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Old 03-23-2006, 03:11 AM   #1  
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Default Delta pilots: Pay cuts not fair

Delta pilots: Pay cuts not fair
By RUSSELL GRANTHAM
The Atlanta Journal-Constitution
Published on: 03/23/06

Washington A demand by Delta Air Lines for more than $300 million in contract concessions probably wouldn't be ratified even if negotiators agreed to it, a pilots union official said Wednesday at an arbitration hearing.

Tim O'Malley, head of the negotiating committee for Delta's unit of the Air Line Pilots Association, also said the company plan imposes more paycheck pain on pilots than on other workers.

He said the proposed 18 percent wage cut, on top of a 32.5 percent cut negotiated in late 2004, would mean a total wage cut much larger than other workers have endured.

"It's not possible that I take a 46 percent compound cut in my pay and lose my defined-benefit plan, and non-contract employees take an 18 percent compound cut and keep their defined-benefit plans, and have those two things be proportional. It's not possible," O'Malley said.

Delta contends its proposal is fair because pilots the industry's highest-paid until the 2004 cut account for 35 percent of payroll and would contribute 35 percent of overall labor cost savings under the company's plan.

The unusual hearing before a panel of three arbitrators was triggered by the two sides' failure to meet a March 1 deadline for a new long-term contract deal. The deadline was part of a temporary deal in December that cut pilot pay 14 percent.

The union has offered a package valued at about $140 million annually.

The arbitrators have until April 15 to decide whether to void the contract, allowing Delta to impose its terms. The union has vowed to strike if the contract is voided, but both sides have said concession talks can continue after the hearings wrap up, and even after a ruling.

Delta spent most of last week presenting witnesses. The airline has noted that pilot pay rose sharply from 2001 to 2004, before it inked a $1 billion-a-year deal, including the 32.5 percent pay cut, to help cope with a financial skid that became a nose dive after 9/11.

But the 2004 deal and other moves were swamped by higher fuel costs in 2005, leading to a bankruptcy filing in September. The airline sought new pilot cuts about the same time.

Meanwhile, Delta has cut non-pilot pay twice in the past two years, with an across-the-board 10 percent cut and another round averaging 9 percent.

O'Malley said many pilots don't think the cuts are fair, and he noted that the interim December deal passed by a small margin, 400 votes.

Delta's new proposal, which would supersede the December deal, would have little chance of being ratified because it eliminates protections against pilot furloughs while allowing the airline to shift more flying to contract carriers both factors that would alienate younger pilots, O'Malley said.

He also said the plan doesn't do enough to compensate pilots for savings Delta will realize if it terminates their traditional pension plan, shifting responsibility for payouts to the federal Pension Benefit Guaranty Corp.

"The structure of this agreement is such that it wouldn't be ratified," O'Malley told the arbitrators.

Delta executives recently said it's likely the pilots' pension plan will be terminated and taken over by the PBGC. That means smaller payouts for the typical pilot because of PBGC caps, although Delta is offering a fund that ALPA could use to offset such cuts.

Lee Moak, chairman of Delta's ALPA unit, testified briefly at the end of Wednesday's session and was expected to be back at the hearing for cross- examination Thursday.

Expanding service on targeted routes

Meanwhile, Delta said it will expand service on 22 high-volume routes from Hartsfield-Jackson International Airport this summer, boosting peak-day departures to more than 1,000, including regional affiliates.

The additional flights go to major destinations such Los Angeles, which is getting two new flights for a total of 13 daily, as well as to secondary cities such as Bloomington, Ill., where Delta will add one new flight for a total of four daily.

Delta is cutting overall capacity as part of its Chapter 11 restructuring plan, but it has added flights and routes from its giant Atlanta connecting hub. The airline is also shifting more capacity onto international routes.



Find this article at:
http://www.ajc.com/business/content/...deltacash.html
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Old 03-23-2006, 07:40 AM   #2  
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Default Will Delta Strike?

I'd like some opinions from guys on the property.
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Old 03-23-2006, 12:34 PM   #3  
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I don't like the rhetoric that compares one group's sacrifices to those of the other employee groups. Other than that, I like what Tim has to say. As far as the statistics cited, we all know how those can be presented to support any position; take them with a grain of salt, obviously.

Our main ammunition in this case is a letter both parties agreed to prior to BK ( in conjunction with the big giveback), which says that the company can only come to us again if it to get relief for a specified cash shortfall. By our understanding of that letter, they cannot get relief now. Additionally, they want the pension liability to disappear, but don't want that to count as a concession. (By my accounting, that is worth more than every thing else they want, combined.)

Support for a strike is very high. Many of us have started other careers, and are ready to pull the plug on this one.
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Old 03-23-2006, 12:56 PM   #4  
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Quote:
Originally Posted by CVG767A
Support for a strike is very high. Many of us have started other careers, and are ready to pull the plug on this one.
IMHO the more prepared and willing you are to actually go on strike, the less likely the chances are that you will. Something about keeping the powder dry.

Good luck, no matter what.
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Old 03-23-2006, 01:51 PM   #5  
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Quote:
Tim O'Malley, head of the negotiating committee for Delta's unit of the Air Line Pilots Association, also said the company plan imposes more paycheck pain on pilots than on other workers.

He said the proposed 18 percent wage cut, on top of a 32.5 percent cut negotiated in late 2004, would mean a total wage cut much larger than other workers have endured.

"It's not possible that I take a 46 percent compound cut in my pay and lose my defined-benefit plan, and non-contract employees take an 18 percent compound cut and keep their defined-benefit plans, and have those two things be proportional. It's not possible," O'Malley said.

Delta contends its proposal is fair because pilots the industry's highest-paid until the 2004 cut account for 35 percent of payroll and would contribute 35 percent of overall labor cost savings under the company's plan.

The flaw in Delta's argument is this: Assuming pilot compensation INCLUDING PENSION COSTS is 35% of payroll, management wants pilots to shoulder 35% of the labor cost savings IN ADDITION to losing their pensions. Count it here, but don't count it there.
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Old 03-23-2006, 02:10 PM   #6  
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Default But thats is how MBAs think....

Quote:
Originally Posted by tomgoodman
The flaw in Delta's argument is this: Assuming pilot compensation INCLUDING PENSION COSTS is 35% of payroll, management wants pilots to shoulder 35% of the labor cost savings IN ADDITION to losing their pensions. Count it here, but don't count it there.
It's just another example of Managements do as I say, not do as I do....

Good Luck Guys!
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Old 03-23-2006, 04:44 PM   #7  
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Default Some of us have walked already...

IronWalt,

I was a seven-year 737-800 F/O at Delta and resigned last Fall to pursue a non-aviation career. I had become thoroughly disgusted with the job and decided that my family and I would be better off by making the move early.

There are many more like me who are waiting for the right time to leave. If pushed to a strike before deciding to leave on their own, make no mistake - the Delta pilot group will simply shut the joint down.

It's a sad situation but reality has sunk in, and from what I observed many Delta flyers are wholly prepared to move on - one way or another.

Cheers and best to all,

Felix

Last edited by felix; 03-23-2006 at 05:16 PM.
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Old 03-23-2006, 09:24 PM   #8  
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Default Natural Evolution

Delta management's plan for a new 35% reduction in pilot compensation is not sinister, underhanded, unfair, or a "betrayal" of the pilots.

It's a natural and inevitable progression as Delta fights for survival.

Pilots are by far the most expensive labor cost for an airline. It is inevitable that pilots will shoulder a far, far larger hit than other employees as legacy carriers scramble to reduce costs so they can stay alive.

Airlines are doing this, of course, in order to be able to continue offering cheap fares while still making a profit. Airlines that can do that will survive; airlines that can't, won't.

I think the comment or two by Delta pilots here saying they've found an alternate career or are looking for one are pretty intelligent. Pilots who are smart and want some control over their careers will establish an alternate career field now. It's inevitable that one or more major US airlines will go bankrupt; pilots need to realize that a full professional flying career (assuming they can have that) is never going to be anywhere as financially rewarding as it used to be. Why? One main reason: the cheap fare.
 
Old 03-23-2006, 09:52 PM   #9  
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Default Fuzzy Math

Quote:
Originally Posted by Poundstone
.... pilots will shoulder a far, far larger hit than other employees...
Thank you, that was exactly my point.

But Delta is falsely arguing that this is not the case, by counting pension costs and then not counting them.
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Old 03-23-2006, 11:34 PM   #10  
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Default

"pilots need to realize that a full professional flying career (assuming they can have that) is never going to be anywhere as financially rewarding as it used to be."
Third person?
You sure dont sound like a pilot to me.
Poundstone, why is zero fuel weight a useful number?
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