JV Changes Summary
 

I may have posted some of this before, apologize if some of it is a repeat:


The changes to the AF/KLM/AZ joint venture from an EASK to block hour ratio seems like a very confusing contract language change that could erroneously be viewed as a concession. This isn’t the case.

The production balances within the JV are based on twin aisle EASK’s, currently. The language in this contract changes this to a block hour balance. Delta has never been in compliance with the minimum EASK production balance. The recent grievance and settlement addressed this shortfall outside of Section 6 proceedings.

Delta was at 46.8% of EASK’s at the end of the cure date. Using the new calculation which excludes N. America/UK traffic.

Now keep in mind this: we tried to induce greater Delta traffic via this production balance level and it failed. We ended up in a grievance and the company settled it. The goal of this JV language is to keep flying at a 50/50 ratio between DL and the JV partners, offer a tighter compliance window (12mo. v. 36mo.) and tighten the compliance band (+/-1%). This does that.

Some of you will and can argue that ‘we are just giving this up’. We settled a grievance for lack of JV compliance. Its understandable if you didn’t like it. But it is outside of this TA. The TA removes UK flying from the balance, adds single aisle flying that only DL does and is very advantageous to our side, because we fly all of Europe flying with 3 person crews, any AF under 9.5 block is 2 person crew.

The new language applies to only N. Am/EUR traffic between DL and AF/KL/AZ. It provides a 12 month look-back and a 12 month cure period. It converts from twin aisle EASK’s to total Block Hours. The new threshold is 50%+/-1%. This is less than we are currently flying. A potential loss to be sure. However, this conversion starts to include the 757 to Europe. That flying is now in Block Hours.

***professor’s own analysi***********
Something not inclusive to the TA but to think about is that AZ has publicly stated they are leaving the JV in 2017. That represents approximately 6-7% of flying that will flow back into the JV partner balances. Just something to keep in mind.
***end my own stupid opinion***

Now as far as where we are currently. The last 12 months DL had 51.5% of the total block of the JV flying. 1% of the JV flying is 4.36 round trips at an average stage of 8.9 block hours.

The EASK to Block conversion is a downside protection. Let us say that we all pull capacity out of the market. One 380 would be the equivalent to two of our 330’s. So 2 of their pilots (2man crew CDG-JFK) for six of ours.

The block hour conversion is also up gauging protection. Because all of our WB deliveries both real and notional are larger than the 767, EASK balance doesn’t help us keep jobs. As we up gauge the 767s on the JV routes, we add seats and keep 3/person crews. Keep in mind as well that using pilot block hours would hurt us because of the crew imbalances amongst the JV partners, as previously mentioned.

That is only for FRMS categories, which right now means 777 only. Any other category is the same.

It is difficult to value retirements from different carriers.

The pilots at American made huge concessions in 2003 (with the rest of labor at AMR) to stave off bankruptcy and protect their retirements. It worked for almost a decade, but labor paid in work rules and scope. They still have a frozen plan that is not "owned" by the PBGC.

The UAL and USAir pilots got little over the PBGC. We have a mixed bag at DAL.

At AMR I would have less seniority, but a much better retirement.

Hard to go apples to apples.

Still, this contract missed the target time landing window and didn't deliver the payload.

Well I'm a NO NO NO VOTE. Sick, LCA PULLS, invasion of privacy with the sick language,why should anyone have to give up anything during these high profit times. 30 years of the same crap from ALPA. Enough is enough.

Incorrect. They were 1.5% below the bare minimum when we settled the grievance for about $2,300 per pilot. The settlement language contained NO NEW CHANGES. This TA converts EASK's to block hours THEN reduces it even further. The result is an instant cure of the old 1.5% loss of those Delta pilot jobs and SPECIFICALLY ALLOWS for an ADDITIONAL (approx) 1% reduction in case management needs it.

But it gets worse. The change from EASK's to block hours ALLOWS the company to drastically down-gauge to smaller (lower paying) aircraft while shifting those extra DELTA PASSENGERS to a JV partner...and be in full compliance with the contract.

Read the language folks. It's all there.

Carl

Yes, 7/1/2015.

If the TA passes you would see retro pay (12 days) in your July 30, 2015 paycheck.

And as I said earlier post, Delta's earnings report is on July 15, 2015.

It's not just about the money we made in the quarter, it's about management beating their chest at the earnings report that the biggest union on property has a contract. And Delta will be able to have more flexibility in their fleet and pilots will be more productive and so on. And that one quarter of profits has funded the pilot contract for the next 13 quarters.

That is the most unintelligent statement one could make.

I never said you didn't have more money under the TA. Ok, you are dealing with a History Major here and I really don't understand how you came up with those figures. More than what or less than what?

Ok, it looks to me like you refuse to acknowledge that approximately 6% is a swap with profit sharing. If you will not acknowledge that, we have nothing further to talk about.

Denny

That is completely wrong Carl. It just is.

Again 1% is about four round trips.
Do you know how many seasonals we bring up and down every year? It's mid double digits.

Where precisely in this fleet plan do you see any aircraft that will be flown to Europe that is a down gauge?

No smaller aircraft in our fleet now or in the future can even do JFK to Europe.

Please use facts and numbers.

The TA binds the JV flying. Not the settlement.

Either way, this is the deal. Attempting to force compliance via numbers has not worked in five years. This gives us realistic goals we can hold the company to, quickly.

Please take notes and ask questions at the road shows.

Professor, the key points I see from your JV analysis are these: Delta is currently out of EASK compliance on the low end. After the change they'd be above the block hour minimum with room to reduce. That sure as heck sounds like a concession to me. If Delta corrected the EASK ratio as required what would the block hour ratio be then? I see where you're going with the downside protection angle but I'd need more data to be sold.