Chairman's Perspective
June 12, 2015
(pdf attached as a viewing option)



Note: Each Council 108 officer will provide you with his perspective of the Contract 2015 tentative agreement in a separate Council Update. This is simply to provide you with the information in a timely manner as the updates become available.



Dear Council 108 Pilots,

The Delta MEC met on Tuesday and Wednesday of this week to consider the Section 6 tentative agreement (TA) with Delta Air Lines that was reached on June 4.
On Wednesday, by a vote of 11-8, the Delta MEC approved the agreement to be sent to you for membership ratification. I cast my vote in favor. This agreement increases the value of the current PWA by a minimum of $1.1 billion over its three-year term and will provide you with the highest pay rates that have ever been paid at any airline in the country, with an industry-leading profit-sharing plan, and will place additional thousands of dollars in your pocket every month. I cast my vote because I think you deserve the right to a determining vote. In this update, I will provide you with my perspective on the TA and where we go from here.

Your MEC began preparations for Section 6 negotiations over a year ago when we elected our Negotiating Committee. Our committee ranks among the best I have witnessed in my 25 years with this company. Last summer, that committee produced a Contract History and a Contract Comparison. They worked closely with the MEC to craft a comprehensive Contract Survey. The results of the survey were presented to the MEC over several meetings in late 2014 and early 2015 and were a primary tool used by the MEC to craft our Contract Opener this past spring. Your MEC was ready, and Delta's senior executives expressed interest in reaching a timely agreement, so the MEC authorized negotiations to open ahead of schedule. Over the past 2½ months, the Negotiating Committee and its expanded team spent hundreds of hours negotiating a new agreement under the direction of the Delta MEC. Under a traditional Section 6 timeline, this volume of work would have typically taken many more months or even years. In short, while the time between the exchange of openers and the TA was relatively brief, the amount of work that took place was monumental, nothing was rushed, and our process was followed to the letter.

You've already received Contrails 19<https://dal.alpa.org/DesktopModules/Bring2mind/DMX/Download.aspx?Command=Core_Download&EntryId=7949&l anguage=en-US&PortalId=0&TabId=2593>, which provided you with a very high-level overview of the agreement, but it's only a view through a soda straw. You'll soon be receiving volumes of additional information from the Negotiating and Communications committees, and I encourage you to learn all you can about the agreement before it comes time to vote. I will provide a brief bullet-point summary here:

* Pay rates will increase by 21.45% over the course of the three-year agreement. This includes pay raises of 8% on July 1, 2015 (six months ahead of the amendable date) and 3% each on January 1, 2017 and 2018. In addition, a portion of profit sharing will be converted to a 6% pay rate increase on January 1, 2016, which will compound other raises and will be valued at an additional premium any time Delta's pre-tax income (PTIX as defined in the PWA) falls short of $6 billion.


* I understand that the percentages may not convey the magnitude of the increases, but we don't spend "%," we spend "$," so let's look at the rates in context. With this agreement, pay rates will have increased over 75% between the implementation of the JCBA and 2018. The agreement provides top of the industry [cid:[email protected]] pay rates in every single category on the amendable date averaging 3.5% above American's January 1, 2016, rates and 13.5% above United's before profit sharing. Profit sharing will increase these margins even further. One year after the amendable date, we will be above Delta's 2004 C2K rates and at the highest rates ever paid at any airline in the country. The rates will be over 20% higher than the highest rates ever in place at Northwest. Five captain categories will pay over $300 per hour and five first officer categories will pay over $200 per hour. For example, for the CVG categories, over the course of the agreement:
* MD88 captain rates will increase from $206.69 to $251.03
* MD88 first officer rates will increase from $141.17 to $171.45
* 737-700/800 captain rates will increase from $218.11 to $264.90
* 737-700/800 first officer rates will increase from $148.97 to $180.93


* The profit-sharing conversion is similar to the conversion that took place in Contract 2012-and it remains one of the most misunderstood aspects of that agreement. The conversion is a simple math exercise that is easily quantifiable and results in no reduction to your compensation. It is a conversion at a premium from an annual to a bimonthly payment, with the added effect of compounding other raises. In this agreement, the trigger to achieve 20% profit sharing changes from $2.5 billion to $6.0 billion for profits earned in 2016 and beyond, which results in a 5.74% conversion. Nobody is suggesting that the conversion is a traditional pay raise but at 6%, the conversion occurred at a premium. Unless you believe Delta will be wildly profitable forever (in which case, you must be new here), for years when Delta's PTIX falls below $6 billion, we will come out ahead in terms of value added, and, for years when PTIX exceeds $6 billion, we will maintain the same level as if there had been no conversion but at a slight premium. If anyone tells you that a conversion of this nature is a concession, they are attempting to mislead you, or they simply do not understand the basic math. There is no scenario where this conversion is producing lesser results than the existing C2012 plan. Even after the conversion, we will have an industry-leading profit-sharing program to go along with the industry-leading rates. Those are the facts. Finally, there is no cap on the profit-sharing amount.


* [cid:[email protected]] The agreement introduces a new narrowbody category of Embraer E190s to the mainline while reducing DCI hull count by over 5% and DCI seat count by 2%. It will also increase perhaps the most important metric, the block-hour ratio, which defines a minimum level of mainline flying relative to DCI flying. Furlough protection will be extended to all pilots on the seniority list on date of signing, thereby protecting over 1,500 of our most junior pilots. Delta also announced<http://news.delta.com/2015-06-10-Delta-to-acquire-20-Embraer-E190s-and-40-new-737-900ERs-upon-pilot-ratification-of-tentative-agreement> that it will acquire 40 737-900ERs upon pilot ratification of the TA. Delta plans to deploy these aircraft as replacements for other narrowbody aircraft scheduled to retire through 2019.
* Vacation pay, CQ pay, per diem, and distributed training pay will increase.
* Sick leave changes were agreed to that partially address management's concerns, but we did so while retaining every single hour of each pilot's sick leave. Our sick leave program remains the best in the business. Significant improvements were made in other areas including FAA leave (for issues related to obtaining your FAA medical) and the ability to shift unused sick leave to a disability account, which can increase the amount of time a pilot receives at or near full-time pay while out on disability.
* Substantial improvements were made to reroute provisions of our contract. Maintenance issues were removed as a trigger to avoid reroute pay, and if the Company doesn't get you back within four hours of the scheduled end of your domestic rotation, or 25 hours internationally, you will be paid premium pay.

Is it enough? That will be for you to decide. Like every other agreement I have experienced in my 25 years here, there were portions that I was pleased with, and other portions where I would have liked to have seen more. A few council pilots contacted me insisting that we should not entertain a single "concession" during these negotiations. A concession implies we were unable to receive something of value in exchange. Yes, we addressed some of management's issues, but that's always the way it works and the only way to get to an eventual agreement ever. While addressing management's issues, we extracted value at every opportunity. Toward the endgame of negotiations, the MEC sent the Negotiating Committee back to the table in repeated attempts to bring back more. What became clear was that we had pushed the Company as far as they were willing to go-now or in the foreseeable future. All in all, the TA will provide well over $1 billion in contract improvements over the course of the agreement, $114 million of which will be delivered before the amendable date. It provides us with industry-leading pay rates, maintains an industry-leading profit-sharing plan, and will be the envy of every other pilot group in the country.

With that in mind, I voted to approve the agreement for membership ratification where each of you will have had the same say in its ratification as each MEC member had. You will be the final arbiters of whether or not the agreement is acceptable to you.

Throughout the MEC's debate, when considering whether or not to approve this agreement, I kept coming back to one simple question. If not this agreement, what is the path to a superior agreement? None of my colleagues were able to provide me with an answer that consisted of anything other than speculation.

For those who contacted me and requested that I not approve the agreement, that choice now belongs to you. For those who contacted me and indicated that you have already decided to vote in favor of the agreement, you will soon have the opportunity to do just that. For the majority of you who fall in between, you will soon have the opportunity to learn more about the agreement. You can expect to receive volumes of information over the next couple of weeks through a variety of different avenues. The first of the base road shows will take place in Cincinnati on Tuesday, June 16, from 1 to 4 p.m. at the DoubleTree Hotel<http://doubletree3.hilton.com/en/hotels/kentucky/doubletree-by-hilton-hotel-cincinnati-airport-CVGHBDT/maps-directions/index.html> at the airport. For those of you unable to attend, a calendar of additional road shows at other bases will soon be published, and the Negotiating Committee will soon conduct a webinar, which will include the opportunity for you to ask questions of the negotiators. The Communications Committee will post the webinar to the website, along with a video of one of the road show presentations. Your elected reps and P2P volunteers will soon man the lounges to answer your questions and address your concerns. You should have all the information you need to cast an informed vote once the ratification window opens.

If you elect to ratify the agreement, the first of over a billion dollars in improvements will show up in pilot paychecks on July 31. Less than three years from now, which is about the amount of time typically spent in NMB mediation, we'll be back in negotiations for Contract 2018.

If you reject the agreement, we will remain in Section 6 negotiations, and, at some point, we will get an agreement. For any new agreement to be better than the agreement now before you, however, any subsequent TA will presumably have to contain more value and include enough of an increase to make up for the delay in gains-including the $114 million in pay raises we were set to receive prior to the amendable date. Can that happen? Maybe, but history has shown that delay almost always works exclusively in favor of management, and second deals rarely, if ever, contain more value than first deals. In the last decade, we have witnessed this scenario at a number of carriers including US Airways, American, AirTran, and at Northwest during our transition negotiations and seniority list integration.
Our legal professionals, who worked closely with the Negotiating Committee and have a combined total of over 100 years of negotiating experience, all agreed with me that while it is speculative to predict when we might reach a subsequent agreement, it is unlikely to be of greater value.

[cid:[email protected]]Not-So-Fun Fact: The Southwest pilots and the Delta pilots both entered Section 6 negotiations in March 2012. The Delta MEC has since negotiated Contract 2012, and now Contract 2015. The Southwest pilots received their last pay raise in 2012 and have remained under the auspices of the National Mediation Board without any pay raises since then. They are joined there by the FedEx and UPS pilots who have also been in mediation for several years. The end rates of this agreement will place our 737 rates 21% above those currently in effect at Southwest. All three pilot groups have expressed an interest in the details of our new agreement in a desire to get out of mediation and to achieve agreements of their own.

Thank you for your support over the past 15 months as we have prepared for this agreement. I hope you will take every opportunity available to learn as much as you can about the agreement now before you. When the time comes to cast your vote, I encourage you to vote in favor of the agreement.


Respectfully,
Buzz



Buzz Hazzard
DAL 108
Captain Rep