Any "Latest & Greatest" about Delta?
07-07-2011 | 03:28 PM
Gets Weekends Off
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It was known within the executive circles that Delta's cost structure was going to result in bankruptcy probably as far back as the year 2001. ALPA did not know, went through a period of denial, then made the best of it.
To form your own time line based on objective data points, look at when Mullin came in and formed his team including Michelle Burns. Obviously that team brought great reorganization and bankruptcy experience to the table and they were chosen despite a lack of any airline management experience. That tells us something. Those with airline management experience were passed over, like Hollis Harris, who then went on to do a good job running World.
Also consider that the cost of C2K was basically equivalent to the Company's profits during the economic boom leading up to the year 2000.
Publicly management was running around saying the industry was achieving a new cost paradigm where it did not matter how much money Delta spent because American, Continental and United would be forced to match Delta's spending. ALPA drank this cool aid right up since it helped them achieve United Plus.
ALPA is smarter now and Delta's board also seems to have an acute understanding that no one makes money when the stock price goes to zero. While the airlines wanted to reorganize in bankruptcy, the only folks who did really well were the inner circle, a few attorneys and Mullin's former employer McKinsey.
It is sad what happened to Delta over the last decade. I've frequently thought about writing a book digging into the tragedy. The same administrative inner circle is still in place within DALPA and while it could be hoped they learned something, events like the Compass vote suggest otherwise.
To form your own time line based on objective data points, look at when Mullin came in and formed his team including Michelle Burns. Obviously that team brought great reorganization and bankruptcy experience to the table and they were chosen despite a lack of any airline management experience. That tells us something. Those with airline management experience were passed over, like Hollis Harris, who then went on to do a good job running World.
Also consider that the cost of C2K was basically equivalent to the Company's profits during the economic boom leading up to the year 2000.
Publicly management was running around saying the industry was achieving a new cost paradigm where it did not matter how much money Delta spent because American, Continental and United would be forced to match Delta's spending. ALPA drank this cool aid right up since it helped them achieve United Plus.
ALPA is smarter now and Delta's board also seems to have an acute understanding that no one makes money when the stock price goes to zero. While the airlines wanted to reorganize in bankruptcy, the only folks who did really well were the inner circle, a few attorneys and Mullin's former employer McKinsey.
It is sad what happened to Delta over the last decade. I've frequently thought about writing a book digging into the tragedy. The same administrative inner circle is still in place within DALPA and while it could be hoped they learned something, events like the Compass vote suggest otherwise.
07-07-2011 | 03:32 PM
Can't abide NAI
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From: Douglas Aerospace post production Flight Test & Work Around Engineering bulletin dissembler
Bucking Bar, I agree with almost everything you said, EXCEPT the DALPA inner circle. It was a wholesale turnover when JM left and LM took over. One viewed the world through rose colored glasses and landed us in BK; the other viewed the world as it exists and made the most of it. JMO. And I lost my pension to prove it.
07-07-2011 | 03:32 PM
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Did the C2K contract have a pension? Do we have one now for the majority of the pilots? If we are lacking that, then I think the company could afford more than if the pension was still around for the majority (the Southies and newbies). Were there bag fees back then? That has to be taken into consideration too. Everything that we have and do not have compared to the C2K contract should be looked at. How about the $2 billion a year in extra profit due to synergies? That wasn't a part of the C2K contract most likely. Please remind those mid level guys that when they start talking contract stuff. Bag fees, less pension, synergies.
07-07-2011 | 03:34 PM
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The success of the "C2K reaction" is debatable. While many like to parrot the pay scales, few enjoy discussing the fact it was not even six months until job protection provisions began failing and the contract was modified beyond any recognition by concessionary negotiations. Over the life of the agreement several thousand pilots lost jobs (both from the top and the bottom) and thanks to the increase in outsourced flying increasing from 10% to 50%, those jobs are not coming back.
IMHO C2K was ill conceived. It is unfair to the Titanic to make the comparison, but both were the greatest until they sailed into adverse conditions and sank.
IMHO C2K was ill conceived. It is unfair to the Titanic to make the comparison, but both were the greatest until they sailed into adverse conditions and sank.
07-07-2011 | 03:37 PM
Da Hudge
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From: Poodle Whisperer
Bill, our DC plan costs DAL more money on an annual basis than the DB ever did. Because the DB took advantage of market returns which ultimately resulted in minimal required contributions. Once those market returns dried up, they terminated the pension. It was destined to fail, but few realized it. The lump sum provision and run on the bank by the senior guys just guaranteed it.
07-07-2011 | 03:38 PM
Can't abide NAI
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From: Douglas Aerospace post production Flight Test & Work Around Engineering bulletin dissembler
Bill, our DC plan costs DAL more money on an annual basis than the DB ever did. Because the DB took advantage of market returns which ultimately resulted in minimal required contributions. Once those market returns dried up, they terminated the pension. It was destined to fail, but few realized it. The lump sum provision and run on the bank by the senior guys just guaranteed it.
80 kts, because:
(1) Margins were better, lots better
(2) Those at the top had integrity and understood market variation was no reason to short change a promised obligation
(3) There were fewer people obtaining payouts and what eventually became an unsustainable pyramid scheme was still in its misunderstood infancy. If Delta had continued organic growth, it would have been easy to pay.
07-07-2011 | 03:43 PM
Da Hudge
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From: Poodle Whisperer
07-07-2011 | 03:43 PM
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1. Demographics - the pilot group was much younger then, with a much lower accrued benefit
2. DAL financial strength - there was no concern that the DB would terminate then, thus no reason for guys to bail
3. C2K - those pay rates coupled with the market down turn resulted in the liabilities growing exponentially, at the same time the assets were going down. Add in people cashing out by retiring while the assets were at the bottom, and the system became doomed.
07-07-2011 | 03:48 PM
Can't abide NAI
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From: Douglas Aerospace post production Flight Test & Work Around Engineering bulletin dissembler
Excellent analysis. Better than mine.
07-07-2011 | 03:59 PM
Da Hudge
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From: Poodle Whisperer
Good post PG- thank you!
Further diversion:
Why FA's have problems using the computer:
Further diversion:
Why FA's have problems using the computer:
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