International up 22.1%
 

Aeromexico updates on traffic

Look who's international expansion is going great. 22.1% YOY. Good for them. :rolleyes:


https://seekingalpha.com/news/329415...pdates-traffic

Aeromexico, El Al Israel Airlines launch codeshare | Airports & Routes content from ATWOnline

AeroMexico replaces Delta on Guadalajara ? Salt Lake City route from 1Q18 :: Routesonline

Sailing will be here shortly to explain to all us simpletons why this is GREAT NEWS for Delta and Delta pilots! If only we were bright enough to understand....

BTW, GOL is getting new 737maxs with increased range to do FL to Brazil routes.

http://ri.voegol.com.br/download_arq...3-0EED4761C4C8

Good thing we didn't take the bait when DALPA tried to "monetize" our PS.

I resigned myself awhile ago to being a narrowbody guy for most of my DAL career. Now I'm starting to wonder if I'll even be flying outside the CONUS in ten years.

What an unbelievable defeatist attitude.

Can you help me out and explain the connection here, and give an example so that I can pass on the logic to those I fly with?

The "no monetization" framework I see is that with outsourcing, our level of higher paying international flying, and the associated salaries decline (the numerator in the individual PS equation), while the total salary pool of eligible salaries (the denominator) shrinks slightly less, but the profit stays the same, assuming just a transfer of flying (no growth). That's just slightly less PS for us, maybe not enough to notice.

With monetization, .... (here's where you explain or correct the above, please).

... our pay rates go up but our profit sharing payout goes down (assuming the pilots' share of the pie remains constant.) As we become more of an narrowbody airline it would have been a net negative for the majority of pilots.

There's reason there was a backlash against this.

We have a bunch of 350s, and 330neos coming. Pilot with 10 months seniority holds NYC765B, 1.5 years holds DTW330B and 2.5 years holds LAX777B. Even the DTW350B went significantly more junior than anyone thought. I just don't see the "we're a narrowbody airline" angst. Things are really going to get rolling when the new international terminal in Seattle opens giving Delta the capacity to revitalize the Pacific Network.

without 'monitization' ps remains and will always be in addition to pay rates.

paid as equity holders in the business.

with 'monitization', ps is absorbed into pay rates, likely to never be reestablished. and wages are always paid as labor, with no equity position in the business.

pay rates can evaporate with the stroke of a pen. with no 'automatic' recovery resulting from improving economic performance.

idk why the benefit of this arrangement is any longer a point of debate.

Trip,
What's your category and seat? 747s gone, half the 777 are long in the tooth, ERs have no teeth. A350 isn't a 787. 330s won't revitalize the Pacific.


Hank

Profit sharing is a percentage of profit from the entire corporate entity and as the company grows and becomes more profitable we gain from that corporate growth regardless of the operational growth or decline. This kind of compensation is reserved for only the upper levels of management and the revenue generators that bring additional revenue to the business.

We now have $7 billion in profits we collect on. If the margin remains constant (which the leadership has said is sustainable in every forum they can) then as the company grows we get additional compensation that is not connected to a negotiations or market pilot rates.

Exactly. Yet this is lost on some. PS makes us true stakeholders -- whether we have WB growth, NB growth, or just become a travel agency. If we "monetized" it we would never -- ever -- get that share of the pie back.

Bob, let me try to address each of your points:

1. Equity holders are people who own stock, not those that receive profit sharing.
2. Profit Sharing absorbed into pay rates grow at a compounded rate with every future pay raise. Profit Sharing is not compounded by future pay raises. Do you understand the power of compound interest?
2. Profit Sharing exchanged into pay rates can be negotiated away (with the stroke of a pen), whereas Profit Sharing can simply disappear without negotiation. I prefer to have the option of negotiation.

The shrinking minority of people regurgitating this misleading information refuse to accept reality. "Every future pay raise" will undoubtedly be a function of the market rate, with very little deviation. PS monetized gives you a pay raise that might exceed your peers for the duration of a single contract. Next time around, your pay rate increase will be smaller as a result. Your PS will then be gone (or reduced) and your rates (and total compensation) will just be industry standard.

Why do you suspect management makes the same argument that you do... do they want us to have much larger W2s than everyone else, or do you think they are trying to reduce costs over time?

I know I can't convince most people of your opinion, but I'm glad that fewer and fewer are being played by management or by those who only care about compensation in the next few years before retiring.

notEnuf, this is a good explanation. But there is a way to transfer even more value to the pilot group. The explanation is connected to my previous explanation to Bob. Here's how...

Take the initial portion of Profit Sharing value, the amount paid out at the 10% level, and convert it to a pay raise. That value then compounds every year we get a pay raise, increasing in value. Retain the amount above the 10% payout to participate in your description above. Do the math. This is a more valuable approach.

Pay raises would then be smaller as a result of the higher starting point. Do that math... not over 3 years but over 10-20 like many of us care about. We're gonna miss that PS soon after we trade it away.

I understand compound interest. I also understand that I am soooo happy we didn't accept TA1. And soooo glad you don't make decisions for the group.

Ted, you've hit on a point that is poorly understood. Profit Sharing exchanged into pay rates raises costs, reducing the profit sharing payout. But what is important to understand is the formula of distribution. Let's look at the math.

Let's say $100 million of Profit Sharing is exchanged for an equivalent Pilot only pay raise.
This increases costs $100 million and reduces profit by $100 million (admittedly a simplistic view).
I'll be generous to your point of view and say the entire $100 million came from the 20% portion of PS payout.
In other words, the PS payout is reduced by $20. The pilot portion is about $7 million. This reduction is overcome by future compounded pay raises. The long term benefit outweighs the initial year reduction.

As well, you can see that the increased costs and concomitant reduction in profit and profit sharing is born by ENTIRE group of employees, while the benefit (the pay raise) goes only to the pilots.

Do you disagree with his point that this jump in rates would be absorbed by future contracts being more in line with peers? If I take your compound interest example out to just a few future contract cycles, we'd double the pay rates of our peers. Do you really believe the company will do that? I don't.

There's a reason management and Wall Street have been upset about the amount of PS we receive. It's "unprecedented" that labor gets this much.

I'd like to stick with the current precedence.

We were pressured to give up some profit sharing because "Wall Street hates how much we get", and we were warned that continuing the status quo would prevent us from being investment-grade...

http://www.barrons.com/articles/s-p-welcomes-delta-back-into-investment-grade-ranks-1504806183

Great post Ted. It's pretty easy to look around and see that now. Pay rates among the legacies are essentially the same. The only thing setting us apart is our higher profit sharing payouts. I also look at it as a little insurance while the company grows its business without using us.

I also don't mostly. There's no magic way to exceed peers by a significant amount, for an extended period of time. You could say that future pay raises would absorb the exchange, or you could say that future pay raises may not be as big because of profit sharing. Management really doesn't care what label is on the value they transfer to us. It's all eventually wrapped up in pilot costs.

Which leads us to a second dimension often overlooked. What about the down years without profit? Now the way I've described above is of significant more value.

If you subscribe to managements view that we'll be profitable forever, why worry about any of it? If you think we might still be subject to the rise and fall of normal business cycles, exchanging the first level of PS for pay turns out to be way better.

I get both sides of the "should we trade PS for pay" and I side with the "no" camp on that.

However I find it disturbing that PS is such an emotional issue that sometimes seems to supersede far superior sections like Scope. Its almost as if some say that if outsourcing increases profits then its OK because we have good PS. But PS is a function of income. As we lose flying (or don't gain flying, etc) then we lose the foundational money that PS is based on in the first place.

I agree we shouldn't trade PS for pay, for numerous reasons already mentioned. But the way some fawn over it has me concerned that at least some would entertain further scope sales in exchange for more PS. And yes at least some who wear polos instead of hats and ties to work every day have at least entertained the concept. That should absolutely be off the table. More scope should be the biggest priority with way off in the distance.

Public corporation?...shareholders hold an equity position. They are paid from profits in both dividend and share value growth.

No profit. They dont get paid.

Dont see much difference than the equity position we hold in roi directly from the profit line. In fact we get most of the upside of an equity position with none of downside.

Like a disappearing share value. Yes. We hold an equity position in the corporation so far as ps is concerned.

Now help me with the 11th and 12th commandments i guess i missed? Thou shalt never get an hourly rate increase without surrendering something else?

And thou shalt always recieve ever increasing pay rates?

Both are foundational to your calculation. And both were never handed down to us.

There is NO prohibition on retaning ps as is....in addition to negotiating a 10% hourly rate increase.

You are missing the importance of retaining the ps mechanisim in a pwa. Its not the specific dollar value in any given year. Or the transactional value in any given pwa amendment cycle.

Ps serves as an economic shock absorber for labor both going up, and down the economic business cycle. And we would do a huge disservice to our future pilots to entertain in any way diminishing yet again what we have.

Once upon a time pilots around here 'monetized' the hourly pay rate for yet unhired thousands of us.....all to satisfy their own mathematical calculation for compensation.

If its all right with you all...id rather not be a party to making that kind of mistake.

Your math works with several assumptions that may or may not happen. Giving up 3.B.4. being independent of PS was huge. PS diversifies our income, making a rate cut much less likely during a downturn. It also doesn't require any action to "snap back" as the company profits we earn on the profit. My opinion is that WB international flying will stay roughly the same and not significantly exceed the 650,000 GBHs we now set as a floor. (ceiling really)

The business will continue to grow through JV+equity "virtual mergers." Managements entire job is to grow the business as profitably as possible. PS keeps us aligned with that goal. I also think with the addition of the MEC livery option of 1.E.9. the method of growth will be a single brand strategy eventually. If we franchise out China we will have the soon to be largest market in the world. That is the prize at the end of all this. I prefer to keep as much of the corporate profits as possible and negotiate rates along with the rest of the industry.

Not an unreasonable general opinion. I fixed the one sentence for you.

Agree with your change but to monetize it permanently reduces the benefit which is a substantial and unique form of compensation that ties us to ALL the company growth. Did you see we have a new credit card out now? The Amex deal brings a lot of revenue to Delta. That "automatic salary cut" benefits the cost structure and hastens a recovery. Quicker return to profitability means quicker return to profit sharing.

https://www.delta.com/content/www/en...dit-cards.html

Dharma, a couple of questions for you. Considering hourly pay rates only, do you think over the next few contract cycles there will be a significant hourly pay rate difference among the major carriers? Now let's add PS to the mix. Do you think our hourly pay rates over the next few contract cycles will be less than other major carriers?

My answer to the first one is NO, I don't see there being a significant difference in negotiated rates. To the second, again, my answer is NO.

I understand what you are saying with the initial bump but I believe over a couple of contract cycles (that could very well include delaying tactics by management) we would lose any advantage that might be gained from a conversion of the 10%. I think management is looking long term with this and sees an advantage they could exploit if we convert.

If we want to convert that 10% to something other than hourly pay rates..........such as a retirement annuity/medical..........I might think about it. For straight hourly pay rates that can be massaged over time.......No.

Denny

This logic is kind of a straw man. If you think there would be down years over the life of the contract (4 years), your point would be valid. However, if EVERYONE who gets paid to estimate airlines earnings was predicting 6-10 Billion /year for the next 3 years, why would you hedge so dramatically. Literally NO ONE had Delta making anything less than 3 billion per year.
It made no sense. It was pure capitulation.

See C2012.
Or are we supposed to monetize the first level every contract cycle?

You are right. The math says exactly what you are talking about. But, no. The company wants to insist on JVs and revenue sharing, and this is the way to get our share of that without doing any 'work' ourselves. I wish we could figure out some way to continue to get PS as a retirement vehicle.

I've been on the curb waiting for a retirement vehicle for eleven years.:D

Mine finally showed up and it was an oxcart. I asked where the ox was, and they said "the yoke's on you". :p

I don't remember the exact numbers of C2012, but we exchanged something like $40 million for an extra 2% pay increase. How much is 2% of a $3.5 Billion contract worth now? $70 million? How's that extra $30 million working out for you?

2% rate increase or 2% of the total value of the contract? If I recall correctly it was very close to a dollar for dollar exchange. There was no magic gain. Here we go again, TVM but don't bring up inflation because THAT doesn't count. :rolleyes:

We are still below the purchasing power, retirement value and medical coverage prior to bankruptcy. If/when we return that value we can talk about the value of PS and whether we want to forever relinquish that compensation.

Exactly, ugh?

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