Source: Delta Air Lines' CEO Discusses Q3 2012 Results - Earnings Call Transcript - Seeking Alpha


Operator
We’ll take our next question from Mary Jane Credeur with Bloomberg News.

Mary Jane Credeur - Bloomberg News
Hi, folks. Can you talk a little bit about how you’re going to afford that new pilot contract?

Richard Anderson
Hi, Mary Jane, this is Richard. Sorry for not saying hello. When you look at the overall value that we’re going to create as a result of unlocking the ability to refleet plus the productivity that has been built into that agreement, we’re confident that it will be an important part of our ability to get to unit cost over the next couple of years to improve our margins and our return on invested capital.

Glen Hauenstein
And, Mary Jane, this is Ed. One additional thing, we also reduced the profit sharing going forward and that’s an important part of helping to fund that cost growth.

Mary Jane Credeur - Bloomberg News
Sure. Okay. Thank you.

Operator
We’ll take our next question from Ted Reed with TheStreet.

Ted Reed - TheStreet
Thank you. Rich, you said that you would applaud the industry consolidation, that it would be quite good for Delta but the contemplated transaction would make a much stronger competitor to Delta in the Southeast across the Trans-Atlantic and probably elsewhere. SO what’s the rationalization for saying that?

Richard Anderson
Ted, good question. When you just think around the world and it’s not just in the U.S. but around the world,...

http://25.media.tumblr.com/tumblr_mc...sthro1_400.gif

Cost Neutral: when you pay for your own pay raise.

Now, back to When Cats Jump Really High...

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RH (C1 FO rep) and RB did most of the Compass negotiation. They did it while we were in bankruptcy and when our management was trying to reject our contract. I'm sorry it sucks for you, but you weren't complaining as you interviewed for your "NWA" job.

Alfa;

We understand what the people on the other side of the table are saying and what they want.

Is DAL in danger of re-entering bankruptcy? No.

Is DAL, in the medium term, going to quit being able to pay down debt? No.

So why should the DAL pilots be concerned what the people on the other side of the table say or think? We still have not returned back to pre-bankruptcy pay and benefit levels. We did not choose the company's direction and strategies that led to bankruptcy.

They, on the other side of the table, have their goals, but they have made their mistakes. We footed their bill in a big way. We (DALPA) should only be concerned about what is meaningful on OUR side of the table...Unless, of course, we have accepted Bankruptcy rates and workrules as the new normal...Which BTW, I believe we (collectively) may have.

And that's a huge minus.

No E&FA. Who would SWAPA copy for their contract comparison?:rolleyes: And you can't replicate that in an independent union. While firewalled, ALPA's analysts get to look at 37 different contracts and 37 different management business plans. No independent nor CAPA airline gets that. You'd be stuck with single source and public data, leaving the pilot group with a lot less information than their negotiations adversary.

No Government Affairs. No seat at the IFALPA (ICAO) table. No seat at the Haneda negotiations with Japan. Limited influence in FT/DT implementation (especially with a change of government in Nov). No Roth. No traditional IRA rollover. Source taxation from broke states that you fly through. The independents all were on the outside looking in, or had limited rolls. Not a great spot for our pilot group, imo, and that's where you want us.

No Air Safety and Engineering. Limited NTSB, DHS and DOT access.

Those are just 3 examples that your plan would take away from Delta pilots that couldn't be recreated at a reasonable cost or are prohibited from happening by international treaty. I see that as a bad plan.

Time for a gameshow and movie response!:D

You should be concerned because it's a game of "Deal or No Deal"

They (management/owners) have the money you want. You have to get them to "yes" if you want them to show you the money. There are a whole bunch of ways to try and get them there. Leverage is a good thing to have to accelerate the process. Without leverage you've got to create a business outcome to reach deal. If you can't get there, you've got to create a government outcome (release or threat of release) to create leverage. APA tried for 5 years...no deal. UAL and CAL have been at it for over 4 years each. You can run down the list of regionals that have gone through the same thing. btw, SWAPA is past their amendable date with no progress reported (and no pay raise this year).

Deal, or No Deal?

ahem, he was responding to one of our unionoids asking him why compass hasn't made major contract gains.

Guess you missed that one. ;)

Thanks for expanding on why said unionoid was even further out of place.

Well, you are shooting the messenger and I pleaded with you not to shoot the messenger.

The real answer as to why we should be concerned about they think is that they own the company we work for. At some point, the owners could say no to this constructive engagement process and we could go back to the old ways. Unfortunately, the old ways don't lead to a 12.8% raise by the amendable date they lead to giant turd for about 4-7 years.

So my response is that we should not respond to their concerns by throwing money at them, but we should continue to add value to the corporation in non-traditional ways. We should work with them in Washington and else where to ensure that their business plans can be executed. And yes, that means our work on the slot swap at LGA was more than worth it as they are succeeding, making more money, and giving some of it to us. (they are also slowly upgauging the flying too). We need to fight alongside them to ensure we don't get b-slapped by the Japanese government in Haneda.

We need to show that the extra dough-re-mi we are getting is worth it in the company's ability to execute their business plan. Look how side tracked AMR is right now with that train wreck they have going on. No one is winning that fight. We are doing a damn good job of running the operation right now, so that should continue. Thank your customers, look professional, help your fellow employees, only whine and moan when you are at 350 and not in the gate house. Those are the little things that we can do to add value to the company while still racking in more green.

If Delta wants to consolidate we should make that seamless and not turn it into another US Air or (to a lesser degree) United fiasco. Let's get money out of that action too.

So that is why we should care to some degree about what they think. They own the company and they have to sign off on any increases in our contract. Caring about what they think and doing whatever they want are two different things. It should be expected that our interests will diverge over our value and how we are compensated. It is just the rest of the time we should make the company succeed and then demand a share of that success.

alfa and slow- why would the company in the investors call explain that they paid for our contract with minimal cost growth via our scope givebacks (more jumbo RJs), profit sharing givebacks, and workrul givebacks (increased utilization)?

I don't have a plan, I was attempting to temper what were, IMO, illogical forum viewpoints with what I believe are the only two choices; in-house or ALPA...but while we're at it.

EF&A was rented by the American Pilots and by many accounts did not even seek an analysis of the SWA contract.

Para#2
Gov't affaies are important, CAPA does have influence, but granted not as active as ALPA.
Please share with us the unbelievably critical:rolleyes: input ALPA had in Hanada negotiations...I wrote a letter...but negotiations? Was an ALPA representative allowed to speak until the adults realized who it was?
FT/DT success remains to be seen. Let's not forget the entire premise that led us to FTDT was faulty-and not countered by (opportunistic) ALPA.
Roth and Rollover didn't affect me so I can't judge the importance of them.

Para 3. Air Safety and engineering? Are you saying the independants don't have safety programs and can't figure bad stuff out?

Access to alphabet soup gov't bureaucracies. Man how long did it take to get Lee's #1 priority to be something.

And the world also stopped spinning.

ALPA does things, yes. Noone disputes that. I am not willing to go back down this DPA discussion path...They are dead, they are just the only ones that don't realize it. It's going to take more than an OPR's worth of bullet points to convince me that ALPA is as effective as you believe it is.