Wake Up Delta

[aislehopper]

If DL files BK to get the pilots costs down, it would piss a lot of people off including the employees.

This would be DL's biggest mistake ever!

DL's "biggest mistake ever" would be to do nothing and let our costs remain above that of the competition. That path eventually leads to dissolution.

In a free market economy, the market rewards the most efficient provider. Currently, we are nowhere close. We have to get our costs under control.

If the company and our pilots cannot come to an agreement, a 1113 hearing to rationalize our pilot costs is the only solution. The threat is probably the only reason why ALPA would grant concessions. (Bankruptcy could also make a 1114 hearing a possibility as well).

I do not want to see a bankruptcy. It is bad for morale. Is a black mark on the company. I do not want to see our pilots treated like that. However, the alternative is worse. A quick bankruptcy now could ensure that Delta does not go the way of Eastern and others.

 

[luv2fly]

If the company and our pilots cannot come to an agreement, a 1113 hearing to rationalize our pilot costs is the only solution. The threat is probably the only reason why ALPA would grant concessions. (Bankruptcy could also make a 1114 hearing a possibility as well).

Pilot costs will not make or break Delta. However, concessions would go a long way to helping with the recovery. Your comments would leave one to believe the current contract is the only thing keeping DL in the red.
You make BK sound like a quick trip to through the car wash. Drive in and come out smelling like JB. It's doesn't work that way. US being a fine example.
I believe the pilots will ultimately give some concessions, however, I highly doubt those concessions would closely resemble those at AA. I disagree with your assessment that ALPA would only grant concessions under the threat of BK. The pilots pension is one that most of us would like to protect. Pilots, unlike management have a vested interest in the long term viability of the airline and need the airline to survive in order to reap the benefits of a long career. The issue becomes what is reasonable? I am assuming that you propose that ALPA would have to be threatened with BK in order to accept managements proposal?

 

[aislehopper]

LUV2FLY:

Good points.

Your are correct that it is not fair to say that one group is responsible for all the woes of a company in this economy. Pilot costs are just one of many variables that will make or break Delta. I believe that you are also correct in stating that ALPA does not need to be threatened with bankruptcy to grant concessions.

However, what is the necessary concession amount?

Delta is in the process of reducing our costs to be comparable with the LCC's and the lower cost legacy carriers. The other departments are becoming more productive. Procedures and policies are changing to make the company more productive. We are squeezing our vendors. We hedge fuel. One major part of the puzzle that remains is pilot costs.

There is not much progress being made on the negotiation front. There have been company proposals and ALPA counter proposals. They are far apart. ALPA is willing to grant some concessions. The question is whether they are enough for management. If not, the company has limited means to bring ALPA to the table if ALPA does not want to deal.

The one weapon that the company has is bankruptcy.

If the company decides that more pilot concessions are necessary and a trip to Chapter 11 is the only way to achieve them, we will go there. If management does not, the negotiations will continue and Delta will accept whatever ALPA will grant.

I am not privy to what is acceptable and what is not. Time will tell.

NHBB's suggested that something scary was going to happen. Bankruptcy is my best guess.

 

[bigbusdrvr]

LUV2FLY:

Good points.

Your are correct that it is not fair to say that one group is responsible for all the woes of a company in this economy. Pilot costs are just one of many variables that will make or break Delta. I believe that you are also correct in stating that ALPA does not need to be threatened with bankruptcy to grant concessions.

However, what is the necessary concession amount?

Delta is in the process of reducing our costs to be comparable with the LCC's and the lower cost legacy carriers. The other departments are becoming more productive. Procedures and policies are changing to make the company more productive. We are squeezing our vendors. We hedge fuel. One major part of the puzzle that remains is pilot costs.

There is not much progress being made on the negotiation front. There have been company proposals and ALPA counter proposals. They are far apart. ALPA is willing to grant some concessions. The question is whether they are enough for management. If not, the company has limited means to bring ALPA to the table if ALPA does not want to deal.

The one weapon that the company has is bankruptcy.

If the company decides that more pilot concessions are necessary and a trip to Chapter 11 is the only way to achieve them, we will go there. If management does not, the negotiations will continue and Delta will accept whatever ALPA will grant.

I am not privy to what is acceptable and what is not. Time will tell.

NHBB's suggested that something scary was going to happen. Bankruptcy is my best guess.

I believe Delta would have to exhaust its cash position down to an unaceptable level in order to file CH11. You can not just take a publicly traded company CH11 to abrogate contracts, Lorenzo caused this change....also the pilots would have to be encouraged to "give up " thier retirement. The company can not just stop it!!

 

[sfb]

I believe Delta would have to exhaust its cash position down to an unaceptable level in order to file CH11. You can not just take a publicly traded company CH11 to abrogate contracts, Lorenzo caused this change....also the pilots would have to be encouraged to "give up " thier retirement. The company can not just stop it!!

That's not quite true. You can file bankruptcy and break the labor contracts in bankruptcy, but management doesn't get a rubber stamp on its contract changes like Lorenzo got in the first Continental bankruptcy. Management has to show that it negotiated "in good faith" with the affected labor group(s) before the judge can cancel the contract, and a labor group unhappy with the new contract is permitted to engage in "self-help."

The key points in a hypothetical DAL bankruptcy used to break pilot contracts would be:
* How much management could get its pilot costs down (at least to "industry-standard" seems highly likely to be approved by the judge).
* How much this would drive up borrowing costs due to the inevitable effect on the company's credit rating.
* How much this would depress traffic among passengers leery of booking on a bankrupt airline.

While taking the money now is always appealing, I would think it would behoove the pilots to help the company put a cost structure in place which would allow for growth in future and thus the potential for upgrades. In their shoes, I'd want Delta to be one of the survivors among the network carriers -- especially given that they are very well-positioned to take advantage of opportunities that might arise as a result of UAIR's difficulties.

 

[bigbusdrvr]

That's not quite true. You can file bankruptcy and break the labor contracts in bankruptcy, but management doesn't get a rubber stamp on its contract changes like Lorenzo got in the first Continental bankruptcy. Management has to show that it negotiated "in good faith" with the affected labor group(s) before the judge can cancel the contract, and a labor group unhappy with the new contract is permitted to engage in "self-help."

The key points in a hypothetical DAL bankruptcy used to break pilot contracts would be:
* How much management could get its pilot costs down (at least to "industry-standard" seems highly likely to be approved by the judge).
* How much this would drive up borrowing costs due to the inevitable effect on the company's credit rating.
* How much this would depress traffic among passengers leery of booking on a bankrupt airline.

While taking the money now is always appealing, I would think it would behoove the pilots to help the company put a cost structure in place which would allow for growth in future and thus the potential for upgrades. In their shoes, I'd want Delta to be one of the survivors among the network carriers -- especially given that they are very well-positioned to take advantage of opportunities that might arise as a result of UAIR's difficulties.

How do you explain to a share holder that his value is now "0" due to bankruptacy when you have cash in the bank?? You canot just file because want to!! How about cutting all the other labor groups back to where they should be in this new "LCC" environment!! When a F/A is making 30 thou a year, agent as well then we talk about a cut for the liscensed help...............

 

[Kev3188]

"How about cutting all the other labor groups back to where they should be in this new "LCC" environment!! When a F/A is making 30 thou a year, agent as well then we talk about a cut for the liscensed help............... "

Sooooo no one gets to earn a decent living? Your elitist mentality is mind numbing. Guess what, genius? You get what you pay for. If the ground and/or inflight service is crap, then eventually there will be no customers left for you to "drive" around,period. I won't even get into the reprucussions of poor maintenance.

 

[skycruiser]

How about cutting all the other labor groups back to where they should be in this new "LCC" environment!!

It is really easy to tell others they should take a pay cut and reduce their quality of life, so how about you bigbusdrvr? Do you have so much loyalty towards your company that you would forgo your quality of life, take a huge pay cut as well as possible benefit cuts to support your management? Mind you that those management folks will still get their pay and bonuses while your being a "team" player and bearing the brunt of the cost savings.

 

[AAmech]

How do you explain to a share holder that his value is now "0" due to bankruptacy when you have cash in the bank?? You canot just file because want to!! How about cutting all the other labor groups back to where they should be in this new "LCC" environment!! When a F/A is making 30 thou a year, agent as well then we talk about a cut for the liscensed help...............

BK does'nt automatically mean the shareholders value is wiped out. Once they settle with the creditors anything leftover would return to the shareholders in a new stock issue. It usually doesn't happen because companies wait until their position is a COMPLETE mess before they reorganize!