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Negotiations Update

As we reported to you earlier this month, the Company delivered its initial pay proposal to us on July 7. We have spent our time since then analyzing the impact of their proposal and of the UPS and Allegiant TAs, and in briefing the MEC. As the MEC is currently in recess, we would like to update you on where negotiations stand to date.

From the start, your MEC has recognized the opportunity for value that Delta’s operating issues provide us. To the extent that the Delta pilots are of a collective will to pursue that value at the table, it represents an opportunity to significantly leverage our bargaining position. To be clear, this is not about "buying" our clean pay raises. Rather, it is an available option with which to entice the Company into discussions that will lead to significantly greater overall value.

Understanding the negotiating process is just as important as understanding the content being discussed. Our December re-engagement proposal was focused on removing your primary objections to the rejected TA, i.e., the “toxins,” plus making important additional proposals not included in the TA. From the start, we sought to bring pay, compensation, and other value items into the discussion earlier than is traditionally done. In the meantime, we have engaged in other areas of the contract, all the while emphasizing that no piecemeal agreements are final until we have reached a satisfactory agreement on pay, retirement, and quality of life issues.
Throughout these discussions, we have held to a number of basic principles:

Scope – any changes to this section must protect pilot jobs throughout the airline, both domestic and international

Sick Leave
· We will preserve our existing sick leave benefit (our annual allotment of up to 270 hours per sick leave year)
· We will not accept any increased requirements for a pilot to authorize the release of his medical records to the Company
· We will preserve the privacy of, and respect for, our pilot professionals

Work Rules
· No pilot should be required to work more hours or days than he does today
· Under certain circumstances, a pilot may volunteer to work more than he does today
· The PWA must not allow any negative financial consequences for pilots complying with the flight time and duty provisions of the FARs

In keeping with the above tenets, we have reached agreements in principle on the issues outlined below. While there certainly are added costs and savings to be found in the following pages, it is important to note that we have not concluded negotiations in pay, retirement, vacation, etc. We will make our most significant gains in these sections. Even under the Company’s unacceptable pay proposal, our net gain in value is already some $600M per year ahead of the PWA.

Please know that these are merely outlines of issues that have been resolved, and that we will provide further details in additional Negotiators’ Notepads when a final TA is reached and contract language finalized.

Scope
Improved control and fragmentation language
Add SEA to list of Delta hubs
Delete prorate aircraft from list of permitted DCI aircraft
Provide that Delta must remain based in the United States
Require Company to maintain separate operating identity for international partners absent ALPA consent
Update furlough protection to pilots on property on DOS

Minimum Pay Guarantees
· One hour pay and credit (against guarantee) for unused short call pilot – a pilot who is converted to short call but not assigned a rotation during that short call period will receive an hour toward his reserve guarantee
· Fitness for Duty (test basis) – a pilot who is not fit to begin, continue, or extend his FDP will automatically default to full rotation guarantee. Rather than being required to speak to the Duty Pilot as to his reasons, the pilot will submit a Fitness for Duty report within 48 hours explaining what led to his lack of fitness for duty. These reports will be reviewed by a joint ALPA/Delta Fitness Review Board (FRB) monthly. A pilot’s pay for the rotation can only be reduced if the FRB agrees that his lack of fitness was due to a circumstance within his control.

Lodging and Expenses
International per diem for training outside the 48 states – today, a pilot receives domestic per diem when he trains away from his base, regardless of the location of the training
Increase per diem
o Domestic
$2.35, effective DOS
$2.45, effective 1/1/18
o International
$2.85, effective DOS
$2.90, effective 1/1/18
A NYC short call reserve pilot who is assigned a rotation reporting in EWR will receive reimbursement for up to $100 of transportation costs to EWR
A pilot who is assigned recency training reporting prior to 0900 in his base and who lives further than 50 miles from the training location will be provided a hotel room

Vacations
· Available vacation move-ups will be posted in DBMS each month prior to the close of vacation move-up bidding
· A pilot who flies on the day prior to his vacation, releases up to two hours into his vacation period due to late operations, i.e., not a reroute, and who has a rotation on his schedule reporting the day after his vacation will no longer be able to move the violated vacation to the end of the period such that the rotation drops. He can move the day to the beginning or end of any other awarded vacation period.
· To the extent permitted by the IRS, a retired pilot’s earned and accrued vacation payout will be deposited as a Company contribution to his 401(k)
· Individual vacation days – a pilot will be able use up to a total of four of his awarded vacation days to drop rotations or on-call days on a higher priority than an APD on up to two separate occasions in a vacation year; he will receive pay only for the vacation days at the vacation daily rate, and not for the rotations or on-call days dropped

Deadheading
· Double surface deadhead pay to $25.00
· The rules for providing at least a 90-minute turn time between a deadhead and an ocean crossing in pop-up rotations will be codified into the PWA
· A pilot who deviates from his scheduled deadhead at the beginning of his rotation will retain his full per diem
· A pilot who deviates from his scheduled deadhead at the beginning or end of a MAC rotation will now be required to book a flight(s) showing actual availability, just as he would on any other rotation

Training
· Sick leave pay for all SLI duty periods – today, an SLI may only use sick leave for up to 17 SLI duty periods per bid period; any additional SLI duty periods for which he calls in sick are unpaid
· Pay guarantee for up to 22 SLI duty periods, subject to recovery – today, an SLI is only guaranteed 17 SLI duty periods per bid period, and he receives no pay guarantee for any additional SLI duty periods on his line
· Increase LCP/LVP override to 15% of 744/777 pay, and provide for premium pay for LCP/LCP duty performed above threshold – today, an LCP or LVP (formerly an AQFO) receives an override of 15% of his aircraft pay rate when he performs LCP/LVP duties
· Voluntary simulator periods 0100-0459 at premium pay
o A pilot will be able to volunteer for training (both CQ and qualification training)
o If he trains 0100-0259, he will receive 2:00 per such training period in addition to his normal training pay
o If he trains 0300-0459, he will receive 4:00 per such training period in addition to his normal training pay
· Warm up period after break of more than six days during qualification training that was caused by the Company if the pilot’s next scheduled event is a PV, MV, or LOE
· Additional curriculum day after first LOE failure, if needed

Hours of Service
· Duty Credit increased from 1 for 1¾ to 1 for 1½:
o 2200 to 0600 (pilot base time), and
o 2200 to release from a duty period that includes 0359 (pilot base time)

Leaves of Absence
· FAA Leave -- up to 60 days of paid leave for pilot who has lost his medical certificate and is awaiting reinstatement; avoids having to use sick leave or go onto disability during this time

Sick Leave
· Same sick leave year and accrual as today
· No increased company access to a pilot’s medical records
· Verification not required until the first sick call in a bid period after the pilot has used more than 100 sick leave hours in the previous 12 bid periods; a pilot who has used less than 100 sick leave hours in the preceding 12 bid periods will have no obligation to provide verification in the current bid period, other than under a good faith basis
· Eliminates verification requirement for a single sick occurrence greater than 14 consecutive days
· Eliminates voluntary verification
· Sick leave lookback reset to zero for pilot who returns from disability
· A pilot who has used fewer than 50 hours of sick leave in each of the previous two consecutive sick leave years will not be required to verify any sickness in the following sick leave year, other than under good faith basis
· Please look for a future Negotiators’ Notepad for full details

Filling of Vacancies
Category freezes
o The freeze for a pilot who undergoes qualification training with fewer than 12 scheduled curriculum days, e.g., a requalification course, will be shortened from 24 months to 12 months
o The freeze for a new hire pilot will be lengthened from 12 months to 24 months, with an exception for a pilot who must bid a new aircraft in order to change bases
Training bypass will be allowed at earlier ages
o A pilot will be able to volunteer for training bypass at age 60, rather than 62
o The Company will be able to exercise its discretion to bypass a pilot at age 63, rather than 64
o In both cases, full pay protection will continue to apply as today
The ALV window for widebody positions (7ER, 765, 330, 777, and 744) will be expanded from 72-84 to 71-85; the TLV range will remain unchanged, such that a pilot will not be required to perform more flying in any given year
Temporary Duty (TDY) and Virtual Base (test basis)
o To be eligible, a pilot must be current and qualified in the applicable position
o Bidding for TDY and virtual bases will occur on the 15th of each month for the bid period that is two months in the future
o TDY and virtual base staffing will be strictly voluntary
o A pilot who lives more than 125 miles from airport center will receive:
Positive space travel between his home and the TDY or virtual base at beginning and end of each bid period, and
His option throughout the bid period of:
· Positive space travel between his home and the TDY or virtual base for each rotation or on call days, or
· Airport hotel for all nights between rotations and during stretches of on-call days
o A pilot will retain any awarded vacation in a TDY or virtual base bid period
o A pilot will bid for CQ training, PBS lines of time (regular or reserve), and open time in his TDY or virtual base category; a pilot in a TDY category will be considered to be junior to all pilots permanently in that category
o TDY may only occur in an existing category
o A virtual base may only be established within the contiguous 48 states and may not be established in an existing pilot base
o A virtual base rotation may not begin with an ocean crossing or contain an ocean crossing to or from an existing pilot base

Scheduling
· Once a pilot’s QPD request, i.e., a PD or APD request that has been denied due to lack of sufficient reserves, has been in open time for at least 48 hours, the Company will be allowed to grant the request and use the rotation for theater or SAQ qualification, recency, and/or consolidation
· The deadline for a Captain being awarded an SAQ rotation for which he is not qualified via a white slip, swap with the pot, or the Pilot-to-Pilot Swap Board will be increased to 96 hours prior to report
· Reroute and Recovery
o The time limitation for triggering reroute pay has been moved up to that of C2K
§ Four hours after originally scheduled release, or
§ 25 hours after originally scheduled release if the reroute ends with a transoceanic duty period
o The only circumstances under which reroute pay will not be applicable are the pilot’s departure or arrival airport being closed and weather along the pilot’s route
o If a pilot has been assigned recovery flying, and if either the pilot’s original rotation or his recovery rotation touch an airport at which the Company has publically announce a waiver of passenger change fees due to an IROPS, and if the pilot is removed from his recovery rotation due to an IROP affecting that rotation, then he may be assigned a second recovery rotation at double pay, provided the assignment is made within six hours of his originally scheduled report
o A pilot whose first flight segment has been delayed may be rerouted at double pay, so long as the reroute is into a turn in the first duty period and he is returned to his original rotation immediately afterward
· Rotations Designated for OE
o A bid package rotation, i.e., not a pop-up trip, that has been awarded to an LCP or to a pilot who is awaiting OE, but is otherwise open, or that is totally open (no Captain and no FO) may be removed from open time after PBS awards and before the first PCS run
o No more than 15% of the open time in a category may be pulled under this provision prior to the first pre-month PCS run or between any two PCS runs
o If an LCP drops or swaps off of a rotation that has been pulled, then that rotation will be immediately returned to open time
o A totally open trip that is pulled from open time must be assigned to an LCP within two business days or returned to open time
o PBS bidding remains unchanged – all rotations in the bid package will be available for line awards; this affects only rotations that were not awarded in PBS or that were subsequently dropped into open time
o The process for removing an FO for another pilot’s OE remains unchanged – the FO will continue to have no recovery obligation and will continue to be able to pick up additional flying via WS, GS, etc.
· A reserve pilot who has flown a rotation that ended with an FDP that operated inside his WOCL will not be required to report for another rotation on the same calendar day unless there is no other reserve pilot available in his days-of-availability grouping
· The short call credit grouping used by the Company for involuntary conversion to short call will be changed from less than three short call credits to less than two short call credits; this will have the effect of spreading involuntary short calls more evenly throughout a category
· Codify the current practice which allows the Company to bypass a one-day pilot going into hard non-fly day, e.g., golden X-day, vacation day, etc., for conversion to short call
· FRMS short call – the Company will be allowed to notify a pilot of his conversion to short call for an FRMS rotation on his first on-call day prior to the beginning of his days off immediately prior to the on-call day
o For example, a 777 pilot who is on his last on-call day prior to a group of four X-days may be notified that he will be converted to short call at 1300 on the first on-call day following his four X-days. He will be considered to be at rest from the time he is notified of the conversion to FRMS short call until the start of the short call period.
· A pilot will be able to be free from contact for the first two hours of any short call period, not only the first after a set of days off
· The Company has committed to further automating the GS and GSWC award process to provide a pilot more notice for such an award; every pilot will continue to have at least ten minutes to respond to a call from Crew Scheduling
· Special Incentive Lines
o These currently pay 55 hours per month to a pilot who is responsible for no flying
o The Company may also offer Known Personal Leaves for full or partial bid periods at no pay
o Under this provision, the Company will be allowed set a different guarantee for SILs at their discretion

General
Two current practices will be codified into the PWA
o Calls between pilots and representatives of Crew Resources are recorded
o A pilot receives an email notification any time his flight times are manually entered or updated in DBMS

Benefits
· As opposed to being limited to $500 per year, the amount of excess FSA money that a pilot may roll over to the following year will be as permitted by IRS
· DPMP changes:
o A pilot who elects DPMP medical coverage will no longer be required to also elect DPMP dental coverage
o Dual coverage of dependents by two Delta employees, retirees, or survivors will be eliminated
o The Injury Coverage Coordination provisions of the DPMP will be amended to match Delta’s account-based plans
o If the “Cadillac tax” from the Affordable Care Act is imposed and is triggered by DPMP, ALPA and Delta have agreed to meet and confer on possible changes to avoid payment of the tax, with any resulting savings going 100% to the pilot group
· Delta will seek to increase max optional life insurance to $2M and to add whole life option in 2018 to provide additional options to the pilot group
· The Company will establish a Pilot Retiree VEBA HRA
o A pilot will deposit $1 per pay hour into his account tax free; he will continue to receive 401(k) and profit sharing on such monies
o 401(k) excess payments will also go into the account tax free, providing an additional vehicle to shelter Company contributions to a pilot’s 401(k)
o All funds will go into the VEBA tax free, grow tax free, and may be withdrawn tax free when used for eligible medical expenses
· A pilot who remains on LTD for more than 36 months will no longer be subject to having his disability benefit reduced by his outside earnings
· Enhanced disability bank
o One half of a pilot’s unused sick leave hours under 80 will be deposited into the bank
o If he remains on disability after exhausting his DPMA benefit, he will receive 40 hours of pay per month for every 80 hours in his enhanced disability bank

Conclusion
Every Delta pilot understands that "it's not only about the money," so contract costing is not a strict measure of group or individual satisfaction. But for the sake of general awareness as to how we're poised to gain in this PWA cycle, the total value of the items addressed above represents less than 1 percent of our total contract value. The remaining items to be addressed lie predominantly in the areas of pay, retirement, vacation, etc., all value items to our side of the ledger. These are all items that we will require to be significantly improved over our current contract in any TA we reach.

As we continue through this process, our measured negotiating approach remains effectively consistent. Our efforts at the table will continue to follow the direction we receive from your MEC, predicated upon continuing polling and other input received from you, the line pilot.
As we keep you up to date on the progress of the ongoing talks, please keep in mind that any items on which we reach agreement prior to reaching a full TA are contingent upon successful conclusion of that overall agreement.

Please forward any questions you may have about the provisions in this Notepad to [email protected].

Thank you again for remaining engaged.


Steve, Heiko, Jeff, and Ron