Delta 20% Pay Cuts Next Week
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luv2fly
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Vikedog64 said:
Let's clarify that vike. You just can't make a blanket statement like that.
Not all employees, myself included, feel the employees should subsidize rising fuel costs. Most majors have achieved labor costs that are in line with LCC's, and some have bettered it. There comes a point when an employee makes the ultimate decision. Is this job worth the level of compensation? Can I do better doing the same job elswhere, or can I choose another line of work that is more fairly compensated? You are correct that we will do what we need to, but your post implies that all will choose the paycut simply because. It has nothing to do with "good web fodder".
Did you know that the bypass rate for furloughed Delta pilots right now is roughly 50 to 80%? Are those pilots bypassing recall because it makes for "good web fodder"? Absolutely not. Most have secured other jobs that for one reason or another have more pro's than con's when compared to Delta.
IMO, there is no way to save DL from BK. We simply have too much debt and gas costs too much. This is not a labor cost issue, it's a revenue issue. Until we start charging what is actually costs to operate an airline, things will never change. Give all you want. I don't plan on it. I won't help subsidize bad business.
Vikedog64 said:
Thats a load of crap. The airlines are exploiting the situation. Every airline can lose money and there will still be planes flying. If one airline is losing and everyone else is making then THAT airline faces extinction, but when they ALL are losing there is no way that ALL of them are going to shut down, they cant-the economic impact would be devastating. In addition to the million of people not only do the airlines still move mail but with todays "on demand" economy where stocks of inventory are kept very low the airlines allow stores and business to get what they need in the same day. If the employees simply refused to give concessions the government would be forced to subsidize it like they do mass transit in every city and Amtrack.
The fact is we have been suckered, we never should have given back a dime. The airlines like everyone else would simply raise the price of the product they sellto cover increased fuel costs. The airlines is the only industry I know of that has lowered prices in response to increased costs.
Bob Owens said:
Your rants might be taken more seriously if they were actually supported by facts. The airlines have raised fares this year as fuel costs rose. Fares probably would have risen even faster if everyone was paying the same price for fuel. However, because some carriers are paying substantially less for fuel that prevents prices from rising as fast.
The reason the gov't subsidizes mass-transit and Amtrak is because neither have a workable business model. Similar to many legacy airlines, people who ride mass transit and Amtrak don't pay nearly enough to cover the actual cost. But beyond that, both mass transit and Amtrak are primarily just welfare programs. Amtrak is kept alive by the folks in Congress from small rural districts that don't want to lose service. Mass transit exists primarily to transport the poor and to a lesser extent provide congestion relief.
However, there is no need for the gov't to subsidize airlines in the same fashion (except for maybe EAS service). Airlines can make money if they are well-managed and have employees with realistic expectations. Currently, most of the majors have neither.
luv2fly
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Ch. 12 said:
What does that tell you Chap 12? What more can an airline hope for other than full planes? Labor costs are not the problem. In fact, many carriers are now reporting that their fuel costs are exceeding labor. Load factors are at a record highs, and yet amazingly enough, the airlines are hemorrhaging.
Labor costs will not save airlines from $60+ a barrel.
luv2fly
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DLFlyer31 said:
I agree with your assertion that airlines can make money if they are well managed, but your statement about employees with realisitic expectations is beyond me. Please define realistic.
I'll define it as charging a price for your tickets that doesn't require your employees to subsidize it. As I noted earlier, some airlines have noted that fuel costs now exceed labor which is historically unheard of.
Stupidity is killing the airlines, not labor.
luv2fly said:
It's called revenue management and I can tell you that a 70% full a/c is often more profitable than a 100% LF. It's all in the mix of pax. Problem is that even before 9/11 and high fuel prices, biz demand dropped off a cliff as businesses started doing more teleconferencing rather than travel and as frac jets increased in popularity. Now we see more a/c flying than ever before and they are being filled by leisure travellers which is all that remains.
There is not any one golden egg but the only area where airlines have control is in labor costs. The carriers cannot force biz demand to increase again (no matter what you do with skeds, perks, and fares), they cannot decrease fuel prices (hedges and futures will also increase as crude increases), but they can affect labor. True...as Bob points out, some legacies have reduced labor costs to something comparable to rates at LCCs but wages are only part of it. Productivity is the other piece and even though the LCCs pay comparable wages (per hour), they actually pay much less per productivity as they don't have decades-worth of productivity-stifling clauses in their contracts.
But then you end up like U which has ONLY looked at labor costs (which again...is the only substantial cost area where a carrier has some control) and you end up with very disgruntled employees (Bob?). That is not the solution either and mgmt needs to be cognisant of this and show that they are also at least trying to make cost-cutting efforts in other areas and not just labor (even though as I have mentioned...there is far less opportunity in other areas). DAL has demonstrated this with their cost-cutting plan but in the face of crude prices that have increased 20-40%, it isn't enough.
Wish I knew the answer that would please everybody but if I did...I would be rich and the airlines would all be in the black. Until then I guess we all live in the red??
artiefufkin
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At Delta labor costs are most certainly part of the problem. Being a Southeast domestic oriented carrier they cannot achieve the yields that other carriers are able to obtain in Latin America, Asia, ORD, LHR, EWR, etc. Something must compensate for this and that is employee pay. Contrary to the claims made here, Delta does pay at or near the top of what most major carriers pay. Delta already has achieved the lowest operating CASM of the full service carriers, and it is going lower still. But not enough. Just a small cut in pay/benefits would bring them into the black next year.
WorldTraveler
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DLFLyer is correct that there is NO transportation system of any kind that is profitable apart from government protection or assistance. The airline industry cannot be profitable because the cost of entry is too low - there are plenty of airplanes that can be had for a, well Song, and put into the air with no viable business model.
No, employee costs are not necessarily the problem but it is the easiest way to cut costs and attempt to balance the business model. It is true that the legacy carriers have certain employee related costs that are far higher than younger LCCs, although many like Delta, have learned to use those employees very productively. Like it or not, Delta employees will take it in the shorts one more time just like UA and US's employees have.
Yes, DL has real issues with revenue production that the current network cannot solve. For years, Delta has focused on the Southeast and Florida which is highly leisure focused. However, there are revenue positive things Delta can do in the future but they are doing some things now - like removing widebody aircraft from the domestic system. DL will not be a survivor in the industry unless it obtains costs that are at or below current LCC levels or they merge with another carrier that has access to higher quality business markets.
If Delta does head into bankruptcy, which seems all the more likely, employee compensation will come down as will the rest of DL's costs. They will be able to shed alot of unsecured debt and convert into equity which could make DL a strong player going forward. Having low costs, lower debt, a lock on the SE (which is not the only part of the world but is a key market) and a non-union workforce makes DL a prime takeover target. Those of you (employees or creditors) might consider that you will probably fair far worse if DL ends up in bankruptcy since the chances are very high that they will not remain a long-term independent airline.
No, employee costs are not necessarily the problem but it is the easiest way to cut costs and attempt to balance the business model. It is true that the legacy carriers have certain employee related costs that are far higher than younger LCCs, although many like Delta, have learned to use those employees very productively. Like it or not, Delta employees will take it in the shorts one more time just like UA and US's employees have.
Yes, DL has real issues with revenue production that the current network cannot solve. For years, Delta has focused on the Southeast and Florida which is highly leisure focused. However, there are revenue positive things Delta can do in the future but they are doing some things now - like removing widebody aircraft from the domestic system. DL will not be a survivor in the industry unless it obtains costs that are at or below current LCC levels or they merge with another carrier that has access to higher quality business markets.
If Delta does head into bankruptcy, which seems all the more likely, employee compensation will come down as will the rest of DL's costs. They will be able to shed alot of unsecured debt and convert into equity which could make DL a strong player going forward. Having low costs, lower debt, a lock on the SE (which is not the only part of the world but is a key market) and a non-union workforce makes DL a prime takeover target. Those of you (employees or creditors) might consider that you will probably fair far worse if DL ends up in bankruptcy since the chances are very high that they will not remain a long-term independent airline.
luv2fly said:
For pilots, what I mean is that if you want to have industry leading pay, you'd better have the industry leading PRODUCTIVITY to back it up. The previous contract certainly didn't do that and the pilots are paying the price for it now. Part of the reason for such steep cuts is in part to try and make up for the excesses of the last contract.
For labor groups like FA's, GA's and Res agents, there have to be realistic career expectations. I know I'm going to get attacked for this, but these labor groups are unskilled labor. Yet up until the past few years, they were being compensated as if they were skilled labor. Many FA's at DL were making far more than skilled professions such as teachers, nurses, police officers, etc. That's not realistic and not sustainable. If you want to make a career as an FA that's fine, but you can't expect high wages for unskilled labor.
For all labor groups, there have to be realistic expectations about the type of revenue a company like DL can produce. DL has a pretty weak route structure that revolves around leisure routes (Florida) and low-yield connecting traffic. Therefore, expectations on pay have to fit within the context of DL's ability to produce revenue.
This isn't a wild concept. If you work as a waiter at Applebee's, you can't have the same pay expectations as someone who works as a waiter at Ruth's Chris Steakhouse. Fundamentally you do the same job, but the revenues of the two companies are quite different and so is the pay.
SoftLanding
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FWIW,
if BK is the endgame, no matter what Delta employees give, will save it from the "game of CH11".
You, employees of Delta, will give way more because of a government official, the BK Judge.
In BK, as has been stated elsewhere, expect basically no negotiations.
Oil prices will most likely be kept up here, or higher, by the powers that be, if BIG MONEY want the pensions gone/employees benefits reduced to basically nothing.
BIG MONEY owns the debt, and will get paid a few years down the road.
SoftLanding
if BK is the endgame, no matter what Delta employees give, will save it from the "game of CH11".
You, employees of Delta, will give way more because of a government official, the BK Judge.
In BK, as has been stated elsewhere, expect basically no negotiations.
Oil prices will most likely be kept up here, or higher, by the powers that be, if BIG MONEY want the pensions gone/employees benefits reduced to basically nothing.
BIG MONEY owns the debt, and will get paid a few years down the road.
SoftLanding
