MEC Early Out Comm
05-12-2020, 10:36 AM
#1
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Joined APC: Oct 2009
Posts: 3,108
MEC Early Out Comm
Early-Out Program to Mitigate Displacements - #1
On February 14, a record Profit Sharing payout made possible by record-setting corporate revenue was celebrated with fanfare by Delta management. Costs were not a problem for Delta on that day. At the same time, a virus, a thousandth of the width of a human hair, was silently spreading across America, ultimately becoming a pandemic and triggering an economic downturn. Presently, Delta's challenge is the instant evaporation of revenue, which is forecasted to be down 90% for this quarter and has spurred management to store over half of its jets. In early March, your MEC engaged with the Company and provided cost-saving solutions contained in LOA 20-01 via the April bid package re-do and SILs. Shortly after agreeing to LOA 20-01, your Negotiating Committee approached Delta to discuss an additional cost-savings measure – a voluntary pilot early-out program. The Company declined even to meet and hear the proposal. This program would have provided limited pay and benefits to pilots if they took a voluntary buyout package and retired early. By offering pilot early-outs in categories that the Company intends to reduce the size of, downline displacements are curtailed, providing substantial savings – savings impactful enough that United and American offered similar programs to their pilots months ago.
Early-Outs: They Save Real Money
Before discussing potential voluntary pilot early-outs, displacements and furloughs need to be addressed. These options hinge upon the fleet plan Delta is formulating for summer 2021, and the network plan that will reflect the needs of the fleet plan. All pandemics have a lifecycle. This one, and the recession that has come in its wake, will end. Notwithstanding, both are currently making planning a difficult task for the Company. At its core, Delta has publicly indicated that it will be a smaller airline than it was earlier this year and that it will seek flexibility to scale up in the eventual recovery. With a fleet plan in hand, Crew Resources can derive the manning requirements needed to staff the trimmed down airline in the short and medium time frame. Through ALPA's analysis, we have concluded that there are three primary methods to most efficiently reduce the staffing required for the smaller airline.
Looking ahead, from May 1 to the end of 2024, 3,369 pilots will reach age 65. That represents nearly 23% of today's seniority list. The retirement numbers will most likely be higher as pilots decide to retire early or leave with a medical issue. When distilling fleet specific retirements just to the end of 2022, over half of the B777 and nearly half of the A350 captains will retire. This is not an insignificant number of pilots that can be incentivized to retire early that would otherwise be subject to displacement and the source of waterfall training events.
Displacements High Price Tag: The Financial and Personnel Costs The cost of initial qualification, not including a pilot's salary, is $40-50,000 per pilot. This number varies by the length of training, whether it is off-site, and who is instructing. Further adding to the costs are:
Displacements, and the disruption that comes with them, can also bring high personal costs to pilots and their dependents. Budgets are reworked as income is reduced, and families suffer when pilots find themselves forced to commute across the country to new domiciles causing them to spend significant time away from their homes. Even if a pilot and his or her family can move, it still represents an erosion of quality of life to uproot and relocate.
What About Training Capacity?
Logistically, some severe constraints would make mass displacements difficult for Delta. Currently, maximum simulator capacity allows for the training of 288 pilots a month. Once a pilot has been retrained, the question of OE and TOE becomes an issue.
Closing
ALPA has identified an undeniably elegant way management could selectively target top-of-the-category and seniority list reductions that vastly eliminate cascading displacements. Curtailing displacements lessens unneeded disruption to pilots and their families' lives and will help moderate any future furloughs and the high costs they entail.
For the early-outs to be fully effective, and to capture the most considerable savings, they should be implemented before displacements. The window for seizing this dynamic logistical and cost saving opportunity is fleeting. Swift action by management will ensure that the Company can avail itself of the savings and the flexibility that our direct competitors - United, JetBlue and American Airlines – have already secured.
The next piece in this series will examine the different early-out programs at JetBlue and American.
On February 14, a record Profit Sharing payout made possible by record-setting corporate revenue was celebrated with fanfare by Delta management. Costs were not a problem for Delta on that day. At the same time, a virus, a thousandth of the width of a human hair, was silently spreading across America, ultimately becoming a pandemic and triggering an economic downturn. Presently, Delta's challenge is the instant evaporation of revenue, which is forecasted to be down 90% for this quarter and has spurred management to store over half of its jets. In early March, your MEC engaged with the Company and provided cost-saving solutions contained in LOA 20-01 via the April bid package re-do and SILs. Shortly after agreeing to LOA 20-01, your Negotiating Committee approached Delta to discuss an additional cost-savings measure – a voluntary pilot early-out program. The Company declined even to meet and hear the proposal. This program would have provided limited pay and benefits to pilots if they took a voluntary buyout package and retired early. By offering pilot early-outs in categories that the Company intends to reduce the size of, downline displacements are curtailed, providing substantial savings – savings impactful enough that United and American offered similar programs to their pilots months ago.
Early-Outs: They Save Real Money
Before discussing potential voluntary pilot early-outs, displacements and furloughs need to be addressed. These options hinge upon the fleet plan Delta is formulating for summer 2021, and the network plan that will reflect the needs of the fleet plan. All pandemics have a lifecycle. This one, and the recession that has come in its wake, will end. Notwithstanding, both are currently making planning a difficult task for the Company. At its core, Delta has publicly indicated that it will be a smaller airline than it was earlier this year and that it will seek flexibility to scale up in the eventual recovery. With a fleet plan in hand, Crew Resources can derive the manning requirements needed to staff the trimmed down airline in the short and medium time frame. Through ALPA's analysis, we have concluded that there are three primary methods to most efficiently reduce the staffing required for the smaller airline.
- Voluntary Early-outs
- Displacements
- Furloughs, if necessary
Looking ahead, from May 1 to the end of 2024, 3,369 pilots will reach age 65. That represents nearly 23% of today's seniority list. The retirement numbers will most likely be higher as pilots decide to retire early or leave with a medical issue. When distilling fleet specific retirements just to the end of 2022, over half of the B777 and nearly half of the A350 captains will retire. This is not an insignificant number of pilots that can be incentivized to retire early that would otherwise be subject to displacement and the source of waterfall training events.
Displacements High Price Tag: The Financial and Personnel Costs The cost of initial qualification, not including a pilot's salary, is $40-50,000 per pilot. This number varies by the length of training, whether it is off-site, and who is instructing. Further adding to the costs are:
- There is no seat lock for displaced pilots; they can bid in the first available AE, thus negating some of the previous displacements.
- Mandatory displacements carry moving expenses to include lease cancellations, packing, motor vehicle transportation and insurance costs if pilots elect to relocate to a Delta base.
- Displacements from senior categories can cause a waterfall of training events.
- The A350 Captain displaces to the A330 A seat.
- An A330 Captain gets displaced to the B7ER A seat.
- A B7ER Captain gets displaced to the B73N A seat.
- A B73N Captain gets displaced to the A220 A seat.
- An A220 Captain gets displaced to the A330 B seat.
- An A330 F/O gets displaced to the B7ER B seat.
- A B7ER F/O gets displaced to the B73N B seat.
- A B73N F/O gets displaced to the A220 B seat.
Displacements, and the disruption that comes with them, can also bring high personal costs to pilots and their dependents. Budgets are reworked as income is reduced, and families suffer when pilots find themselves forced to commute across the country to new domiciles causing them to spend significant time away from their homes. Even if a pilot and his or her family can move, it still represents an erosion of quality of life to uproot and relocate.
What About Training Capacity?
Logistically, some severe constraints would make mass displacements difficult for Delta. Currently, maximum simulator capacity allows for the training of 288 pilots a month. Once a pilot has been retrained, the question of OE and TOE becomes an issue.
- First, Line Check Pilots (LCPs) are not immune to displacements, which will leave their ranks depleted. Replacing a displaced LCP takes time as it involves simulator training and line experience.
- Second, with reduced flying, the opportunities to get OE and TOE become scarce, which will lead to pilots sitting idle while getting paid. During the 9/11 displacements, it was not uncommon for pilots to sit unqualified for months waiting for training between displacements.
Closing
ALPA has identified an undeniably elegant way management could selectively target top-of-the-category and seniority list reductions that vastly eliminate cascading displacements. Curtailing displacements lessens unneeded disruption to pilots and their families' lives and will help moderate any future furloughs and the high costs they entail.
For the early-outs to be fully effective, and to capture the most considerable savings, they should be implemented before displacements. The window for seizing this dynamic logistical and cost saving opportunity is fleeting. Swift action by management will ensure that the Company can avail itself of the savings and the flexibility that our direct competitors - United, JetBlue and American Airlines – have already secured.
The next piece in this series will examine the different early-out programs at JetBlue and American.
05-12-2020, 11:22 AM
#3
Banned
Joined APC: Feb 2008
Position: The Beginnings
Posts: 1,317
I’m not entirely certain who this is targeted to.
Company knows it’s expensive to displace. They also know that pilots don’t usually move to the new base, so that’s mostly a non-cost.
Company sure isn’t going to negotiate in public for this when they’re (probably) looking to shed 30% of the total workforce.
Hope everyone gets what they want though. (They won’t).
Company knows it’s expensive to displace. They also know that pilots don’t usually move to the new base, so that’s mostly a non-cost.
Company sure isn’t going to negotiate in public for this when they’re (probably) looking to shed 30% of the total workforce.
Hope everyone gets what they want though. (They won’t).
05-12-2020, 11:38 AM
#4
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Joined APC: Dec 2008
Position: B757/B767
Posts: 180
Originally Posted by deltabound
I’m not entirely certain who this is targeted to.
Company knows it’s expensive to displace. They also know that pilots don’t usually move to the new base, so that’s mostly a non-cost.
Company sure isn’t going to negotiate in public for this when they’re (probably) looking to shed 30% of the total workforce.
Hope everyone gets what they want though. (They won’t).
Company knows it’s expensive to displace. They also know that pilots don’t usually move to the new base, so that’s mostly a non-cost.
Company sure isn’t going to negotiate in public for this when they’re (probably) looking to shed 30% of the total workforce.
Hope everyone gets what they want though. (They won’t).
05-12-2020, 11:58 AM
#5
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Joined APC: Jun 2014
Posts: 589
Originally Posted by Starscream
I think it’s making the point that an early retirement package could alleviate a lot of this, rather than just diving all in with the axe and cranking out max-training at the schoolhouse just to send everyone downwards. And furloughing without an ERP would be highly counterproductive. A lot of the guys you are keeping on property are retiring in the next year or two, anyway.
05-12-2020, 12:02 PM
#6
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Joined APC: Dec 2011
Posts: 224
Early outs save the company money by saving costs for some of the most expensive pilots flying (max seniority / max benefits / max healthcare costs etc).
When you talk about doing training events for 60 year olds, not that many are going to be bumped to have to learn a potentially whole new airplane or plane type that they may not actually fly for very long. The young guys like moving around a ton, some older pilots have families, grandkids etc, may not want to commute or relocate to a new base.
Early out is a win win option - it's going to happen - why wouldn't it? Seriously what is the argument against it?
Keep it voluntary - it doesn't have to be a great option, and pilots don't have to take it if the option isn't good.
When you talk about doing training events for 60 year olds, not that many are going to be bumped to have to learn a potentially whole new airplane or plane type that they may not actually fly for very long. The young guys like moving around a ton, some older pilots have families, grandkids etc, may not want to commute or relocate to a new base.
Early out is a win win option - it's going to happen - why wouldn't it? Seriously what is the argument against it?
Keep it voluntary - it doesn't have to be a great option, and pilots don't have to take it if the option isn't good.
05-12-2020, 12:03 PM
#7
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Joined APC: Jun 2014
Posts: 589
Originally Posted by gzsg
The next piece in this series will examine the different early-out programs at JetBlue and American.
05-12-2020, 12:19 PM
#8
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Joined APC: Dec 2008
Posts: 329
I’m not optimistic about early out program, knowing Delta’s track record. I doubt it will be appealing to anyone outside of one yr left to go. And those guys will be going shortly anyways. Why would anyone want to leave with high pay full vacation and three trips a month plus medical etc. for 50 hrs a month. And no guarantee in BK.😷
05-12-2020, 12:24 PM
#9
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Joined APC: Apr 2011
Posts: 643
Originally Posted by MOTOJOE
I’m not optimistic about early out program, knowing Delta’s track record. I doubt it will be appealing to anyone outside of one yr left to go. And those guys will be going shortly anyways. Why would anyone want to leave with high pay full vacation and three trips a month plus medical etc. for 50 hrs a month. And no guarantee in BK.😷
05-12-2020, 12:25 PM
#10
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Joined APC: Mar 2014
Posts: 774
Originally Posted by MOTOJOE
I’m not optimistic about early out program, knowing Delta’s track record. I doubt it will be appealing to anyone outside of one yr left to go. And those guys will be going shortly anyways. Why would anyone want to leave with high pay full vacation and three trips a month plus medical etc. for 50 hrs a month. And no guarantee in BK.😷
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