To Delta Pilots...

[Always deferred]

I hope you guys stand tall and strong. You guys are the last example of what airline pilots can and should make. Goodluck.
~AD

 

[FlyBoeingJets]

Absolutely!!

Delta Pilots,

Stay informed and do the best you can. Others will follow and all will benefit when times improve. Naysayers don't have the best interests of the profession and our collective salaries in mind.

 

[pb4ufly]

I TOTALLY agree!

 

[Wise Guy]

Bump and Amen! Hang in there guys.

 

[spanky2]

New rumor...new CEO (Jerry "Just call me Jerry" Grinstein) just upped the price of poker with talk of Ch-11. Worked for AA. Now we will wait and see if the senior CA's make a run on the lump sums.

 

[FDJ2]

New rumor...new CEO (Jerry "Just call me Jerry" Grinstein) just upped the price of poker with talk of Ch-11. Worked for AA. Now we will wait and see if the senior CA's make a run on the lump sums.

It's "Jerry's" job to try and scare us into submission, but it aint going to work. DAL's performance was essentially in line with expectations. Most analysts don't see chapter 11 in the immediate future at DAL.

"Higgins said he believed bankruptcy would ultimately be avoided but predicted a tough few months ahead."

"Blaylock & Partners analyst Ray Neidl said he did not interpret Grinstein's comments as a potential bankruptcy warning. He said Delta has a good liquidity position and is in no immediate danger of bankruptcy."

"That (talk) could be scaring a few people, but that's just not the case," Neidl said. "

And we have a very competent economic analysis team closely monitoring the economic health of the company. With $2.9B in cash and an operation that is cashflow positive, chapter 11 is not in the immediate future of DAL.

My personal opinion is that there will be no mid contract concessions. "Jerry" is too involved in a strategic assessment which will take us into the July BOD meeting, you'd think after nearly 17 years on the BOD that wouldn't be necessary, and the Delta MEC has scheduled elections for section six negotiators at its February 3rd MEC meeting. As far as early retirements, while we don't have nearly as many pilots in the retirement window as we did last year, I'm sure we'll have some who will hedge their bets and who could blame them. If I had 30 years at DAL and was a 777 CA with a good final average earnings, I wouldn't risk it for a few more months, or a year or two more of flying.

 

[Ty Webb]

I think most of us over here on "Cellblock C" hope you guys hang tough. If DAL management gets concessions from you, our management will come to us for give-backs, and here we go again.

Come to think of it, here's a better idea-

Just have DAL management come to AirTran management and demand a raise for us. That'll work, too.

 

[FDJ2]

I
Come to think of it, here's a better idea-

Just have DAL management come to AirTran management and demand a raise for us. That'll work, too.

Ty, I like it. A very original approach.

 

[Bill Mostellar]

Thanks, so do we...

 

[General Lee]

I think there are a lot of concerned Delta pilots out there, and they want the company to be ok and thrive again. But, we are not stupid, and we won't be taken. FDJ2 was right, we do have a great team of people looking out for us, and hopefully we can make a deal good for us and management. But, if they don't want to negotiate, then what can we do? Just give them 30%? No way. We have a pretty good cash balance ($2.9 bil), and a good economy--with a good Spring and Summer coming up. We will send a good team in to negotiate, and in a couple years we will have a lower payscale. We wanted to give some now, but they only want the whole thing. And, they do have a faduciary responsibility to all of the share holders, so declaring Chap 11 with $2.9 bil in cash and rendering everyones' stock worthless would cause some major lawsuits......Let's keep that good economy rolling......

Bye Bye--General Lee

 

[Dieterly]

We have a pretty good cash balance ($2.9 bil)

Doesn't matter, it's all about fuel hedging...

 

[Heavy Set]

Dieterly,

Could you make LESS sense?

 

[skykid]

If the economy continues to improve Delta mgt will have a harder time painting the bleek picture - here's to you guys holding the bar up there!

 

[MedFlyer]

At this point I think bankruptcy is almost inevitable for DL. If you look at DL's debt load, pension requirements plus future cash requirements to upgrade customer service, DL is really screwed. Even if the pilots rolled over tomorrow and gave 30%, it would be hard for DL to avoid BK. I think both DALPA and DL management are starting to realize that it is inevitable which is why negotiations have died. I don't think BK will happen immediately, DL has too much cash. But as cash is drawn down in the next year, BK will become more and more likely.

As for the improving economy, it is improving but the improvement is very slow for the airlines. Fare wars are intensifying (you can fly from BOS to LAX on DL for about $160!!!!) and capacity is being added back faster than demand which will keep yields weak. DL's advance bookings are weaker than last year at this time, Song is floundering and customers are tired of DL's poor service (even Grinstein has admitted that DL's service is poor and it usually takes a lot to get a CEO to admit his product stinks).

The only event that I could see allowing DL to avoid BK in the long-haul is the collapse of USAirways. If that happens, then it's a whole new ballgame.

 

[satpak77]

As far as having 2.9 billion making "Ch. 11 out of question" or similar idea, a company can file Ch. 11 papers at the courthouse whenever they want, 365 days a year, excluding federal holidays. Do not live in a bubble thinking the world is nice and butterflies are flying and everything will be ok, and that Ch.11 is not an option.

Ch.11 is used by many companies that are in financial distress to legally re-organize debts and finances in an attempt to prevent final insolvency. Ch.11 is also used by management to break unions.

As far as "many lawsuits" if Ch. 11 happens, please observe Enron. How many lawsuits are going to end up with people actually collecting the money they are owed? Lawsuits, like Ch.11, can be filed at any time, by filing the paperwork at the courthouse. Heck, I can sue my neighbor if his lawnmower is too loud. So the purported threat of "lawsuits" is not making DAL management loose any sleep.

In any event, if DAL does file Ch. 11, they can be sued all day long, and the loans on the airplanes and the lawsuits are not going to be personally paid out of the pockets of management, they will walk out of there with golden parachutes.

As far as "the good economy", that is still yet to be seen. The stock market always leads an economy, and yes it appears to be turning around, but lets not go out and buy the party balloons and champange just yet. Any burp or hiccup or bump in the road is going to seriously affect DAL.

My above comments all rest at the feet of DAL management, not the pilots. The "overpaid" pilots pale in comparison to an overpaid management team which flew this ship into the storm it is in now.

 

[FlyBoeingJets]

Medflyer,

Interesting take. I also think it will take more than a quick turn on the yoke to get the Delta ship to turn.

But I don't think Ch 11 is anywhere near inevitable. Look how AA avoided it and they had (have) bigger problems. The health of the other carriers and the economy is showing with the start of fare wars. Short term it's bad news for Delta. I do think the ship is slowly starting to turn though.

The window of opportunity is starting to slowly close...I hope Delta can break the mold and show us the boom and bust cycle of legacy carriers is not a foregone conclusion.





General,

Whats the chance of new 100-130 jets on the property with a lower salary for those jets? Not trying to start something, but once you get the jets at mainline you can go for higher salaries later. A new jet for Song perhaps??

I'm thinking the new CEO might offer that carrot.

 

[Astra Guy]

I don't know about the pending doom and gloom outlook but I do know that it is always supply and demand. Customer service sets one apart when everyone is charging the same rate for trips. Delta needs to work on that while continuing their battle for financial success.

The odd thing to me is that there is somewhat of a contempous attitude towards the passengers that fill these aircraft and ultimately pay the bills. Glad I don't work in that environment. But that is just my opinion.

I do say that I hope the DL crews can hold the line while ensuring financial success of their company. Gone are the days when the employees chip in to buy an aircraft for their company.

 

[FDJ2]

At this point I think bankruptcy is almost inevitable for DL.

JP Morgan

"• Cash Flow Update – By our estimates, even without a pilot deal,
Delta should easily remain solvent in 2004, with an ending
unrestricted cash balance slightly north of $2 billion. With a 2H
pilot deal in place, we estimate an unrestricted cash balance of $2.4
billion. In our view, either figure is more than adequate under all
but the most draconian scenarios."

[email protected]
North American Credit Research

 

[satpak77]

JP Morgan

"• Cash Flow Update – By our estimates, even without a pilot deal,
Delta should easily remain solvent in 2004, with an ending
unrestricted cash balance slightly north of $2 billion. With a 2H
pilot deal in place, we estimate an unrestricted cash balance of $2.4
billion. In our view, either figure is more than adequate under all
but the most draconian scenarios."

[email protected]
North American Credit Research

OUR ESTIMATES

SHOULD

WE ESTIMATE

IN OUR VIEW

ALL BUT MOST DRACONIAN


unfortunately, typical Enron-esque financial analyst legalese at its best

 

[lowecur]

Interesting thought

The only event that I could see allowing DL to avoid BK in the long-haul is the collapse of USAirways. If that happens, then it's a whole new ballgame.

June 30 is the drop dead date with the ATSB. UAIR really only has the shuttle, the two recently combined regionals, and a few gates to sell to get it beyond June 30th. They need to keep PHL, as that is the jewel for their long-term survival. Charlotte and PIT really have no value, and will in all likelyhood see a slow demise as viable hubs for UAIR. They are talking to the pilots about the purchase of 60 more Airbus', but I have trouble seeing that unless they could command $500M for the saleable items I mentioned.

If David Bronner decides to go 7, he will wait until the above items are sold, as they will get more for them that way than at liquidation. So don't automatically assume with these sales that the airline will not go 7 immediately after.

If UAIR is liquidated after June 30th, all boats will rise with the tide. This will give DL pilots the reprieve they desparately need to hold the company's feet to the fire for a few more years. The unfortunate thing is this will only draw out the inevitable Chapt 11 filing for a few more years. By that time DL will be so far behind the other carriers in their strategic planning, that their survival will be questionable.

The interesting thing is how will PHL be divided up? I think any airline is mistaken if they think the City of Brotherly Luv is going to sign long term leases to one carrier for the majority of the gates. I think many fortress hubs have learned a painful lesson about poor market pricing from a dominant carrier, and their lack of competition. I think PHL gates will operate on an open market basis, where the airport authority will assign gates to further competition.

I think you will see the arrival in PHL of JBLU, Independent Air, and Branson's new airline. Don't count out further expansion by FL, F9, AWA, ALK, and ATA if they survive. The usual cast of characters from the legacy's have tremendous capacity to expand in PHL, but the city will be very careful with their gate assignments. Afterall, they don't need similar pricing to UAIR.

 

[AA717driver]

Keep in mind that employee concessions have never kept an insolvent airline out of financial trouble.

Also, the AA pilots gave up almost everything in the contract to keep their retirement intact and now Congress will strip that.

Hold the line. If you walk a picket line, I'll be there with you. (Of course after I'm furloughed I'll just be there to get free sandwiches... )TC

 

[FlyBoeingJets]

Also, the AA pilots gave up almost everything in the contract to keep their retirement intact and now Congress will strip that.

TC

Sorry about the thread creep....But I'm dying to hear about this.

Congress will strip the AA retirement? How so?

 

[jhill]

Doesn't matter, it's all about fuel hedging...

Dieter,
Are you even a citizen of this country?

 

[MedFlyer]

JP Morgan

"• Cash Flow Update – By our estimates, even without a pilot deal,
Delta should easily remain solvent in 2004, with an ending
unrestricted cash balance slightly north of $2 billion. With a 2H
pilot deal in place, we estimate an unrestricted cash balance of $2.4
billion. In our view, either figure is more than adequate under all
but the most draconian scenarios."

[email protected]
North American Credit Research

I never said DL would go BK this year. I agree with JP Morgan that for this year, DL is ok. However, what happens in 2005??? If DL has about 2 Billion in unrestricted cash on 12/31/04, that means DL will have reduced its cash position by 700 million during 2004. 1.5 Billion is likely the bankruptcy trigger amount, so that means by next year at this time, DL will have about 500 million left to play with. DL could easily burn another 250 million in 1st quarter '05 (they expect to burn 300-350 million in 1st quarter '04, so I'm assuming things improve some). This would leave DL around 1.75 Billion on 3/31/05 which is precariously close to the edge.

Of course, I'm assuming the pilots don't give concessions which grows less and less likely every day. Even DALPA has said they will soon abandon concession talk and begin preparations for section 6 negotiations.

The two elements that have been the hallmark of Delta throughout much of its history were a low-cost structure and top notch customer service. DL has never had the best route structure or best hubs (except for ATL). However, having costs lower than its competitors and good service easily made up for the structural weaknesses.

Today, DL's cost advantage has evaporated. The LCC's have costs much lower than DL and even many of the network carriers have costs that are similar to DL's. DL's customer service has fallen and is now mediocre at best. There's almost nothing to distinguish DL from Airtran. In fact, on many routes Airtran will have better service. Which would you prefer on a route like ATL-BUF if you were a business traveler: (1) a relatively new 717 with good sized overhead bins and enough room to use a laptop, plus affordable upgrades to Business Class and free XM radio OR (2) being crammed in an RJ with no upgrades, no radio, no room to open a laptop, walking out on the ramp in the pouring rain, plus there's a good chance ASA will lose your luggage or delay your flight?

Even Song, which is a big improvement in terms of service, is really just a copycat of JBLU. There's not much that really distinguishes Song. Worst of all, Song only provides good service on a bunch of leisure routes, while business routes (ATL-BOS, ATL-ORD,etc) are ignored by Delta. Could this be why DL's advanced bookings are weak??

Don't get me wrong, I'd love to see DL avoid BK. I'd love to see DL thrive and grow and maybe have the chance to fly for the Big D. Unfortunately, given DL's state of affairs I don't see that happening. It's not the pilots fault and I agree that concessions won't fix most of DL's problems, but this is where DL is now.

Before I turn into the General completely and write an entire novel, I'll stop.

 

[rjcap]

(2) being crammed in an RJ with no upgrades, no radio, no room to open a laptop, walking out on the ramp in the pouring rain, plus there's a good chance ASA will lose your luggage or delay your flight?

This will become a bigger issue in the future. The service experience in ATL on terminals C and D is pathetic.

I sincerely hope Grinstein is going to address the management and leadership void at ASA.

 

[Dieterly]

Are you even a citizen of this country?

Which country?

 

[jhill]

Which country?

Germany or France?