Great piece from Council 54's FO rep.


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DAL COUNCIL 54
January 24, 2012
Vice Chairman goes to (Electoral) College
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This is my third and final article in this series.*The first*dealt with*the many variables*and different playing fields we find ourselves maneuvering on*and, most importantly, for us to remove*emotions from our decision making. My second article compared the circumstance of two companies (AMR and Boeing) with two contract proposals and the choices made by each company*based on the current environment. This article*deals with what we should*be paying attention to during this presidential election year. There is a real*possibility of a transaction (merger or asset purchase) that could interrupt our Section 6 time line. You should be aware that Delta might decide to put our negotiations on the back burner in order to complete a potential asset purchase/merger.
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A presidential election is the Super Bowl of politics. In this game, sides form, deals are made, and presidents are created by the public vote—and sometimes not. In 2000 we witnessed the Electoral College decide the presidential race when the popular vote was for another candidate. In that election, Gore won the popular vote by close to 500,000 votes, only to lose the Electoral College vote to Bush (271 to 266) and lose the presidency. There are a total of 538 Electoral College votes; you need 270 votes to win. At this moment, the race might be close. If it is, the Electoral College could again be the deciding vote. As we saw in Florida in 2000, every chad counts. Could the employee-lobbying efforts on behalf of Delta and US Airways to gain the swap slot have been a test run for bigger events? While the timing of American’s bankruptcy was not known, many experts were prognosticating it was going to happen, just not when.
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American Airlines’ bankruptcy has stoked the rumors about consolidation. The timing of its bankruptcy, along with the 2012 presidential election year, makes it interesting speculating on the future of AMR. Recent press reports speculate on TPG, US Airways, and Delta as being possible suitors. So, as Delta pilots, this important election calls for us to pay attention. Recent memories still linger from the LGA slot swap and the call for help by Delta and ALPA to help influence Washington, D.C., and support the transaction. Could the employees of Delta and possible US Airways be called on one more time to lobby and asked to cast a vote in this presidential election? It’s an election year and anything is possible. Our recent dealings with government regarding the LGA slot swap and the flight time/duty time cargo “carve out” of rest rules show that money, manpower, politics, and politicians goes hand in hand. For us to summarily dismiss a Delta purchase of AMR due to combined size would not be wise. In an election year could the normally unthinkable be possible?
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Looking at this scenario both critically and strategically, we have to be prepared for a possible transaction. We should consider the possible and plausible scenarios in which a transaction would be given clearance by the government regulatory agencies no matter who becomes president. Even now, during the AMR Chapter 11 filing, the chairman of Pension Benefit Guarantee Corporation is challenging the need of AMR to terminate pensions. Given the large government deficits, is there a possibility that this could guide a government decision on a transaction with AMR? American is the last of the legacies to file for Chapter 11 protection. While the employees of AMR will want American to emerge intact, that might not happen as a result of economic Darwinism. Delta*pilots are well aware that the day AMR went bankrupt is the day the employees lost most of their control of their future and that*their future lives*were turned over to*creditors, judges, lawyers, and politicians. Today’s business headlines speculate on how the restructured AMR will look. Will it emerge as a lower-cost, fuel-efficient, and nimble competitor, or will other corporations or competitors find the sum of the parts worth more than the whole? This is the last of the legacy airlines, built in the era of regulation and operating in the deregulated environment. AMR succumbed to the competitive and economic pressures of their business model. There are some on Wall Street predicting a one in five chance that AMR will successfully emerge from bankruptcy as an independent airline. Wall Street’s record over the last few years deserves further scrutiny, but Delta pilots should view*possible transactions*objectively and draw unemotional conclusions regarding them.
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Even bankrupt AMR still has value, and the sum of the parts might be worth more to others than an intact, leaner,*smaller AMR. Our own experience through bankruptcy showed us the power to shed leases, terminate contracts, and keep the profitable parts. If and when AMR emerges from bankruptcy, it will likely be the fourth largest airline. UAL, DAL, and SWA will all be larger in terms of revenue. Would Delta want to acquire some or all of AMR? Many expect US Airways to be a bidder and a player in this round of consolidation and they will no doubt drive the price higher. The private equity firm of TPG could make a play on AMR. The question is: can this transaction get done? Yes,*CEOs are in the*business*of making money and they bet on both political*horses to win. Scan some Fortune 500 CEO’s political contributions and you will find that many of them give money to both candidates and both parties. Money buys access and influence.
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Four pivotal states in this year’s election are classified as swing states or up for grabs. These states are Pennsylvania (20), North Carolina (15), Michigan (16), and Florida (29). While this scenario is not worthy of an Oliver Stone movie, the truth is out there and a plausible and possible scenario exists. Each of the swing states has a corresponding hub—Delta has DTW in Michigan, US Airways has hubs in CLT North Carolina and PHL Pennsylvania, and AMR has MIA in Florida. So these four states, full of airline employees hold one-third or 90 of the 270 Electoral College votes needed to win the Electoral College*vote for president. If*Delta and US Airways were to use their previously demonstrated*skills*at lobbying*in Washington, D.C., is it*possible that they might use the*same tactic to support a candidate for president who supports a transaction involving AMR? In addition to the many employees in these swing states, there are*many banks headquartered in Charlotte and with the new*Boeing assembly plant in South Carolina, how much pressure could their respective employees*exert?
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Look at all we have been through over the last six to seven years. We need to ask ourselves if there are any more transactions in our membership’s interest. There is no doubt in my mind that the merger between DAL and NWA was a necessary transaction. It created the template that validated industry consolidation as a means to sustained profitability. In doing so, Delta is not only a survivor, but the model that was used by CAL/UAL and AirTran/Southwest due to the economics that helped to mitigate the high price of fuel and the weakness of the economy. The former Council 54 officers and I supported the Delta merger and corporate plan of paying down the debt, but*I am skeptical a potential AMR transaction is in the Delta pilot group's best*interest*for the following reasons:
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With the state of the world economy, is it in our interest to support a transaction that adds more debt to our balance sheet?

Does an asset purchase or merger jeopardize the Delta business model?

Would the price needed to acquire AMR put Delta in a financial bind that we would have to pay for in delayed contractual improvements?

Delta pilots are long-term investors in the airline and should earn a dividend for our support of*each transaction and our risk due to the transaction. Pilots did not see any immediate rate of return*from the LGA transaction,*so*should*Delta pilots lend our support to management*desire for a transaction?

If we choose not to participate, could our lack of involvement allow a competitor to make a strategic move that will hurt our pilot group in the future, and we will pay the price for inaction?
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ALPA’s support and*cooperation with management on the DAL/NWA merger was the result of an evaluation done by both ALPA’s Economic & Financial Analysis team*and outside consultants*that verified management’s merger claims. ALPA did the corporate due diligence and worked with management to place Delta in the position it enjoys today.*Previously, Delta pilots*also chose*a different*path in helping to thwart a hostile takeover attempt by US Airways. In both cases, it was clear and it was a joint effort*that resulted in a*successful outcome. Any future transaction requires an equally critical and strategic analysis on the part of Delta pilots. The expectation for real and substantial contract gains have been delivered to the MEC*by the Delta pilots. It is now the duty of the MEC to*deliver a winning strategy for the Delta pilots on our path to a PWA worthy of corporate partners.
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72 days until the exchange of openers
342 days until your contract amendable date
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Fraternally,
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F/O Art Aaron
Vice Chairman

There have been a few others come out as well. I believe there are a few in SAT getting ready to come back on line.

Yes, it appears art is salivating profusely at the thought of cherry-picking AA's best assets. Can't blame him in that respect as AA has a lot to offer, but his considerations of also getting at Washington to grease the skids for the hopeful evisceration of AA though can't be overlooked. AA employees are well aware many of their counterparts at other carriers would love to strengthen themselves using the bodies of AA employees as their foundation and thanks to this confirmation, can expect the pilots of Delta to become one of the more bloodthirsty in assisting their managment in every way to insert the knife and twist it as much as possible.

Thanks for the info, it will be very useful. For those at AA who had doubts about that, this will provide a wake-up call as to what to expect going forward and exactly where our efforts at defense should be directed. The pilots of AA have no friends right now, not in managment, nor among their own brethren. It's important for this reality to be highlighted in no uncertain terms and this "great piece" from DALPA will not go unnoticed. ;)

acl65,

Interesting read. I personally think anything other then routes from AMR, or the 757's they are rejecting in BK would be a huge LOSS for Delta pilots. I do NOT want a merger with AA. IMO it would be very, very, very bad for Delta pilots.

It appears Art is salivating? Really? :confused: I get the impression he is more weary of a merger then anything. I really don't see how you came to the conclusion that he wants us to help pick apart AA. He mentioned the Washington thing because we as a pilot group got burned by management writing to DC to convince them to approve the DCA/LGA slot swap. Management kept saying it'd be great mainline growth, then once it was approved it became an RJ parade. 9 whopping flights are mainline. My impression from this letter is more of a 'watch your six' or 'be careful what you wish for' letter.

O.K, I'll agree that "salivating" was perhapse too strong a description, but he talks about using DAL controlled labor bases (hubs) as leverage to lobby for a Presidential candidate who SUPPORTS the breakup of AMR/AA, i.e., potentially using political leverage to support the seizing of AA assets for DAL pilots interests (para. 6).

That's what I got out of it........and that's what I'll be passing along internally. AA pilots have got to cover their backs from ALL angles and it's obvious another angle has made itself known. Yes, he's "skeptical" it would be in DAL pilots best interest, but he IS only concerned with DAL pilots best interests and as he should. It's almost certainly NOT in AA pilots best interests to merge with Delta and asset acquisition by DAL of AA parts, CERTAINLY wouldn't be.

Just highlighting that AA pilots are on their own and must realistically defend themselves from other pilots (and unions), just as much as other creditors, finaciers and management. Other pilot groups may decide the best defense is an agressive offense and rationalize the destruction of AA, so as to eliminate any possibility that it might become that quintessential "low-cost powerhouse" that will only make their careers more difficult. It seems that DALPA may be leading the path in this regard as per this letter.

You crack me up. You sound like a scared kid. Passing through and catching up, most of the recent posts are you lashing out at presented business cases.

Having spoken to the council 54 rep several times, you couldn't be more wrong. it has been announced in the press, so it is a consideration which the Delta pilots need to take seriously, including the possibility of supporting or opposing any kind of merger.

As far as the election, perhaps consider that it is AMR who will try to justify--using their significant Illinois clout with the current president. Maybe they will make the case that unless this (insert transaction here) goes through, they will be forced to lay off thousands in the President's home state. Then throw in MIA--in a swing state, DTW--in a swing state, PHL and PIT--in a swing state, and maybe Delta and USAir will help or hurt AAs chances of success. The games are few and many, and nobody is salivating over pieces of AA. The possibilities are there, and considerations needs to be given, and strategies derived in order to protect the interests of the Delta pilots. This board is merely a reflection of opinions of what those actually in control may or may not be doing.

You're scared, you flowed late, and are worried about your job. We get it. Deny it all you wish, but your posts indicate otherwise. A transaction hasn't been conducted yet, with Delta pilots involved, which has resulted in the loss of pilot jobs.

It's not in your control. Running around here like a chicken with your head cut off screaming chicken little isn't going to help your cause. Man up.

Anyone else notice that DC-9s retire on 12-21-2012 and two days later the world ends. I guess a world without DAL/NW DC-9s just aint worth existing! :)

I mean the 727 went away and all we got was Katrina or a tsunami - I can't even remember.

Scoop

That's funny! I actually prefer CVG chili over Texas chili.

AA is possibly the smartest person on the MEC.

He's Chairman material. No joke.

Extremely sharp individual, and good trade unionist.

Nu