Agreed. The union risk is too high.

Q: Is there going to be an early profit sharing payout this year?
RA: No. We need to make sure that we have $5.5 billion in liquidity in the first and fourth quarter, so staying on the annual cycle of paying in on Valentine’s Day will be our long-term plan – and those checks in February are going to be very nice.

And furthermore, you can thank the pilots for voting down the TA, or those checks would quickly disappear. (editorial comment)

DeltaNet, Q's from the Leaders, 8/14/15

The "me too" rate leveler clause will work as it has in the past unless status quo is changed to prevent it. The argument is valid. The response by our union is the only thing in question, if that occurs.

The "me too" clause is basically off the table. As others have pointed out if there is any pay raise this year, the clause won't activate. Were I a betting man, I would also say that any pay increases to the employees next year would be in the form of bonuses or extra things so that it doesn't trigger again.

I definitely agree that it is risky to touch other employees PS without a pilot conversion first.

The "me too" clause is not off the table ever. It already worked for this year. It is on a revolving 18 month cycle. Once the UA and AA rates are increased 1/1/2016 any raise triggering a review will increase our rates. The FA group getting a raise will do it because they are 30+% of the non pilot domestic work force. A change in compensation from the 8 year track record like a bonus would be a specific action to exclude us.

Yes, and I would fully expect a move like that from RA. Would you not?

If he chooses to put labor unrest on the table, yes. That is his choice, how our union responds to that is our choice.

3.B.4. and 3.I. are powerful pay enhancement tools. That is why they want them changed. As long as they remain intact and separate we will be the best compensated pilots of the big 3 on a perpetual basis.

We have achieved with C2012 something no other airline pilot group has ever accomplished. We have a built in raise that applies indefinitely beyond the amendable date. Along with the industry's most generous profit sharing. These two clauses because they deal with rates and profit sharing separately guarantee we are the best compensated without the need for a new contract. This is HUGE! If the profit sharing or rate leveler are ever changed it would destroy this power. I'm not sure our union leadership knows the leverage they have.

Absolutely Correct!

I have been saying the rush for the company to lock the pilot group up is the large liability that PS has to the company moving forward.

Here is what I am thinking. If it is agreed to that the company doesn't want to reduce PS until the pilots agree to restructuring the formula. Then my take is we have a enormous sledge hammer. Let me explain for those in the union yes TA camp.

First, with profits forecast to exceed 6 billion this year and perhaps 8 billion next year. The PS payout will be between 25-30%. Obviously we know what that means to our checks. Where the company stands to have HUGE problems is with other employee groups. Now you have gate agents, flight attendants, bag handelers etc. Receiving huge pay days on February 14th. Each year. The problem with that is now your compensation to these employees exceeds the value of the job. You will soon have employees making 75-100k for a job with financial expectations that were 20-25k less than actual. What are you going to do when all these employees started to grow accustomed to financial expectations that exceeded the job qualifiers?

The company will be facing a very difficult situation if they do not modify the PS formula in the VERY NEAR future and the pilots are the first target. For this reason we have much more leverage then we realize.

If the price of gas doesn't go up in the next few years it will have made sense to keep our PS.

Honestly I think I will work out alright with keeping our agreement for the short term, but nobody predicts this economic climate to last for more than a few years at best. Massive bubble & super cheap oil. Let's keep the PS now, but get out before this crashes.

I disagree. Here's why.

Profit sharing must remain separate and unchanged to earn us significant gains.

1) Profit sharing is an arrangement to return proceeds to the pilot group for the “loan” given during bankruptcy.
Until the “loan” is repaid in the form of rates independently returning to pre-bankruptcy levels and the savings being repaid, profit sharing is untouchable. This arrangement is unique to Delta and its bankruptcy and is separate from the industry compensation.

2) Profit sharing aligns a portion of our compensation with managements’ goals and personal compensation.

As labor earning a wage we are a cost to be controlled and will not break out of the industry standard of compensation. Rates will never be increased significantly above our peers.

3) Profit sharing is variable compensation.

This means we are insulated from rate damage during the lean times while fully participating in the current record profits. The shock absorber affect will make it less necessary for management to seek rate concessions in the future.
4) Profits sharing will grow more quickly than rates and the increase is automatic, not requiring a new negotiation to increase every 3-4 years.

It is already a part of the contract and once given up, even partially, it diminishes our ability to recover our investment and participate in all the profits from all of Delta’s sources. The ancillary revenues at Delta have grown 22% in the first two quarters, while PRASM has shrunk slightly. This means our flying is less profitable but Delta still finds ways to increase profits to new records. This is prior to the Aeromexico, GOL, and China Eastern acquisitions and the profit they will bring. Virgin Atlantic is now profitable with the assistance of Delta and this model can be replicated around the globe.

We are marginalizing ourselves by giving up our profit sharing claim to Delta’s outsourced profits. To remove some portion of our significant profit sharing and “convert” it to rates is to permanently damage our benefit, especially when profits are generated outside of our Delta flying. With the growth of the airline now focused outside of our operating aircraft and the ongoing production balance violations it is imperative we retain these profits.
The rates and profit sharing need to remain separate and intact. The proposed changes to the 3.B.4. rate leveler clause to include profit sharing is a significant step to end profit sharing by encouraging its conversion to rates.

My position is:
Rates should be commensurate with the pattern bargaining of AA + 1% minimum to keep us laddering the industry standard.
Separately, profit sharing in its current form should be retained for two reasons. First, to pay back the previous concessions which is an arrangement unique to Delta. And second, to remain relevant and tied to the globalization of the company. The precedent of selling profit sharing set by C2012 is very dangerous should it continue.