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C20 / DTW Update
Contrails or Smoke?
July 7, 2015

First of all….We hope everyone had a great Independence Day weekend, whether it was time with family and friends or while at work.

TA Vote Closes, Friday July 10 at 2PM ET. If you’re having any trouble voting please contact ALPA Membership Services at 888-FLY-ALPA, option 3 (two times). If you have any other questions about voting or the process in general, please call / contact us. Please either call or text if your issue(s) / question(s) are time critical; we have a significant email backlog that we are working through from the past several days. If you don’t get an initial response please be persistent and try all three of us. Thanks for your patience.

The Path Forward.
The balloting results should be known within a couple hours after the close of balloting.

If the TA passes, an implementation schedule will be published within several days.

If the TA fails, well, a whole range of interconnected decisions will have to be made by both the Company and ALPA; Re-engage? Don’t re-engage? Wait? Until when? With whose involvement? Under what parameters / threats / deadlines?
Whatever those choices are, what is for certain is that we'll continue to work together under our existing pay, work rules (including sick leave, productivity and SCOPE), and profit sharing parameters, continuing to do the best job possible for our airline, our passengers, our fellow employees…. and of course the shareholders….
The Path to a deal is not likely through the NMB, even if they are ultimately involved; it will be through the mutual needs of both parties.

Please see our last two updates for the more in depth considerations discussed previously. Long version ; Short version

Are those Contrails…… or just smoke……? There have been several items that have been published by the MEC Administration and Negotiating Committee, presented at roadshows, or used as talking points which we believe are unclear at best, don’t tell the whole story, are misleading at worst….or we just plain disagree with.

It’s also clear that the effort to pass this TA has become an all-in, over the top effort, with plenty of fear and threats being served up from all directions. This could be due to an actual belief in the benefits of the TA, fear of the threats, fear of or discomfort with a less well-defined or absolute path, or simply being so committed to getting “a win” that ego has become the prime motivator. This TA campaign has included hundreds of pages of information that has become more selectively focused as we approach the end of the process, recently including two True Headings which took serious liberties with the details; one even printed on attention grabbing yellow paper (in the lounges), and the other seemingly so rushed that it had obvious typos in the text and email header. Hey, everyone makes typos, and we probably have a few within this document, but some of this stuff has become pretty “breathless”.

· Multiple references to aggregate pay charts and graphs which don’t include the offset from the 5.74% W2 reduction in profit sharing for 2016 and beyond, nor the possible effects of “me too” / PWA 3.B.4 raises (where IF the other employees received raises, we’d receive the lesser of the other employees’ raises or the UAL/AMR composite, which would be the 3% UAL and AMR raises for at least the next 2 years). This includes the often referenced table that purports to outline the contract gains which would be necessary in future years if there were not a deal until that point; this table does NOT consider the compounding effects / offset of the PS money that would not be received since it would be used to buy the 1/1/16 rate increase.

· The charts highlight diametrically opposed assumptions and don’t consider other effects such as reduced staffing requirements should the TA pass nor do they highlight other intangibles similar to those included in decisions about bidding a different position or category that go beyond hourly pay rates.

· None of these charts quantify the other contractual reductions or overall aggregate contract value changes.

· References to the PS trade for 5.74% at $6B PTIX being paid at a premium in our favor, in part since “Delta hasn’t ever made a $6B profit”. $6B PTIX is a number that Delta has already been near in 2014 where the publicly announced pre-tax income was $4.5B and the corresponding PTIX was $5.8B.

· There appears to be a failure to comprehensively explain the relationship between consolidated pre-tax profit and PTIX (upon which the PS is determined):
o PTIX is greater than the publicly reported consolidated pre-tax income and essentially equal to the sum of:
§ The consolidated pre-tax income
§ The expense accrued with respect to the profit sharing plan
§ All asset write downs related to long term assets
§ Gains or losses with respect to extraordinary, one-time or non-recurring events
§ Gains or losses with respect to employee equity securities. (This is changed in the C2015 TA; this item essentially represents management stock plans and would count against the profit sharing pool).

· One of the TA campaign Contrails spent significant effort justifying that the PS trade valuation was a good deal at 5.74%. The actual issue isn’t the valuation methodology, it’s the amount of the pay rate increase prior to the PS conversion.

· “The first deal is always the best deal”. This has been stated many times by the MEC admin, communications and especially the Strategic Planning Committee CH, without broad detailed substantiation. However the most distracting issue relative to this characterization is when the 2008 JCBA negotiations are repeatedly referenced.
o The 2008 failure (after some false deadlines) to initially negotiate an agreement was NOT about looking for more money.
o It was about the Leadership of one of the pre-merger pilot groups being unwilling to agree to a deal that they perceived as having an unacceptable Seniority List Integration (SLI) attached to it and the Leadership of the other pre-merger group unwilling to accept a deal that included arbitration to determine the SLI.
o We’ve come a long way since the merger and put many of those issues behind us. Unfortunately some of those involved with the MEC communications, as well as two other LEC reps’ individual communications to their LEC, have apparently decided to (we believe cynically) continue to use the 2008 JCBA negotiations example which does not have a practical application for C2015.

· “If this TA isn’t passed, we’ll be parked for years….. or end up with a PEB (Presidential Emergency Board)”. We believe this is a drastic overstatement, especially considering that we’re six months prior to the amendable date of the current agreement.

· The comparisons with SWA, FDX, and UPS.
o In 2012 and prior we were told that we couldn’t compare ourselves against them since they either used a “different business model” or were in a different business (cargo).
o Presentation slides show how they haven’t made progress in their respective negotiations over the past several years while we’ve had significant aggregate percentage improvements.
o What’s not shown or recognized in the presentations are their pay rates vs. ours dating back to bankruptcy and the fact that they were never in bankruptcy and never took the 35-40% pay cuts during the referenced period.
o No mention of the obvious math that a 35-40% pay cut requires a 54-67% increase to recover from (which, without the PS conversion, wouldn’t occur until 2018).
o No recognition of the reasons that other groups have been unable to reach a deal; in many cases, what the respective managements want isn’t worth the cost to respective pilot groups, even considering other improvements (Reduce or eliminate the pilots’ DB / pension plan at FDX, productivity issues at SWA, no “cargo” pattern bargaining “partner” at UPS).
o Some of the charts presented in the MEC materials have some interesting differences in how data is presented. For example, the below chart is designed to illustrate the stagnation of the pay rates at FedEx and SWA (which already have “good” rates).




Notice, however, than in this chart, FedEx and SWA do not appear. If one were to provide that data, it would indicate that their pay rates were relatively constant (and at the top of the chart), and never suffered the calamitous drop that DAL, AMR and UAL suffered.




· “Sick leave dropped off significantly in May 2015 after information about the new sick leave language’s retroactivity (originally 36 months) was ‘leaked’ during contract negotiations”.
o This is one of the biggest “whoppers” propagated yet during the roadshows. Utter garbage and the Negotiating Committee should know better.
o IF this surfaced as a rumor on some web board, those participating on them would’ve been the primary population with knowledge of it. (Very few people who have heard this allegation mentioned, especially during the roadshows, had any idea what the presenters, usually a negotiating committee member, were talking about).
o Since those on the web boards are frequently regarded by those who oppose that medium as a fringe minority, this would mean that having a significant May sick call reduction would thus have to be dependent upon this “small group” and those that they have other communications with not calling in sick. Ridiculous.
o In any case, this has the highest probability of just being a politically motivated talking point to attempt to discredit those who don’t agree, do so in an outspoken manner, or just to deflect the blame and responsibility for the inadequacies in the sick leave language of the TA.

· “You have to vote yes even though it’s not a good deal because the MEC is so [select negative description; no expletive intended] and we’re doomed.” The MEC will take the necessary action should the TA fail to press on with the process. A MEMRAT rejection may even serve as a “perspective reset” the MEC.

· There are a few items which have been moving targets relative to their implementation parameters, application, and details since described to the MEC as the “last, best, and final offer”, but do not have any supporting PWA language or language changes. Some of those “after the bell changes” are:
o Retroactivity date for the Sick Leave language, which was initially briefed as 36 months retroactive at the time of implementation, but later changed to June 1, 2015.
o Disposition of medical records and DHS (Director of Health Services) AME responsibilities. Boils down to a letter of commitment from the Company which states that they can’t share your medical records or data with the FAA (without a court order or your approval) vs. the stated FAA requirements to AMEs that requires them to “…report a disqualifying condition either observed or in the course of the examination or otherwise known to exist.” [Our emphasis]. Simply committing to have the records stored away safely in a “lock box” isn’t the point; its what’s done with the records by those who are allowed to have access to them on a much more frequent and comprehensive basis than currently, as well as any associated unintended consequences that will only become fully realized and understood once the language is implemented. The disposition of the records after their contractual use has also not been defined.
o Definition of “bona fide patient relationship” relative to QHCP (Qualified Health Care Professional). Originally briefed to include family, friends and neighbors, most recently now limited to just family. Likely to be an issue of contention once the policy becomes effective and, like with many other areas, the rush to an agreement may have led to a failure to clearly define the term.
o Withholding LCP Rotations from FO Bidding during PBS. MEC Communications have stated that no trips would be withheld for students not based in the LCP’s base. This parameter is not included in the PWA nor the TA language and was not briefed at the time of the TA presentation to the MEC.

· Contrary to the roadshow descriptions, the “test programs” for the virtual basing and the TLV +1 increase are approved for continuation by the MEC Scheduling Committee CH (who works directly for the MEC CH) and the PWA 1.E.9 foreign carrier allowance to use Delta branding is approved by the MEC CH; there are no MEC decisions required in these areas. In theory, the MEC CH works at the direction of the MEC, however, the recent JV Grievance settlement was completed with no input from the MEC whatsoever.

· Revisiting the MEC TA MEMRAT Vote.
o The MEC Policy Manual (Section 9.B.2) states that “No agreement will be submitted to the membership for ratification unless it has first been approved by the MEC” and “When an agreement is to be submitted for membership ratification, following MEC approval and prior to the opening of membership balloting, the complete and final language will be provided to the members for a period of time as determined by the MEC as appropriate under the existing circumstances”.
o An 11-8 majority of the MEC believed however that the following action was sufficient: “Therefore Be It Resolved that the Delta MEC approved submitting this tentative agreement reached with Delta Air Lines for membership ratification”. This occurred after debate and discussion determined that a majority wanted to support sending the TA to MEMRAT without recommendation. While some other Representatives have claimed otherwise, the discussion that occurred prior to the vote, and then afterwards, made it very clear to those present the intent of the agenda item.
o The MEC’s actions have still been described in official MEC communications and talking points as having “approved the TA”.