Grinstein's Letter To Pilots

aislehopper

Senior
Aug 20, 2002
331
9
It looks like the cutbacks are coming for everyone.
ah

Text of letter to pilots from Delta CEO Grinstein was clipped from Jointogether

Published on: 07/30/04

Dear Delta Pilot,
Today, Delta responded to ALPA's proposal and provided ALPA its
proposal to achieve the pilot cost savings needed to help ensure
we have the best chance possible to restructure outside of
bankruptcy court and avoid the additional sacrifices that
alternative course of action would demand. While I respect the
negotiating process and believe details are best resolved
privately at the table, the sheer life-altering magnitude of the
need - approximately $1 billion in annual savings - deserves
acknowledgement, hard truths and assurances from me personally.

First, the hard truths. As the financial data and modeling we
have shared with ALPA over time demonstrates, the $1 billion in
annual savings represents the minimum amount, in combination with
reductions from other stakeholders, required for our company to
regain long-term viability. So, unlike traditional talks where a
company's opening proposal represents a ceiling from which it can
afford to lower its target, this level of savings must be
achieved.

Importantly, how we get there - i.e. the combination of changes
in benefits, wages and work rules required to deliver the
permanent, steady-state savings the company must have - is
something best determined through a collaborative effort with
ALPA. We look forward to receiving ALPA's input and suggestions
on how best to achieve the objective. We will be as open to
solutions as market realities and developments allow. To be
clear, the marketplace is dictating our level of need.

Because of the current situation we are in, the limited amount of
time we have to do this together, and what we are trying to
avoid, it would be irresponsible for us to be unprepared. We
therefore have proposed certain pension plan changes for ALPA's
consideration and input which, unlike United, are designed
to achieve viability, preserve accrued benefits and provide a
sustainable pension plan going forward. Appreciating how
important this issue is to you and to all of us, I wanted you to
hear about this directly from me and understand the very real and
meaningful differences between our position and United's actions.

We are watching United closely, as I am sure you are, because
what happens there could have far-reaching effects throughout our
industry. Our options are limited by the marketplace and the
requirement of viability. However, our goal in this proposal,
with respect to the pension plan, is to preserve and protect
your accrued benefits (including your ability to receive money in
a lump sum). Delta's objective is to maintain the ability to fund
the existing plans and provide a secure, sustainable new
retirement plan for the future, within the boundaries of
viability for Delta.

Second, the assurances. To consider making the level of sacrifice
needed, you must believe your sacrifice will be worth it. Is the
need real? Does the company have an innovative, strategic plan?
Are other stakeholders being called upon to be a part of the
solution? Will sacrifices be shared fairly and equitably? Will
there be an upside? These are legitimate questions that deserve
direct answers.

The need is real. We have opened our books to ALPA and its
independent advisors for verification, so they could ensure that
the numbers are accurate. Seven credit downgrades and the worst
second quarter performance in the industry further confirm the
severity and precariousness of our situation.

Delta has a plan. After months of intensive planning, we are
poised to roll out at the end of August decisive, strategic
initiatives that will transform Delta and the way we do business.
Our plan is not to simply mimic low-cost carriers, nor is it to
continue to struggle for another few years as a traditional
legacy carrier. We are instead pursuing a Delta Solution, using
the tools and resources unique to us to carve out new and
previously uncharted airline territory. Make no mistake; this is
designed as an out-of-court solution. And, as we implement it,
the Company must and will generate significantly more savings
than the $1.8 billion achieved to date through our Profit
Improvement Initiative.

Other stakeholders will be a part of the solution. Though
significant, pilot costs alone are not the problem, and they
alone are not the solution. We are working hard to restructure
debt, renegotiate aircraft leases, and reconstruct our
relationship with vendors and suppliers. Everyone must
participate, or we can not transform this Company without court
supervision. Our goal must be to do it once and do it right.

Sacrifices will be shared fairly and equitably. Our circumstances
do not permit us to enjoy the benefits of being at the top of the
industry compensation ladder. Our goal is for Delta's
compensation packages to be market-competitive against legacy and
low cost carriers - not the highest, not the lowest, but
mid-range. Though our non-contract employees are generally at
market, and management is below, the need for greater savings
through PII will require even more change.

There will be an upside. I am committed to the principle that the
people of Delta must have an opportunity to share in any success
their sacrifice helps make possible. If we are able to
restructure consensually, rather than through the courts, this
principle will be a meaningful component of our on-going
relationships with all of our people. We already are working on a
combination of equity, profit sharing and some type of incentives
tied to productivity as we move forward.

I appreciate ALPA's willingness to work constructively with the
company. As we tackle together painful and difficult issues,
there are few good options and no easy choices. Delta's work to
transform itself into a viable company that can provide stable
and rewarding career opportunities for its people over the
long-term will require enormous change and sacrifice from its
people now. And, while there are no guarantees in life, and
particularly in this industry, I do believe all of us would be
better off if we could avoid a court-supervised restructuring.
We have a window of opportunity and it is my view we should take
advantage of it.

Thank you very much for your continued dedication and commitment
- particularly in the face of almost unimaginable change. I
appreciate your contributions and am proud of the dignified and
professional manner in which you and all of Delta's people are
serving our company and our customers.

Sincerely,
JG
 
aisle,

I hope for your sake, your cuts do not go much further than they already have, but I think you know they will. All of us are in for a very rough ride, even if the pilots approve the concessionary package. Good luck to us all.