Pilot Thoughts, Ideas, Beliefs...

[NewHampshire Black Bears]

Bear-

When has wall street said take what they offer? In a recently released interview of Grinstein, Morgan Stanley's analyst noted that he agrees with Jerry's stance and informs investors of the implications.

Live-

Nobody's b*tching & complaining about that as much as they are saying they've given, yet the group that most affects flight profitability refuses to take note of the fact they are dragging the company down. Few people, if any, feel any sympathy toward pilots and their need to take a cut. Many are more bothered by union (ALPA) comments that we have a Delta problem as if to say that pilots are not part of Delta and that the well-being of Delta is of no interest. It concerns me that the national organization is using Delta pilots as an example that they will stand tough no matter who it hurts including Delta pilots...

flyhigh;
Seriously, one of the Big Named airline analyst's, at one of the Big names(I wish I had retained the article), said in a research note, that as long as DL was sitting on resonable ca$h, that DL would be wiser to take the offer.
As you know, because DL is almost non-union, it will be harder for DL to purposely "tank" the airline towards BK-11.(Which we know that the thought crosses EVERY CEO's mind, dreaming of a trip to "11", as a lesser of two evils)

DL "could" hack all non union people to $$$ death(NOT a position I advocate), until the pilots come up for renegotiations in 05'

DL finds itself in an unusual situation.

Again, with NO other Union contracts to further drain cash, and the ability to "corn hole" every other employee, DL has(one way or another) enough cash to get to 05'.

When DL get's to 05', the pilots can still put the SAME 9% offer on the table.
DL then has only 2 choices.
Threaten to shrink the airline(which I ultimately think that they will do, IF ALPA HOLDS FIRM),
or purposely "tank" the airline towards BK-11.

I think that, that's the reason(given DL's "unusual" union situation), that it was suggested that DL take whatever ALPA is offering.

Your thoughts ??


NH/BB's

 

[flyhigh]

Bear-

I can say with great assurance that Will Greene & Robert Susman of Morgan Stanley both agree with Jerry's stance, but layout how that bodes for investors. In addition, their interview stated that Grinstein may push for more than 30% if the pilots take the fight into '05 when their contract is amendable.

In addition, I disagree with your comment that every CEO dreams of going to the courts. It's not enviable and it puts them and their compensation at risk as well.

As for hacking non-union people....again I disagree. Delta has maintained a stance on what they're doing. The issue with the pilots, at this time, maintains that stance. The stance being that every work group needs to fall just above industry average. That is the case for just about every group...except guess who??? The pilots remain 40% above average. That is simply unsustainable. Should they choose to protract talks into 2005, they put the company in a far more perilous position which would require Grinstein to push harder in their section 6 negotiations. In that case, I think that Jerry is prepared to go as far as DL did with the Comair group. This company has show the willingness before, and will do so again, in my opinion, to avoid paying one group way more than the market can bear for their services.

The unfortunate part of that is that the pilots will first cause most employees to loose their jobs, some temporarily, some long term. In addition to that, they will create an atmosphere here that won't value them as co-workers and fellow employees since they seem prepared to take this to the edge and beyond...

 

[LiveInAHotel]

In that case, I think that Jerry is prepared to go as far as DL did with the Comair group.

Delta, can't afford to let it go the distance Com-Air did. If Delta lets that happen, kiss Delta good-bye. The difference is that Com-Air and the like are making profits. The major's are not making profits.

You have to wonder why Gordon is leaving CO and why Delta put a 76 year old man as CEO for the interm?

 

[NewHampshire Black Bears]

flyhigh,

Alpa agrees that their wages are "unsustainable".

If DL refuses the 9%+, then in 05' ALPA could(hypothetically) send a letter to "all concerned", "we are willing to contribute "OUR" fair share, and are DOUBLE/ing are offer to 18%, TAKE IT,OR LEAVE IT !!!!!!!!!!!!!!!!!!!

THAT would be far less than 30+%, and everyone at ALPA would sleep like a baby, at night.

Now, what does DL do ??
1. Impose "their" 30+%, prompting a strike ??
2. Lock them out ??
3. Intimidate ALPA with words like "selfish, while they shrink the airline ??
or
4. OUTSOURCE their jobs to INDIA

IMHO, ALPA is sitting in the drivers seat, so long as they make (what "THEY" think) is a reasonable effort.

(Must be that "UNION" thing)

Mabey Grinstein will get REAL TOUGH, and get rid of ALL the 777's, while he "pit stops" a 767 at ANC and somwhere in Siberia for fuel, on the ATL/NRT trip !!

NH/BB's

 

[Vikedog64]

Bear-

I can say with great assurance that Will Greene & Robert Susman of Morgan Stanley both agree with Jerry's stance, but layout how that bodes for investors. In addition, their interview stated that Grinstein may push for more than 30% if the pilots take the fight into '05 when their contract is amendable.

In addition, I disagree with your comment that every CEO dreams of going to the courts. It's not enviable and it puts them and their compensation at risk as well.

As for hacking non-union people....again I disagree. Delta has maintained a stance on what they're doing. The issue with the pilots, at this time, maintains that stance. The stance being that every work group needs to fall just above industry average. That is the case for just about every group...except guess who??? The pilots remain 40% above average. That is simply unsustainable. Should they choose to protract talks into 2005, they put the company in a far more perilous position which would require Grinstein to push harder in their section 6 negotiations. In that case, I think that Jerry is prepared to go as far as DL did with the Comair group. This company has show the willingness before, and will do so again, in my opinion, to avoid paying one group way more than the market can bear for their services.

The unfortunate part of that is that the pilots will first cause most employees to loose their jobs, some temporarily, some long term. In addition to that, they will create an atmosphere here that won't value them as co-workers and fellow employees since they seem prepared to take this to the edge and beyond...

Bravo post and right on the mark!!

 

[luv2fly]

The pilots remain 40% above average. That is simply unsustainable.

Really. 40% above average?? As a pilot for DL, if I take a 40% pay cut I will make roughly 66k a year. So you are saying the industry average first officer makes 66k a year? I don't think so. This is what happens when people make generalizations. Your numbers are skewed.

 

[NewHampshire Black Bears]

flyhigh,
I'm hoping you'll respond to my most recent post !!!!


luv2fly,
VERY good post !!!!!!!!!!


NH/BB's

 

[TJoe]

Is this the article you were looking for?




By RUSSELL GRANTHAM
The Atlanta Journal-Constitution
Published on: 02/11/04

A veteran Wall Street analyst says Delta and Northwest airlines'
executives may be making a mistake in holding out for deep labor
concessions rather than accepting more modest deals that might
mean a quicker turnaround.
 
"Managements must compromise, in our opinion," UBS Securities
analyst Sam Buttrick said Wednesday in a note to investors. "Each
month that passes without a pilot deal is costing shareholders at
[Delta] and [Northwest] tens of millions of dollars. Paying above-
market wages for a prolonged period to get market wages late is not a
noble exercise."
 
Delta last spring sought a phased-in 31 percent wage cut after
American, United and US Airways won steep concessions last year
from union employees. The three carriers sought or nearly filed for
bankruptcy protection during the negotiations.
 
Delta's pilots, the highest paid in the industry, have offered a 9
percent cut, plus suspension of a 4.5 percent raise scheduled for May
in exchange for a three-year contract extension, to 2008, and later
pay increases and job protections.
 
Buttrick questioned whether Delta or other carriers still can use the
same threat, given the airline industry's improving prospects this year.
 
"Bankruptcy is no longer a credible alternative," said the long-time
airline analyst. "There is no such thing as a 'threat' of bankruptcy. It
has to be real. And, in our view, it's not. Smart managements won't
likely play this card."
 
Buttrick lowered his first-quarter loss forecast for Delta Air Lines from
a loss of $1.75 per share to a loss of $2.30 per share.
 
Delta's and its pilots' bargaining positions apparently have changed
little since they resumed concession talks shortly before Gerald
Grinstein, a long-time Delta director, became CEO on Jan. 1.
 
In recent statements, Grinstein indicated he will not accept a deal that
doesn't contain cost cuts deep enough to allow Delta to survive long-
term, prompting some analysts to speculate that he might use the
threat of bankruptcy to win the deal he wants.
 
The Air Line Pilots Association said it is leaving the door open for
more talks, but is shifting its focus to getting ready for regular
contract talks later this year.
 

 

[FWAAA]

Really. 40% above average?? As a pilot for DL, if I take a 40% pay cut I will make roughly 66k a year. So you are saying the industry average first officer makes 66k a year? I don't think so. This is what happens when people make generalizations. Your numbers are skewed.

Your math is faulty, and here's why.

If you make $140k (and I'm not saying you do) and the industry average is $100k (and I'm not saying it is), then your pay is 40% higher than the industry average.

Do you have to suffer a 40% paycut to get down to the average? No. If you made double the industry average (100% above it), would you have to take a 100% paycut to get back to the average??

In my example above, a 28.5% paycut would be required to get your pay back to the average of $100k.

Computing percentages can be difficult, even for someone able to fly jets.

Let's face it: DL pilots are more costly than those at other airlines. You've got two options for dealing with it.

1. You could attempt to raise the pay of all other airline pilots to match your book rates; or

2. In 2005 you can suffer the same fate as those at USAir, UAL, AMR, CO (twice in CH 11), and all the other pilots who have had their pay and benefits slashed.

At some point the beancounters at WN are bound to realize that their pilots are highly paid - without some concessions, they may soon be the highest paid in the USA. That will make for an interesting fight.

 

[luv2fly]

"Your math is faulty, and here's why.
If you make $140k (and I'm not saying you do) and the industry average is $100k (and I'm not saying it is), then your pay is 40% higher than the industry average."


Ok FWAAA,
Lets see if you understand this.
If I make 110k a year (which I do), and I subsequently take a 40% pay cut (which I won't), then I would make approximately 66K (which is ridiculous). I understand that math quite well.

 

[NewHampshire Black Bears]

Is this the article you were looking for?




By RUSSELL GRANTHAM
The Atlanta Journal-Constitution
Published on: 02/11/04

A veteran Wall Street analyst says Delta and Northwest airlines'
executives may be making a mistake in holding out for deep labor
concessions rather than accepting more modest deals that might
mean a quicker turnaround.
 
"Managements must compromise, in our opinion," UBS Securities
analyst Sam Buttrick said Wednesday in a note to investors. "Each
month that passes without a pilot deal is costing shareholders at
[Delta] and [Northwest] tens of millions of dollars. Paying above-
market wages for a prolonged period to get market wages late is not a
noble exercise."
 
Delta last spring sought a phased-in 31 percent wage cut after
American, United and US Airways won steep concessions last year
from union employees. The three carriers sought or nearly filed for
bankruptcy protection during the negotiations.
 
Delta's pilots, the highest paid in the industry, have offered a 9
percent cut, plus suspension of a 4.5 percent raise scheduled for May
in exchange for a three-year contract extension, to 2008, and later
pay increases and job protections.
 
Buttrick questioned whether Delta or other carriers still can use the
same threat, given the airline industry's improving prospects this year.
 
"Bankruptcy is no longer a credible alternative," said the long-time
airline analyst. "There is no such thing as a 'threat' of bankruptcy. It
has to be real. And, in our view, it's not. Smart managements won't
likely play this card."
 
Buttrick lowered his first-quarter loss forecast for Delta Air Lines from
a loss of $1.75 per share to a loss of $2.30 per share.
 
Delta's and its pilots' bargaining positions apparently have changed
little since they resumed concession talks shortly before Gerald
Grinstein, a long-time Delta director, became CEO on Jan. 1.
 
In recent statements, Grinstein indicated he will not accept a deal that
doesn't contain cost cuts deep enough to allow Delta to survive long-
term, prompting some analysts to speculate that he might use the
threat of bankruptcy to win the deal he wants.
 
The Air Line Pilots Association said it is leaving the door open for
more talks, but is shifting its focus to getting ready for regular
contract talks later this year.

TJoe,
That's EXACTLY the article I'm refering to.

Analyst Sam Buttrick has been around a LOOOONG Time

THank you !!!

NH/BB's

 

[FWAAA]

Ok FWAAA,
Lets see if you understand this.
If I make 110k a year (which I do), and I subsequently take a 40% pay cut (which I won't), then I would make approximately 66K (which is ridiculous). I understand that math quite well.

Close, but you don't have to suffer a 40% paycut even IF you are paid 40% more than the industry average. You only have to take a 28.5% paycut (to just under $79k). I grant you - THAT would be a drastic haircut, and one that may not be correct. But to correct for pay that is 40% too high (in some people's view), it takes a 28.5% paycut to get where they want you to be.

My only point is that the percentage by which your current pay exceeds the industry average for your position does not mean that your paycut must equal that percentage. Otherwise, those making double the industry average would have to take a 100% paycut to achieve the averge pay. I think we can both agree that the correct paycut in that situation would be 50%, right?

Like I said, percentages can be tricky. B)

 

[luv2fly]

Close, but you don't have to suffer a 40% paycut even IF you are paid 40% more than the industry average. You only have to take a 28.5% paycut (to just under $79k). I grant you - THAT would be a drastic haircut, and one that may not be correct.

But FWAAA,

Here is my point. Delta wants the pilots to take a straight 30% pay cut in addition to cuts in productivity and savings plans contributions. In reality that number would be closer to 35-40% when you factor in those addtional cuts. In my opinion, those figures would never be agreed to voluntarily.
Your points on percentages are noted, and yes, that 28.5% paycut WOULD be drastic.

 

[flyhigh]

Luv-

All I said is that DL pilots are 40% above...that includes benefits which haven't changed for pilots. erry is asking for 30%...it's not all pay. Like the rest of the Delta workforce, part of the change insisted upon MUST include benefits.

As for the Buttrick article, while I typically find is reasonably credible, I can't see how one could agree with his statements. For him to believe that Jerry and Michelle are simply threatening bankruptcy is ridiculous. Delta has lost about $1B for three straight years and has racked up close to $20B in debt in the meantime. How long do you think that is sustainable? Under current conditions one can say with great assurance that Delta will again, for a fourth year, rack up losses close to or at $1B. While some of that will be paper (most likely related to the 777 order change), a great deal of it will be cash. The ability to finance additional debt is close to vanished since we've run through so many of the assets already, there's hardly anything of value left to mortgage. I'm truly surprised at Buttrick. He's the typical 90's style advisor...forget tomorrow, we're here today. Short term thinking in the stock market caused huge losses for too many investors for people to consider that a sound strategy.

 

[luv2fly]

Luv-

All I said is that DL pilots are 40% above...that includes benefits which haven't changed for pilots. erry is asking for 30%...it's not all pay. Like the rest of the Delta workforce, part of the change insisted upon MUST include benefits.

Fly,

The latest information I received indicated a straight 30% pay cut from May 2003 pay rates. Benefit reductions were listed seperately. Here is the latest that I have.

- A 30% reduction from May '03 pay rates.
- Elimination of May '04 pay increase. This makes the actual reduction in pay 34.5% over the life of the contract.
-Reduce night pay, international override, and per diem.
- Work rule enhancement to improve overall productivity of pilot group (more furloughs)
- Vacation bank reductions
- Reduction of company contributions to savings plan from 3% to 2%.
- Increase in medical premiums.
- No furlough clause removal.
- Designing a stock option or profit sharing plan.

There is much more involved than just a straight 30% pay cut.