DELTA tapped out

[WorldTraveler]

This conversation has gone on long enough and, nothing personal, but there are more interesting things going on in the world than to continue to beat my points to people who have heard them before. So let me wrap it up and put this conversation to the side for the weekend.

First, I have to respond to Cosmo and Deleted.

Cosmo,
by any analysis, DL would be considered more profitable than UA and WN if its profits were within a few million dollars of the much larger UA's but with a higher margin and much higher than WN's on a total basis. But if it makes you feel better, I'll yield the point to you.

I have never said that UA didn't have a huge asset base and hasn't used it well. From a revenue standpoint, UA has consistently been at the top of the pack - well ahead of DL, I might add although much of that advantage comes from the privileged position UA has enjoyed for decades. If anything, my point is that UA has not used its position as great as it has. I am also countering those people, including DL pilots, who say that DL has been mismanaged and never had any decent assets. The history proves quite different. DL has been a very well run and airline with above average industry profitability for a long time with the past five years being a noticeable exception. My bone with UA's reorganization is that they have failed to get costs down, they still have a very leveraged balance sheet that is as bad if not worse than it was before they came into bankruptcy, they are still exposed to domestic revenue downturns with a very volative competitive situation in some of their top markets, and they have used some of the lowest estimates for fuel in their business plan - levels that have not been realistic for even one day since the plan went into effect. And while revenue has been above plan, it has been above plan for the entire industry.

Now back to the DL pilot situation. These are the facts:

- DL pilots were the highest paid for decades and it was because they had the most cooperative relationship w/ management.
- In the mid-90's, post Pan Am, DL hit its first ever prolonged period of losses and turned to its employees for help. ALPA balked and the adversarial relationship with DALPA has only gotten worse every year.
- Leo Mullins and co. were woefully ignorant of the forces that affect airlines and completely failed to manage costs, including caving to DALPA's demands for increased pay as part of the pattern bargaining process in which DL followed UA. DALPA's demands for UA + 1, however, quickly disappeared w/ UA's bankruptcy and court sanctioned labor cost cuts.
- If anything, UA's pay rates in 2000 could be somewhat justified based on the sacrifice that UA pilots made as part of the ESOP - which never paid off for employees. DL pilots never made such a contribution but demanded the same high rates.
- In the post 9/11 environment, Leo Mullin asked for reasonably modest cuts in comparison with what has happened. DALPA dawdled and lowballed offers of help throughout the whole process, often saying that they would not agree to any cuts until DL was on death's door and they had to give.
- In the fall of 2004, DL reached that point and the pilots gave $1B in concessions based on a very real threat of a DL bankruptcy. Those cuts, however, still left DL pilots well above average compensated for the industry.
- The fuel crisis that followed within six months gave no room for DL to recover.
- DL has been involved in a necessary network restructuring for nearly five years. To say that DL has not addressed the revenue shortfalls that resulted from low fare carrier incursion into DL's key Florida markets and the overcapacity that developed in connecting markets is patently false.
- I do not believe there is any doubt that if DL had accelerated their network restructuring which is now in high gear by four years and if DALPA had agreed to just $500M in concessions when Leo first asked, DL would have had enough room to recover when those cuts were accompanied by cuts from DL's non-pilot personnel.
- DL will never risk paying their pilots above average again. DALPA was in a position of privilege but they abdicated the responsibility of working to ensure the company's success that comes with that privilege and which has characterized DL's relationship with its employees for years. Purely from a financial perspective, DL cannot risk having to go through this five year long process again.
- Airline employees have traditionally been compensated at well above average levels for comparable jobs in other industries. Labor rates at airlines went up well in excess of every reasonable benchmark during the 90s even though unit revenue fell with the incursion of low fare carriers. Airline management throughout the industry will not let up on their requirement that airline employee compensation be returned to average levels, both with respect to other industries and with respect to other competitors (low fare carrier included) in the industry.
- The DL pilots lived in denial for years that there was any need to help the company. Like UA's employees, they refused to acknowledge the situation that was developing. Putting off those cuts only resulted in greater damage to the company which has necessitated greater cuts. Had DL pilots acted earlier and offered much less drastic cuts, we probably wouldn't be talking about terminating pension plans. The most sad part of the story is that the whole scene played out at UA and yet the DL pilots didn't learn a thing from UA's experience. UA's employees could almost be somewhat forgiven for what they experienced because they were the largest airline to go through the process but DL's pilots had plenty of warning of what was coming.
- It is complete denial to think that DL will give up with its requests for further cost cuts from the pilots and get them somewhere else. No management group in any industry will back away from the publicized cost cuts they have demanded if for no other reason but to save face.
- There is no doubt that should DALPA call for a strike, DL would be shut down. Principe is fine but it will mean without a doubt that the vast majority of DL pilots will never fly again and never make anywhere close to the income they have or could make again. Some will succeed but not all. Airline pilots are still very well paid and there are few places where that income can be replaced, even at the reduced levels DL is demanding.
- ALPA and the AFL-CIO are pushing hard to save what they can because DL represents the last airline pilot contract to be slashed and because DL pilots had the industry's richest contract for years. The bar will be permanently lowered for all pilots the day that DL pilots agree to an agreement with lowered salaries.
- ALPA and the AFL-CIO will lose some in the event of a DL shutdown but DL pilots will lose most if not all of their current and future earnings. ALPA is quite happy to sacrifice DL pilots in an effort to ensure the unions future. DL pilots are fools to allow their careers to be sacrificed for someone elses principles.

I cannot predict with certainty how the negotiations and arbitration process will end. I am encouraged that the company seems to be willing to include the value of the pension termination in the value of the new contract. It is very possible that DL could accept little more than the current interim agreement wage cuts plus the pension termination plus some workrule changes. But it is certain that DL will get what it wants.

And the best thing I could say to DL pilots is to use your position of privilege in the board room to yell loud and often if you believe your company is being mismanaged. You are not in the boardroom just to tell the directors how much money you want to be paid.

I am also certain that you have the potential to rebuild your position of leadership in the industry because DL will be offering significant performance based compensation that will let you profit if DL profits. By offering you a reasonable base salary plus a portion of your salary that is tied to DL's results, you will enjoy salary improvements in the good times and still have an agreed upon base salary in the bad times. DL, the world, and you will not have to go through this bitter process again.

I would very much like to see DL return to a place where it has strong, cooperative relationships with its employees. Cost cutting is never pretty at any company. Sadly, it has been dragged out for a decade only to be punctuated by a pay raise or two that has ultimately had to be taken back. It is not worth it for the company or for people who have lives to plan and life to have to endure what airline employees have been through in the past five years particularly and at DL for a decade.

Once this cost cutting is past and reasonable salaries have been reestablished, DL pilots and the rest of its employees should return to a level of cooperation. DL management would welcome the desire to return to that position and they do very much know how to do it; there are more than enough DL leaders that remember the "good ole days". CO is the best example of a company that has built extraordinary employee relations after years of brutal and contentious cuts. DL employees can return to the position they once knew and will benefit financially and in every other way for it.

Go and make it happen.

Now get off this computer and go watch some TV. Some healthy competition is occurring... go and be a part of it.

 

[magsau]

Cosmo,

Good work. Is that a throat I hear clearing in ATL right now?

 

[magsau]

This conversation has gone on long enough and, nothing personal, but there are more interesting things going on in the world than to continue to beat my points to people who have heard them before.

I am also countering those people, including DL pilots, who say that DL has been mismanaged and never had any decent assets. My bone with UA's reorganization is that they have failed to get costs down, they still have a very leveraged balance sheet that is as bad if not worse than it was before they came into bankruptcy, they are still exposed to domestic revenue downturns with a very volative competitive situation in some of their top markets,

So you get your books thrown over the fence and now you don't want to play anymore.

Is it true that DL was managed into BK with intelligent business decisions? Why did DL mgmnt not take steps earlier to prevent the CH11 filing? Seems they had all the warniing in the world that things were coming yet they continued on the path to destruction. Was it the fact that UAL and US did not fold their tents that caught the mgmnt team at DL flat footed? Perhaps you have some insight or guidance on the route DL took to self destruct. You seem to be convinced UAL would implode.

Now to the UAL leveraged balance sheet. I suspect DL will have similar issues when it tries to emerge. Speaking of which where is a viable business plan? I have not seen one so it must mean that DL has no clue as to what course it is going to take to exit. They mention 07 for exit. Anyone willing to bet on that? On the issue of domestic revenues. You have ATL and AAI sharing the hub and gaining market share. We have SWA at DEN. We beat back flyi at IAD and
have been very successful in using the Explus service against AA at ORD and their EMB 145's. How many routes to China does DL have? LHR slots? How much of the Pan Am that DL spent plenty on do you have left and operational?

While I like DL and the people I have met there you are a bit a enigma in what I thought to be a good group of people . While I hope the regular DL people make out OK I don't share the same feelings for you. Perhaps BK will be learning process for you also. I just hope it education comes before it is too late.

 

[NewHampshire Black Bears]

" ADDRESSED TO World Traveler "

You are so "GD" Sure that DL WILL get exactly the amount of $$$ it wants from DALPA !!

Please "inform" us , WHAT is DL's "ACT-2", if "ACT-1" does NOT materialize(Arbitrators siding with DALPA), in the DRAMA that is known as ..."As the(Delta) World Turns" ???

NH/BB's

 

[ualdriver]

My bone with UA's reorganization is that they have failed to get costs down

For the last 3 quarters of '05 from UAL's, AMR's, and CAL's 10Q's, UAL's mainline CASM (including fuel) is within a tenth of a cent (+/- too late to look up the numbers again now) of both AMR and CAL, and certainly less than DAL's, although you guys are still restructuing. Our non-fuel CASM's I am told are still declining. I'll believe it when I see it of course. But I guess if we're in bankruptcy again in 5 years due to our costs (as you state), we won't be alone.


they still have a very leveraged balance sheet that is as bad if not worse than it was before they came into bankruptcy,

Actually, not true either. UAL will be paying about 500M on 17B of revenue in 2006. If you take AMR's and CAL's total interest payments and divide that by their total revenue (interest paid in comparison to revenue brought in), you will see that UAL is in the better position of at least those 2 airlines. You'll also note that AMR, for the privilege of not going into bankruptcy, is paying almost DOUBLE what UAL pays in interest every year- close to a billion bucks. So if you want to talk about over-leveraged balance sheets, I think you had better start talking about AMR and CAL at least before knockin' on my poor little airline.

they are still exposed to domestic revenue downturns with a very volative competitive situation in some of their top markets,

So is everyone else. Why pick on just UAL? Actually, DAL is REALLY exposed to domestic revenue downturns even more so and not just because DAL is in bankruptcy. Read below.


and they have used some of the lowest estimates for fuel in their business plan - levels that have not been realistic for even one day since the plan went into effect.
Man, if only UAL would use "realistic" estimates in their business plan like Delta does. Oh wait......

http://biz.yahoo.com/rb/060314/airlines_delta.html?.v=2

The airline anticipates top line revenue growth of 6 percent annually in 2006 and 2007, which is ambitious even in good times much less the challenging business environment facing the biggest U.S. airlines.

You will note that although UAL's post-bankruptcy business plan does call for lower Jet A prices, it also DOES NOT ACCOUNT FOR THE FARE INCREASES WE HAVE SEEN BETWEEN 2005 AND 2006. Nor the ones that WILL be occurring before this year is done. Our business plan's revenue growth is extremely modest YOY, nowhere near the 6% DAL is expecting. DAL had better hope those fare increases stick.

 

[luv2fly]

For WT, since you like to quote Mike Stark. I guess he has now turned to the dark side.


Delta - Theater of the Absurd

"If you have integrity, nothing else matters. If you don't have integrity, nothing else matters."

-- Alan Simpson
"Our distrust is very expensive."

-- Ralph Waldo Emerson

"Every time history repeats itself, the price goes up."

-- Unknown


There are two very distinct and different shows playing on stage right now at Delta Air Lines.

One is external - on the road -- in Washington, DC.

The other is internal - at home -- in Atlanta.

One is being played before a 3-man arbitration board.

The other is playing out before 50,000 loyal, active employees and another 40,000 retirees - all watching and waiting - to see if Delta Air Lines goes out of business - as the company continues to warn unless they get the maximum additional demands and concessions from the pilots.

The playwrights themselves -- Delta management -- wonder why there is little trust among the audience - an audience of faithful workers -- from every department -- generally regarded as smarter viewers than the average bear - and not easily fooled.

One must then ask, how can two very different simultaneous stage shows be a truthful and fair representation -- when they are vastly different in both script and content.

Observe and draw your own conclusions:

Two weeks ago (2/28) -- COO Jim Whitehurst told a packed house of 700+ employees at the GICC that in 2005, if Delta had just been an average legacy carrier -- we would have brought in another $2.5 billion in additional revenue.

In other words, if Delta had the same relative RASM numbers (revenue per available seat mile) as our competitors -- AMR, United, Northwest, USAir and Continental -- we would have been not only the most profitable - but the only profitable legacy carrier among the majors in 2005.

Jim told the standing room only crowd -- of mostly non-contract employees -- that we had a very good chance the airline would be "in the black" operationally in the next 12-18 months. I was in the audience. I did not mistake what Jim said or what I heard spoken on stage.

One then asks: How much is just being average worth to Delta? Again, Jim says it would yield an additional $2.5 billion in revenue if we just catch up - and be on par with the other guys - who pay for the same fuel and have competitors of their own.

Next observation:

On Delta's website -- is a copy of the most current interview from the December NewsDigest with Glen Hauenstein, Delta's new Executive VP of Network and Revenue Management - whom we hired away from Continental in 2005, along with Bob Cortelyou - also from Continental.

Both gentlemen came to Delta because they saw an extensive opportunity to shine -- not suffer defeat. In fact, listening to and watching Glen Hauenstein, there is a certain "glee" in his optimism about the potential he feels certain we can and should achieve and thus, surpass the competition.

Jim, Glen, and Bob each project a "fight's on" attitude. They appear motivated to not rest until we succeed. Their mantra? We will not tolerate or accept any more excuses about our past failure to produce better results. We have the routes and the assets. We will do better.

From the December 5th interview with Glen, he clearly states that during the first nine months of 2005, Delta only achieved 85% of the RASM realized by the other network/legacy carriers. That additional 15% "shortfall" is worth -- in his estimate -- the same $2.5 billion in additional revenue to Delta - that Jim spoke of two weeks ago on stage at the GICC in Atlanta.

Jim and Glen - both agree on the numbers and the potential already being realized with the latest changes to our scheduling and increased route efficiencies - day to day.

Closing the gap on that 15% shortfall and additional $2.5 billion is what Glen and Bob Cortelyou were hired to do. Thus far, they appear to be making positive strides toward achieving parity with our competitors and "getting it done".

In January, Delta's year over year revenue jumped by 14% from the preceding year. By chance? By luck? No. By being smarter.

As Jim pointed out two weeks ago at the GICC, Delta had built the best route structure in the industry..for the last century. A large fleet of RJs were a good feeder mechanism to the hubs - until everyone else started getting them too.

The parallel focus on increasing our International flying from 20% to 35% of the total will also significantly help close the gap with respect to increased RASM. The moves at JFK, designed to feed our newly proclaimed International "hub" with more passengers is the kind of productivity and increased efficiency that wasn't being done prior to the arrival of these newly hired, motivated thinkers - who've joined the team.

These guys are on a mission to succeed - the fresh blood we needed to feel hungry again. It's the same reason a JetBlue or Song becomes successful -- and popular.

There is a sense of purpose in every action and decision made - a driving desire to excel, to be the best -- and prove it -- with actions - each day. At the same time, those kinds of employees are building pro-active trust and respect with action - not words.

So this is one very important scene -- Act I -- being played out in Atlanta - live and on stage every day. Sounds promising and not at all similar to the doom and gloom being heard in the nation's capital this past week.

The other act -- Act II -- also live and on stage - is being played out in Washington, DC the next few weeks.

How very different is the script being heard by the audience watching and listening to Act II at the Marriott hotel in DC. Tickets are still vaialble.

In fact, is it possible we are watching the same play about the same company?

While COO Whitehurst and VP of Revenue Hauenstein are touting increasing our numbers by a couple billion - if we can just manage to achieve "average" status among our peers -- the company negotiators/lawyers are telling the world, the press, and three arbitrators that Delta is doomed if the company doesn't secure more deep sacrifices -- another 1/3 of a billion dollars -- from the pilots -- those lowly harbingers of destruction and greed.

ALPA and the company have been haggling over a couple hundred million for months - the equivalent of less than 2% of the company's operating revenue in a single year.

At this point, if the reported numbers are anywhere close - ALPA says they are offering an additional $140 million -- today -- on top of the $1 billion already contributed by the pilots in the past 12-15 months.

The company says they still need an additional $305 million. Or all bets are off.

Something was rotten in Denmark - and now in DC and Dixie.

Between the intelligent efforts being put forth to significantly increase revenue being touted in Atlanta and the dire straits of a sinking ship being portrayed by company attorneys at the Marriot Hotel in DC - there is a major disconnect between Act I and Act II.

And folks wonder why trust has been an issue the past couple years???

The two sides are now only supposedly $165 million apart on securing a deal.

How about the large amount of money the company saved six months ago, as well as now, by not making the required payments into the pilot's Defined Benefit retirement fund? Have we seen any credit given for that sacrificial lamb?

How about the additional savings realized by abruptly stopping all "Unqualified" dollars being paid to pilot retirees who earned every dollar of that money. What value has been contributed to the company pot by denying those promises to these men and women?

Or don't those dollars count towards the effort because they were "Unqualified"?

Every contract negotiated during a Delta pilot's career included the value of those "Unqualified" dollars, lest anyone forget that fact.

There's something else that deserves clarification and more attention with respect to those retirement dollars referred to as "Unqualified".

"Unqualified" is a bad term. Makes it sound like they weren't earned or were given out as extra compensation -- like a goodwill bonus or maybe a SERP -- or not really part of the benefits due to those retirees. Nothing could be further from the truth. The term "Unqualified" projects the wrong connotation of that well-earned value promised to those folks in retirement. Somebody along the way -- with the integrity and power to do so -- needs to right that wrong when we make money again.

But like every other crisis situation at Delta, those retired pilots have swallowed that bitter pill in stride - and continue to hope for the best. Many I talk with are not only saddened but have moved into the realm of both disgust and disbelief - a dark place they said they never thought they could ever go in their hearts and minds with regard to Delta.

At some point - which may be the crux of ALPA's current stance - there is a breaking point where you have to stop subsidizing bad decisions and a lack of good faith.

One might also ask - how much is being frittered away on legal fees and other resources? How much revenue has already been lost with book-aways over the last 3 months?

Arbitrator Richard Bloch's assessment with Monday's opening remarks was that both sides have failed at the collective bargaining process. Appropriate assessment - except I believe it to be one side not negotiating -- not both -- knowing the players in the play.

How much time and effort is being spent on squeezing every last nickel from our Delta pilot group vs. focusing on the real enemy - JetBlue, AirTran, AMR, and United?

Deep down, many want to see us avoid a strike, focus on crushing the competition, and be successful again. Who doesn't? (Other then a large contingent of our F/O's -- who feel cheated and lied to - repeatedly. Last time we told them we were going to grow the airline we ordered a large fleet of RJs. Who can blame them? They know what they see.)

As I've mentioviablened many times, the same Marriottstrong personalities we specifically hired to be our future Captains and leaders are the same folks who are now willing to draw a line in the sand. It should be no surprise why.

Even a casual observer would have to ask how two very different scenes at the same company are being played on these two stages.

During testimony in DC before the arbitration panel this week, Ed Bastian, Delta's CFO, made it sound as though Delta is so fragile -- on literal egg shells -- that if we don't get the additional sacrifices from the pilots - the equivalent of about 2% of our total operating revenue in a single year - that it's over. The fat lady's warming up.

Shutter the doors. Send the airplanes to the bone yard. We're barely keeping her afloat. People are up at night wondering how we're possibly getting through the next day without the additional dollars from the pilots.

Something's not adding up here with respect to the true, honest, forthright health of the patient.

If we don't survive it won't be because the company didn't squeeze that last $305 million from the pilots - 2% of the company's total $15 billion size.

Delta Air Lines is a $15 billion company. It takes roughly $40 million a day to run Delta. $40 million x 365 days = $14.6 billion.

The difference between the company demands ($305 million) and what ALPA is offering ($140 million) is about four days' revenue.

There is still $2 billion in DIP financing available and revenue coming in daily. Are GE, Citibank, JP Morgan, Merrill, and Boeing really going to sit idle and let Delta close the doors -- for good?

A spade is a spade. And someone in a management/leadership position needs to call it.

It's the only way to start re-building the trust - at every level.

If we don't survive the current stand-off and continuing uncertainty, it will be because ultimately we lost all trust in the leadership, and consequently -- the spirit and the will to compete in a tough business - where your employees make the difference.

It will be because our leaders forgot the intrinsic value of the most valuable resource at any company -- its people.

Too many family livelihoods and futures are at stake.

This is not how Delta Air Lines grew up resolving differences -- and prospered.

Richard Bloch is right. We have failed at the collective bargaining process - at the increasing expense of the morale and faith of our current employees and retirees.

As has always been the case throughout Delta's history - the deal gets done when the company wants it to get done.

Shame on those who have the experience, the knowledge, the resources, and most of all -- the power -- to make the difference.

"God sells us all things at the price of labor."

--Leonardo da Vinci

"There is no truth. There is only perception."

-- Gustave Flaubert

Respectfully, Mike Stark

 

[Ch. 12]

luv2fly-

You are correct...there are indeed two acts being played out. The first act you mention is the revenue act and the second is the cost act. In BOTH acts, it has been mentioned by Jim, Glen, et al that we need to achieve not only cost cuts but also revenue gains. In BOTH acts, they have mentioned that we have been working on and achieving some revenue gains over the past few months. In BOTH acts, it has also been mentioned that cost cuts are needed to get us to the right point.

I don't follow the "4 days of operating DL" argument that you either created or brought from DALPA arguments. You have oversimplified the issue and using your logic, one million dollar bonuses to executives during hard times "only accounts for 0.06% of DL's costs" and is trivial. We both know that $150 Million is not a drop in the bucket. And to even have the thought that the DIP financing is there so why not burn it is horrible. Act I (revenue) got started months ago and b/c of that, we are now seeing some gains. Act II (costs) had been stopped shortly after being started and therefore has yielded nowhere near the necessary levels as of yet. And to think that just b/c revenue is up a little and cost cuts are no longer necessary is taking a very short term look at a long term issue. If I am living in the red, I don't just burn the extra $20 that I happened to save up at the end of a pay period b/c it is there. And I don't burn $$ from a high interest loan that I need to pay back just b/c it is there. I still look for ways to cut costs b/c that is the responsible L0NG TERM approach.

I surely hope that cuts that we take aren't long term but I do understand that we all needed to take cuts in order to have a formidible business plan for the long term. Sure does hurt in the short term but at least there would be a long term with the necessary cuts.

 

[WorldTraveler]

I so wanted to give it a break for the weekend but I have to respond.

Thanks for the updated letter from Mike Stark. I had not seen it.

Yes, it does seem like it would be real easy to just turn the other cheek and forget about the other $150M or so being asked of the pilots. And yes I completely get that the pilots have already given alot. But do the DL pilots not remember that they were paid well above average of all US airline pilots for several years and were paid above average relative to other DL employees for years as well? The DL pilots had a really good gig going on from the summer of 2001 to the fall of 2004. If they weren't smart enough to realize they were vastly overpaid so they should put some of it away for when the rainy day came, then they are to be pitied - and chastised. The bill has now come due and it is time to pay. And they will. And if they aren't prepared, they might want to see if they can borrow a couple thousand from one of the couple thousand pilots that retired and took the near million dollar lump sum payouts - the very feature of the pilot pension plan that has made it impossible for DL or any company to fund it.

As for the pilot wages, can you post a link with the pay rates under the proposed and interim agreements? Everything I've read says DL pilots will be paid pretty close to average, not below it. Yes there may be some cases where other pilots will make sure but averaging says there will be that many where another pilot will make more.

Tapped out means DL is not able to any more borrow money. It doesn't mean it is unable to restructure. I do think Bastien over did it in his assessment of how grim DL's prognosis is; thankfully anyone with intelligence can realize that, including the arbitrators. However, DL's pilot cost cuts are indeed part of the plan and, as I've said before, making the interim agreement permanent and terminating the pilot program with the current DL bond offer might come pretty close to meeting the required amount. DL is not dumb enough to enter into a negotiation process if they didn't feel like they are close to getting the pilot cost cuts in the bag.

The only reason that DL ran up the debts it did over the last 5 years is because they didn't pull the nuclear option five years ago. If DL management had done what AA did, we wouldn't be talking about this today.

DL's restructuring plan is very much on track as evidenced by their ability to refinance their debtor in possession loans just six months into their bankruptcy. That is extraordinarily rare.

Assumptions about what DL will do with a plan of reorganization are premature because DL won't likely file one until this fall. UA peanut gallery, I wouldn't make a whole lot of comments about the speed at which DL files their POR since it took UA an astonishing 2 1/2 years to come up with one - while professional fees continued to add up to the tune of several hundred million dollars. I can say with a very high degree of certainty that DL will not structure their exit financing as all debt. And just because UA has lower interest payments over the next few years doesn't mean they are less leveraged. UA just got reprieve from their creditors to push back debt for several more years in hopes of getting back on their feet but the total debt is still very large and the interest is growing at a faster rate than at AMR because AMR hasn't defaulted on its obligations. ANd I'll remind you that DL had more unsecured debt than any other airline (4 times more than United). Even though DL tried to renegotiate their unsecured debt, it's all being reduced to pennies on the dollar. DL's balance sheet will look $3B better than UA's just by virtue of the unsecured debt DL will lose alone.

As for UA, you obviously don't understand the industry if you assert that UA has little downside revenue exposure. DL and US, in fact, have very little left with DL the most exposed. NW, CO, UA and AA all still derive substantial premium business. AA's efforts to protect DFW and keep Wright in place are AA's efforts to protect its premium revenue. UA has no such protective measures to throw up. SFO is a premium business market. And F9 has never offered low fares of the type that other low fare carriers. The fact that airfares in DEN are falling in markets where WN just entered indicates that F9 and UA kept fares well above WN levels and left them plenty of room to come in and set up shop.

Maybe you all aren't the basketball types but you need to take some time out and just do it.

 

[Deleted by Moderator]

Why should we take a time out WT? You certainly didn't spare us your inane rubbish when we were down. Even now, when Delta is clearly the most messed up financially of every legacy carrier, you still insist that all things are fine and dandy at your beloved Delta.

In 5 years Delta may very well be part of the history books.

 

[mistified]

Why should we take a time out WT? You certainly didn't spare us your inane rubbish when we were down. Even now, when Delta is clearly the most messed up financially of every legacy carrier, you still insist that all things are fine and dandy at your beloved Delta.
In 5 years Delta may very well be part of the history books.

On 8/24/05
WorldTraveler said:

"The east coast has been very hard for airlines - Piedmont, Eastern, and likely Delta will all pass into history. I fully expect that DL will be acquired while in bankruptcy in a merger that is orchestrated by the creditors that have and will continue to prop up the industry. I'll try to write more on the subject in the next couple days. It is hard to contemplate but I think it is inevitable."

 

[NewHampshire Black Bears]

World Traveler,

"STILL" we wait for your assessment of"What will DL do, if the arbitrators do NOT force DALPA to give DL ALL the $$$ that you're "guarantee/ing" WILL happen " ????????????


Please don't "Blame" the weekend.

NH/BB's

 

[luv2fly]

Chap 12,

The article was written by Delta pilot Mike Stark, not me, although I agree with it whole heartedly. WT has used his conclusions in a previous thread regarding pilot sick leave. I was simply upadating him on one of Mike's latest articles.

 

[michael707767]

As for the pilot wages, can you post a link with the pay rates under the proposed and interim agreements? Everything I've read says DL pilots will be paid pretty close to average, not below it. Yes there may be some cases where other pilots will make sure but averaging says there will be that many where another pilot will make more.

First let me say for me personally, the pay rates are not what I find offensive and not what I would strike over. But here they are. All rates taken from Airlinepilotcentral.com, so you can check and verify for yourself.

The current Delta rates on this website are from the interim letter of agreement which included a 14% pay cut from the previous pay rates. The company is seeking 19% from the previous pay rates, so the company proposal would be another 5% cut from the posted rates.

This is for a common size airplane that most all competitors fly, the 737-700/800 and A-319/320 and 717. All rates, 12 year captain pay

SWA 190
CAL 163 for a 738, 144 for a 737-700
AA 158
Frontier 157
Alaska 154
Airtran 153
DAL 149
Hawaiian 148
Midwest 148
Jetblue 139 (at JB all hours above 70 pay time and a half)
AWA 138 (yes for now USAir and AWA have seperate rates)
Spirit 138
NWA 137
UAL 129
Aloha 128
USAir 125

 

[WorldTraveler]

all right, time out is cancelled. But if I start typing UK for every other word, you'll know why. I would never want to disappoint those of you who gather to hear me impart my wisdom since you keep coming back and insist I shouldn't take a break.

thank you, Michael. Good to hear from you again.

as I suspected, DL pilot pay rates either proposed or current are not poverty wages as some would have you believe. And what do you know but that they are still higher than UA's and US's. I guess bad old Delta isn't being as bad as it predecessors. It appears these rates do not reflect the pay cuts NW pilots are voting on now - and DL pilots with a 5% cut off the above rates would still be higher paid than NW's current rates. The only offset would be that NW right now says it plans to keep its pilot pension plan. However, if IIRC UA and US both negotiated new contracts with its employees AND THEN announced their intentions to terminate their pension plans. But the big bad Delta has the moral fortitude to tell the arbitrators and ALPA that it has every intention of terminating the pilot pension plan BEFORE it negotiates a new contract. So much for the assertion about mgmt being sleezy - or at least there are other airlines that have even sleezier management.

mistified,
nice of you to drag that up. Would you like to drag up the retraction as well? Cut and paste is a wonderful feature, isn't it?

bears,
you don't get it. there is no plan 2 because DL will get what it wants.

luv,
I do agree that not counting the unqualified retirement terminations is wrong on DL's part. Which is why I have repeatedly said that I think this whole event may well end by DL recognizing that the pension plan changes are worth at least a hundred million dollars per year and by ALPA agreeing to work rule changes that would satisfy Delta - including much stricter sick time allowances. Have you read how much DL paid in unqualified pensions prior to BK? If I recall correctly, however, DL and ALPA both agreed that benefits for current retirees are not considered part of ALPA's responsibility in negotiations (or DL has not agreed to bargain w/ ALPA for the retirees). In other words, ALPA could not get credit for what current retirees are not getting but they would get credit for what future retirees/current pilots would not get. Right?

 

[Deleted by Moderator]

Actually, we do come to see you posts simply because YOU are an idiot and provide comic relief. Thank YOU.

Considering that I know pilots with LOTS of seniority down to those with very LITTLE seniority, I'd say you are WRONG! But this is something I'm sure you are used to. Were you a member of the computer club in high school?