Labor Issues
1. Why would we want SLI arbitration? Isn’t that a change from our previous position?(added 04/22/08)
There has not been change in the position of the MEC with regard to SLI. Our position on SLI has always been the fair and equitable integration of the two seniority list. Prior to an announced merger, both involved parties must agree to arbitration. The Delta MEC did not, and would not agree to arbitration in advance of a merger announcement because we feel a negotiated list will always yield a better result (unity) and would be the quickest path to a "complete package" deal including a joint contract. Following the announcement of a merger and the ensuing PID, EITHER party can force the SLI to arbitration via ALPA merger policy simply by dragging out negotiations until mandatory arbitration is triggered. Given the fact that the NW merger committee has always preferred arbitration and absent a negotiated (consensual) list either party can force arbitration, it is possible and perhaps even probable that the SLI will be conducted via
arbitration. We still strongly prefer a negotiated list but we must recognize that we may not be able to stop arbitration.
2. Why expedited SLI arbitration?(added 04/22/08)
Let us be clear: Our position has not changed and our goal remains a negotiated seniority list. What have changed are the conditions under which we are operating. Our goal before the merger announcement of a "complete package" provided the quickest path to a profitable company. We still want the integration to occur as quickly as possible. The sooner the company can access all the benefits of the merged company the sooner we can enjoy our profit sharing and the negotiation leverage of 12000+ unified pilots working for a profitable company.
All that expedited SLI arbitration means is reaching the arbitration phase of ALPA merger policy prior to the timeline trigger for arbitration contained in that policy. If both sides agree, the timelines in the merger policy can be reduced. Remember, however, following a PID under ALPA merger policy EITHER party can ultimately force arbitration of the seniority list. If it appears we are likely headed for arbitration anyway, getting it done as soon as possible will be in our best interest so as to access the benefits of a profitable strong company.
3. Didn’t we just leave the Northwest pilots behind?
Absolutely not. For the last several months, the goal of the Delta MEC was to achieve a comprehensive agreement which would have included a transition agreement, a joint pilot contract and an integrated seniority list. Unfortunately, we were unable to reach an agreement on seniority list integration with the Northwest MEC, which was a crucial part of the overall package.
Instead, we were able to negotiate Letter 19 which sets a "higher bar" for an eventual joint contract than would have otherwise existed without Letter 19. That is good for all pilots of the merged corporation. We still are actively encouraging three way talks between Delta and both pilot groups to achieve many of the same goals, including harmonization of our contracts to include these critical improvements.
4. This agreement will allow for a period of time where two different pay rates will exist for the same or similar aircraft for Delta and Northwest pilots. Isn’t that something we would like to avoid?
In both the Western and Pan Am mergers, the acquired pilot groups operated under their old contracts for a period of time. In each case, there was a harmonization schedule established to step each group up to our higher pay rates. Achieving this type of parity will be one of our top priorities as we move toward a joint contract and a SLI. Northwest’s contract specifies that if their carrier is acquired by another carrier, then their PWA remains in full effect for them until the Northwest MEC negotiates changes. We have to respect the independence of the Northwest pilots and their MEC to establish their own strategic plan.
5. Will there be backlash from the Northwest pilots since they were not included in this agreement?
The Delta MEC considers the combined Northwest and Delta pilot groups to be one group now and our every action will reflect that belief. We chose a course of action that we felt provided the most value to ALL Delta pilots including our brothers and sisters from Northwest. We will put the full power of the Delta MEC and the Delta pilots behind our efforts to achieve contract harmonization for Northwest pilots in a short period of time, and make will every effort to achieve a mutually agreeable solution on seniority list integration.
6. Will there be lost jobs in this merger?
Northwest and Delta have very little route overlap and there is little expectation of any major cuts in most markets. The combined carrier will also create the need to "up-gauge" many markets which could result in less DCI flying and more mainline flying.
The Northwest Pacific operation is a tremendous asset, but Northwest cannot adequately capitalize on that asset due to their smaller domestic feed. Many Delta hubs, especially Atlanta, are capable of fully feeding that asset. This will create even more long range international flying opportunities for the combined pilot group. Our improved scope protections will ensure that the pilot groups do not get "whipsawed" against each other, but will share in those opportunities. Furthermore, this agreement provides merger related furlough protection for the 24 months from the Date of Corporate Closing (DCC) and merger related furlough protection during the regulatory review period prior to the DCC.
Industry Issues
1. I thought Delta’s standalone plan was sound. Why do we "need" to merge now?
Delta does have a standalone plan that will leave better positioned than most carriers in the industry. However, this plan will most likely be unable to generate the cash flow that Delta will need to repay the secured debt leftover from the post-9/11 borrowing binge, fund their fleet growth for international expansion, and still continue to fund the improvements in pay, working conditions, and retirement that we will expect into the future. This merger will allow Delta to complete their plans for international expansion much sooner than a standalone plan will. This international expansion, along with our Joint Venture with Air France/KLM will give Delta the revenue diversification and the global reach that will ensure our company becomes a dominant player in a rapidly changing industry.
2. Delta has to absorb the cost of fuel. Shouldn’t they just have to absorb the cost of labor as well? We should be demanding much more from this merger.
Oil prices generally affect each carrier to the same degree. We know that some carriers, most notably Southwest, established a successful fuel hedging program that extends out into the future, but it is doubtful that any carrier will be able to copy that success anytime soon. Therefore, as oil rises and falls into the future, it will have equal effects on all airlines. For a carrier to afford differential labor costs, they must be able to generate sufficient revenue to absorb that differential with their competitors. FedEx and UPS are examples of companies that can pay pilots at above average rates due to their enviable bottom line. Our support of the NW/DL merger is in part, an attempt to establish a global carrier that generates revenue capable of providing contract improvements that Delta pilots deserve.
What’s next?
1. How will the Northwest pilots and the Delta pilots achieve a joint contract?
The two MECs have the option to form a joint negotiating committee at any time and ask the company to negotiate a joint contract. We have already worked through many of the items necessary to bring the Northwest pilots over to our working agreement, so we anticipate that much of the negotiation will focus on the economics of the deal. Both our PWA and the Northwest pilot’s PWA, stipulate that there can not be an integrated seniority list and full operational integration until we have a new joint contract. The economic benefits of this integration is are an incentive to Delta to achieve a joint contract.
2. Since we were unable to achieve a seniority list integration, what happens next?
We will aggressively pursue an SLI and this can be achieved at any time. As we have said, there are economic benefits to Delta and both pilot groups to have this happen as soon as possible. Our desire is to work together with the Northwest pilots to achieve these benefits as soon as possible.
If we are unable to achieve a consensual SLI, the ALPA Executive Council may declare a Policy Initiation Date (PID) which will start the clock on the ALPA Merger Policy. There will be a more detailed discussion of the mechanics of this policy in the future, but the basic process is Seniority List Verification, Negotiation, Mediated Negotiation, and finally, Arbitration.
3. When will the membership ratification vote take place?
The ratification window will be announced soon.