 1st (not counting others leaving in AUG etc). It was a shock.


TIM47SIP,

Yes, it would be nice if ASA/Comair could do all of the DCI flying since Delta owns them, but this opportuntiy for management to get the lowest price from the lowest bidder is one that they may never see again, and they know that. You are probably right about Dalpa not going after NEW 70 seaters, and I honestly don't know when there will be new orders for them. Maybe Dalpa will work out something with managment, but there would have to be something in there for eventual recalls or help for the furloughs. We can't overlook them in their time of need----the job market sucks and THEY NEED HELP. I don't know if Dalpa will go for J4J in those 45 new RJs if Chataqua or someone else (I hope NOT Mesa) gets them, but that may be one way to get them back into the cockpit. That would all have to be worked out, but ASA has helped our guys in the past, and I hope they get the new ones----let's just not sell the farm in the process. Good luck.

Bye Bye--General Lee

 

[Wats]

General,
You could not be more RIGHT!!! Sqiggley line dude, sorry but DAL has gotta live up to their agreement! And all DAL flying should be done by DAL pilots! You guys really need to negotiate a scope clause that allows ZERO OUTSOURCING!