Delta Warns Pilots Of Cash Decline

[Hatu]

LOS ANGELES (Reuters) - Delta Air Lines Inc.warned pilots Friday that its cash stockpile had dropped below a key level that could allow it to seek more concessions from the pilots' union, a company spokesman said.

http://money.cnn.com/2005/08/19/news/fortu....reut/index.htm

 

[WorldTraveler]

Sounds like ALPA has a large incentive to negotiate and negotitate fast, although that process has apparently not started.

It also sounds like Delta fully intends to rework its business plan before proceeding to bankruptcy.

"However, the notice from Delta, which was negotiated under last fall's agreement that secured $1 billion in annual pay and benefits give-backs to the company, gives the union a 30-day window to negotiate new changes to its five-year contract with the company. After those 30 days, Delta could then, if it has filed for Chapter 11 bankruptcy court protection, file a petition requesting to dump its labor union contracts."
"Mr. Malone (ALPA) said that Delta has informed him that any new negotiations with the union "will be in the context of a comprehensive business plan that is equitable and involves all other Delta stakeholders."
--- WSJ Online Aug 19, subscription required

 

[invtrade]

Sounds like ALPA has a large incentive to negotiate and negotitate fast, although that process has apparently not started.

It also sounds like Delta fully intends to rework its business plan before proceeding to bankruptcy.

"However, the notice from Delta, which was negotiated under last fall's agreement that secured $1 billion in annual pay and benefits give-backs to the company, gives the union a 30-day window to negotiate new changes to its five-year contract with the company. After those 30 days, Delta could then, if it has filed for Chapter 11 bankruptcy court protection, file a petition requesting to dump its labor union contracts."
"Mr. Malone (ALPA) said that Delta has informed him that any new negotiations with the union "will be in the context of a comprehensive business plan that is equitable and involves all other Delta stakeholders."
--- WSJ Online Aug 19, subscription required

[post="289926"][/post]​

My take on this notice mechanism built in the pilot contract is that DAL knew at the time of negotiation that the concession was not enough and pilots were not convinced that more was needed. Therefore, such a notice mechanism is built in to allow both sides a second chance. It this being true, I feel there is a strong chance pilots will take another concession again provided other employees will do it as well. Hopefully, this time, DAL can make creditors chip in as well.

 

[WorldTraveler]

I'm not sure it's fair to say that concessions were not enough, only that DL realized that the bar is moving in this environment. Yes, it probably is likely that pilots will give more; I don't think the pilots are in a position to dictate that anyone else do anything but DL has historically tried to ask for help and give goodies to both unionized and non-unionized groups.
Unsecured creditors are the ones who particularly need to help out but that may be hard to restructure if it is publicly held.

 

[luv2fly]

Time has run out. There is no more time to negotiate. This time everyone will have to contribute.

 

[invtrade]

I'm not sure it's fair to say that concessions were not enough, only that DL realized that the bar is moving in this environment. Yes, it probably is likely that pilots will give more; I don't think the pilots are in a position to dictate that anyone else do anything but DL has historically tried to ask for help and give goodies to both unionized and non-unionized groups.
Unsecured creditors are the ones who particularly need to help out but that may be hard to restructure if it is publicly held.

[post="290114"][/post]​

Last year, DAL was seeking to waive the buy-out restriction clause on those publicly traded debt. Most of those debts are probabily traded less than 40c on a dollar now. Unfortunately very few debt holders agreed to. DAL can make the request again (through the agent of the debt holders). I think this time DAL ought to organize the debt holders meeting with the gun on their heads. Alternatively, I don't know whether DAL has thought about this. DAL can have conduit investors set up to buy those securities in the open market. The conduit investors can then waive the buy-back restriction on the condition that DAL will buy them back at certain profit to the conduit investors. In today's market, DAL can quickly eliminate up to 50% of those debts.

 

[WorldTraveler]

sounds like a reasonable plan. If there is any chance DL could do it and stay out of BK, I should think they are exploring it.

 

[kiloromeo]

its all over but the crying...