Profit Sharing Must Read
 

There are 3 PS grievances that could have been filed based on 3 different issues. The bait and switch crowd loves the confusing nature of this. Think of the elation the donkey feels when the rider drops the stick right before it finds out the carrot is really a turd painted orange.

During the failed TA management specifically tried to insert an uncapped carve out for management incentive programs that would have paid them possibly large amounts first out of our PS pool. That thankfully got rejected when we voted TA2015 down.

Now to current events. The non-contract employees were taken out of the PS pool by the company yet our contract language was very specific on how the pool was to be calculated. In my missive I was very specific saying that I thought grieving this had very little chance of granting us what most arbitrators would think was a windfall however it had definite value as a bargaining chip. I was told by people in the MEC this grievance had zero chance of success so it was never pursued. The PS pool language however was changed for this TA. Why would it have to be changed if our grievance had no chance of success? I am not talking about the PS calculation language which I will discuss below. The pool language was changed even though we didn't file a grievance on the original language. It simply doesn't make sense. Changing the language ensures a grievance will never be revisited by a more aggressive MEC. BTW the bargaining chip I mentioned above evidently didn't get used or cashed out in this TA.

The rest of the PS calculation language was reformatted. I have not had anyone with a Doctorate in Wordsmithing comment on if there is any change in meaning or legality due to spacing, punctuation, or line breaks. Let's just stipulate for a moment that the PS Calculation Language hasn't changed. We won! Only we didn't. There are 2 grievances that applied to this issue. The first involved PS due to us due to the JV violation grievance. Since the JV PS issue was a black and white calculation situation it is no surprise to me it was settled in our favor. The big problem is the other PS calculation grievance that is worth huge amounts of coin over the other grievance is not even being pursued.

Ed announced to the financial world late last year that going forward Delta will now be the first airline in the USA to classify formerly one-time charges such as fuel hedging losses as normal business expenses. Delta never did that before and no one else does either. Back in the 90s when we also had a PS program we had no language to protect us from one-time charges. That is why we insisted on fixing this as part of starting a new PS program. This change of expense calculation is a drastic change from past practice and will negatively impact our PS pool for 2016 and beyond. The MEC is evidently not pursuing a grievance or requiring the company to stipulate as part of this TA negotiation that the calculation in 2016 will remain the same as for 2015 and previous years.

The only way the "unchanged PS language" results in unchanged PS dollars is if the method remains the same as in previous years. Evidently as near as I can tell that is not the case. The company, not the pilots, is being administratively granted a free pass to skim PS money from the pool through unchallenged reclassification of expenses. Just like the JV violations, the company does what it wants while some claim we have protections and have left things unchanged. If this is allowed to stand, you will get less PS than you would have been entitled to in 2015 given the same set of input numbers. High profits and bean counter restraint may mask the initial damage however the vault door will be left wide open. It is disingenuous to call something unchanged when this loophole has been granted by fiat. $762 Million worth of loophole in just the first 2 quarters. The party is just getting started everyone.

I will say the profit sharing language has most definitely changed. Before it looks like our contract required the company to pay out profit sharing to the other employee groups. Now it looks like we are separating them from us. It looks like we are just saying our contract doesn't cover flight attendants and ground employees. A change is a change even if it doesn't effect our payout. This is the type of thing that makes pilots upset. I expected to see zero changes to profit sharing. Instead, I see changed wording.

^^^THIS^^^

I understand we dropped the grievance on the 1-time currency write off as being a one-time charge. Going forward, ie 2016 Profit Sharing calculations and beyond, will such accounting practices with respect to our Profit Sharing be tolerated? Was this addressed?

This is huge when determining our profit sharing payout and has the potential to nearly make our profit sharing worthless. Do we have an agreement on these BS accounting practices going forward in determining our PS?

The new PS language reads to me like an item about which, several years from now, we will be saying: "we didn't think they would do that!"

This makes me uneasy.

Or, perhaps "this weeks crisis is next week's barely remembered afterthought."

I doubt any of us even a month from now, much less a year or two from now, will even remember that this thread even existed.

So they are going to turn Delta into a profitless airline. They must hate the thought of becoming rich from their stock options. The grievance was dropped without prejudice meaning it has no impact on our future ability to contest differences.

Thought about it. This is perhaps the most ridiculous metaphor you've ever made up ... besting the others in terms of implausibility, absence of logic, and relatability.

Donkeys are stoic animals. The donkey would be unlikely to care if the rider dropped the stick. It might be mildly curious why a human would paint a turd but almost instantly return to it's blissful state of resolute indifference.

A donkey will not do much of anything unless the donkey first determines it is in his best interest. They have a strong sense of self-preservation.

I'm not going to do anything you direct me to do. I am however interested in securing my job and getting paid. My guess is that most pilots are smart Asses, at least more intelligent than you give them credit for.

Years ago, we used to say profit sharing was worthless. We always said the company will always find a way to never show a profit. This makes me uneasy too. IMHO, 20 percent of the fuel hedge losses going forward are now taken straight from us.

The fuel hedges are pretty much wound down. There should be minimal to no losses going forward.

Bastian is an accountant.

He will dismantle our profit sharing one write off at a time.

So far he has lost $762 million on fuel hedging this year. It will come off the PTIX and severely reduce our profit sharing. IMO to the tune of 10% of the total amount or more.

I disagree that the TA produces no changes to PS. See Section 4.I.

Why did the company amend the Delta Pilots Annual Profit Sharing Plan on 1/1/2016? During Section 6 but outside of Section 6 negotiations? Or, was it part of the negotiations and the NC is withholding that information?

The amended language includes the non-contracts' pay in the formula for determining the pilots' profit sharing. However, the non-contracts get only 10% of PTIX up to the previous year's PTIX; they don't get 20% of PTIX until the current year exceeds the previous year's PTIX. The non-contracts 20% portion in 2016 won't kick in until about $5.9B PTIX (or whatever 2015 PTIX was). Therefore, the pilots should be the sole owners of the 10-20% PTIX pool from $2.5-5.9B. That's $340 million the pilots should be splitting 13,000 ways...not 80,000 ways.

So Derry has listed over a BILLION dollars of PTIX the company wants to remove from PS.

I'm concluding that every year going forward will see our PS stripped by about 40% if we allow this TA to go through.

I believe you mean section 3.I

Pretty sure companies that don't make profit aren't investment grade.

The company will make a profit. It will just offset it with writedowns and one-time losses. I agree. We are setting a bad precedent by dropping the currency grievance. I also think the unfiled grievance about other employees might have had merit. Otherwise, why is the language changing?

I saw no change in the language other then removing the non contract employees.

Management's number one priority is to move Delta out of being classified as a volatile transportation company and into an investment grade company. That requires consistent profitability on a large scale. Their own net worth depends on it.

Nice sarcasm. Nothing to see here....


Are you OK with Delta classifying what historically were one time losses as regular charges? This is being done intentionally to reduce our PS. This goes directly against the intent of the one-time charge item in our PWA and you just want to give them a pass?

Shouldn't we address how these charges are handled going forward?

What you're ignoring is how they classify one time charges. Historically Delta and every other airline handled certain charges as one time charges. Our PWA discounted these one time charges to determine PTIX. Now Delta (the only airline) changed they way they classify these to lower our Profit Sharing. This goes directly against the intent of the PWA. You OK with that?

100% agree. Unfortunately PH is the chairman of Contract Admin and has ZERO desire to stand up for the pilots at Delta.

How many attorneys got more than $45,000,000.00 for their clients last year?

Not bad for a line guy volunteering as an administrator to serve the pilots and enforce the contract he also works under. In fact, I'm going to have to disagree with your characterization.

Is there any contract administrator who recovered more for their pilots, last year, or any year?

Why is it considered socially acceptable to make allegations that so unfairly represent a volunteer's work product? Why is it acceptable to make up statements about their personal motivations? Did he ever say such a thing? His actions certainly suggest otherwise.

Good administrators stay out of the politics. Perhaps that puts him at odds with where you want to go. Perhaps you just want your friend in the position. You could advocate for the path you want better by stating the improvement you seek rather than making a rather baseless personal attack.

So you're quite proud of the settlement that relieved the company from violating our Section 1 for 4 years? Then give them relief going forward?

The only reason we got that is we've been so reluctant in enforcing our contract, the company will has no fear violating the PWA. Sure, they'll have to pay for some of the violations, but they're paying pennies on the dollar.

Are you willing to let them slide on these one-time charges being reclassified?

You are making the allegations. The duty is on you to show your math. Hartley showed his.

Do you think you owe the man an apology for what you wrote?

Who wants all those widebody positions when we can get a check for a few bucks.

Amazing any Delta pilot can think that was a win.

Loss of widebody positions affects ever Delta pilot. We all move down in bid position from where we would be with the jobs.

Is that true?

Was that true?

Contract Admin showed their math. Show me yours.

How about a simple addition that one time charges will not be used in calculating pilot profit sharing? Below is the text of questions/answers from today's FAQ email:

Q: I thought you said that our profit sharing plan is not being changed. Why has the language in Section 3 I. changed?

A: The Delta pilots’ profit sharing plan has not changed. The TA ensures profit sharing payouts will be determined in the exact same way that it has been in years’ past. Last year, the Company announced that it would change the calculation for the profit sharing plan payout for their ground and Flight Attendant employees. This had the effect of creating two separate pools of money from which each employee group would take its share. However, the share of each pool of money to which a given employee group is entitled did not change, nor did the pool of money from which the Delta pilots receive our share. When the Delta pilots’ profit sharing payout is calculated, the first step remains determining PTIX. The second step is to calculate the pool of money of which the Delta pilots will receive their share by adding 10% of the first $2.5B of PTIX to 20% of the amount of PTIX above $2.5B. The third step is to determine the percentage that the collective Delta pilots’ annual compensation represents of the annual compensation of all eligible employees – pilots, dispatchers, ground employees, and Flight Attendants. The Delta pilots then collectively receive that percentage of the pool of money that was calculated under Section 3 I. The change to the language in Section 3 I. serves merely to clarify this process now that the Company has altered the calculation for the pool of money of which their ground and Flight Attendant employees receive their share.

Resolution of Profit Sharing Grievances
Q: There’s been a lot of talk about the profit sharing grievances filed earlier this year. What is the status of those grievances and have they been settled as part of the new tentative agreement?

A: MEC Grievances 16-02 and 16-07 both pertain to our profit sharing plan but differ significantly. Grievance 16-02 concerns a prior settlement agreement over the transatlantic joint venture (TA-JV) resulting in a $30 million payment to the Delta pilots covering a period of nearly four years of non-compliance with the TA-JV production balance. Delta did not include the settlement proceeds as part of a pilot’s annual compensation under Section 3 A: 1. and 3 I. for purposes of calculating the profit sharing payout this past February 2016. A System Board of Adjustment hearing was scheduled for October but has been postponed with the parties reaching a Tentative Agreement. Should the Tentative Agreement ratify, the Company has agreed to pay the additional $3.9 million, covering the full amount of profit sharing owed from the settlement proceeds. This additional payment of profit sharing will also receive the 15% DPSP contribution that profit sharing payments are eligible for.

MEC Grievance 16-07, which is scheduled to be heard by the System Board in January 2017, was filed over Delta’s calculation of pre-tax income (PTIX as defined in Section 3 A: 10.) for purposes of determining profit sharing for calendar year 2015, reducing February’s profit sharing payout to pilots by about $9.6 million (plus the 15% DPSP contribution). Specifically, the grievance challenges the Company’s decision to exclude (1) severance payments as a one-time, extraordinary expense, and (2) the devaluation of Venezuelan currency resulting from Delta being unable to extract ticket sale money from Venezuela: Following discussion with the Company over its calculation, Delta contends that its handling of these items is fully in accordance with the PWA provisions and accounting practices and that severance payments, though included in 3 of the prior 4 years, should no longer be considered a one-time, nonrecurring or extraordinary expense. Delta also has stated, among other things, that
the Venezuelan currency devaluation is part of the cost of doing business in Venezuela and that Delta has benefitted in prior years from the profits — never recovered — that the Venezuelan operation has generated. Without conceding these arguments, the Association has conditionally agreed to withdraw this grievance for calendar year 2015 (i.e., for the February 2016 payout). If the Tentative Agreement is ratified, Grievance 16-07 will be withdrawn without prejudice to our position in this matter. The Association would retain the legal right to file similar grievances in the future should we determine that the PTIX calculation is computed improperly.

Transatlantic JV

Q: How many jobs are we losing in the drop of compliance?



A: Zero jobs will be lost.



Old (current PWA): 48.5% share has no lower floor of flying. Ratio could be satisfied with Delta flying 1 flight, Air France flying the other (50/50). This is measured over a 3-year window with a 4th cure year.



New TA: 46.5% only allowed if Delta separately flies at least 650,000 widebody international and 757 transatlantic hours. This is measured every year, with no cure year. This new protection serves as a floor on global widebody hours, particularly in light of the increase in airline partnerships Delta chooses to engage.



The Company’s transatlantic minimum compliance level will remain 48.5%. At the Company’s option, it may be reduced to 46.5% EASKs as long as the Company maintains separately a minimum 650,000 international widebody and 757 transatlantic hours. Over the last 12 months, Delta has maintained 47.7% EASKs. In the event they drop to 46.5%, it is a 1.2 percentage point drop from TAJV current levels. To quantify, worst case scenario, the Company could decrease about 1 transatlantic roundtrip/day from current levels.



In exchange for being below 48.5% EASKs (and measured now every year), 650,000 international widebody and 757 transatlantic hours will be protected, representing roughly 95% of the international widebody and 757 transatlantic hours. This worldwide protection of block hours is new.

It's already there. In the PWA.

It's being ignored. That's what the grievance is about.

Probably belongs in another thread, but that's a statement which takes a lot of qualification.

I have to slightly disagree, adding, it would be better to persuade the company to increase our share of the flying to remain compliant with the existing agreement. If such a solution were found we would have more pilots progressing into premium flying positions.

But, that's not the deal we have to decide on. We have to deal with reality.

a lot of dancing around what is the fundamental question each of us must answer with our vote.

given the economic environment and airline performance, why are we agreeing to any substantive changes (concessions) in any of the essential concerns for any airline pilot?

job security. job security. working conditions. pay. retirement. job security.

doc note? ok. VB trial? ok. LCA pulls? maybe.

any read of the document should have the fundamental question at issue, as a mandatory preface....and footnote to each page.

Ask your reps about the negotiating committees ability to show their math on positions lost with this TA.

Complete and abject failure.

Give me $60 million in union dues and I will show you some math.

But hey, we have a Retro pay calculator.

Maybe you can help with the positions lost in this TA calculator.

But all you want is money.

I'm good with that. Pay parity with United via extension with no concessions.

No concessions. Period. The more the lights are turned up on this pos the uglier it gets. Kind of like closing time at the bar.....

You talking about Jerry's campaign to sink the TA, or the TA itself?

I disagree. It's still probably going to be my first yes vote.

I will be glad to have that conversation with them and since we sat in some of the same briefings, I can provide them with references to the various data points briefed in open and closed session. They all know ho to reach me.

Here I discussed the public data and conclusions on potential loss of seat progression.

http://www.airlinepilotforums.com/2221844-post4.html

(I agree there will be no "job loss" but think there is a cost to us in terms of progression. You & I feel the same about that, BTW).

For the record, I fought this outcome harder than anyone. Had the company been in compliance we would not have to take a concession to get an agreement. First, I documented the company noncompliance. Second, I fought two administrations on proactively engaging Delta management to seek compliance. When unable to convince my superiors that the Scope Compliance Chairman should be in the meeting necessitated by scope language in our contract I lobbied my Reps and got the change instituted into the MEC Policy Manual by a 19-0 vote.

All that having been stated, I can look at the scope section holistically and see that the Virgin language adds more jobs than this one change takes away. We now count Virgin's new operating certificate and anything else they might dream up (or have control over). Virgin has already started one off-certificate operation and is looking to set up a company to compete more directly with Norwegian. Given that our ratio with Virgin is 2 to 1 and we get two widebodies out of their growth, it is important to capture every bit of flying that is on the Virgin side of that equation.

The new 1 E. 9. language protecting our brand is absolutely critical! Damn glad we've got that BEFORE the company turns on its metal neutral JV with Aeromexico.

From the MEC brief yesterday in Washington:

Slide showing total headcount change. 2017: -8, 2018: -8, 2019: +14. Increase attributable to the change in vacation credit (first two weeks to 3:45/day) in 2019.

Net -2 pilot jobs over the life of the agreement.

Pretty much a wash.