Delta Pilots Association
10-30-2010, 07:35 PM
#1982
Back on TDY
Joined APC: Apr 2008
Position: 747-400 Captain
Posts: 12,487
Originally Posted by acl65pilot
Carl;
I just looked for a threat of that on here as it is against the TOS to post someone's identity. PM's are of course off limits for mods, but posts are not. If it was a PM Slow seems to know the TOS!
I just looked for a threat of that on here as it is against the TOS to post someone's identity. PM's are of course off limits for mods, but posts are not. If it was a PM Slow seems to know the TOS!
It is very important to all the posters and lurkers on this thread to know what kind of a "person" slowplay is. He/she is a person that will go as far as threatening people (via PM) if they don't stop posting an opinon that he/she disagrees with.
Carl
10-30-2010, 07:42 PM
#1983
Da Hudge
Joined APC: Oct 2006
Position: Poodle Whisperer
Posts: 17,473
Originally Posted by Reroute
First of all don't apologize, it was a great post you quoted. (^;
These are just recommendations, if implemented "should" becomes "shall."
These are just recommendations, if implemented "should" becomes "shall."
Just catching up after finishing up my trip today...
But, seriously? Are you REALLY that naive? This is why we don't trust the alpa types. Head. in. sand.
10-30-2010, 08:24 PM
#1984
Gets Weekends Off
Joined APC: Feb 2008
Posts: 2,539
Originally Posted by Carl Spackler
It is very important to all the posters and lurkers on this thread to know what kind of a "person" slowplay is. He/she is a person that will go as far as threatening people (via PM) if they don't stop posting an opinon that he/she disagrees with.
Carl
Carl
You've come into a Delta thread with your revisionism and anti-alpa venom. I'm happy to continue the discussion with historical accuracy. Are you?
Save the ALPA victim crap for another thread.
Get over yourself and your hyperbole, Carl. You grow more transparent everyday.
10-30-2010, 11:09 PM
#1985
Gets Weekends Off
Thread Starter
Joined APC: Jan 2010
Posts: 1,503
Why Pilots shouldn't be negotiators.
A. The Prolonged First Negotiation
In July, 2001, Delta and ALPA's pilots signed a 5-years contract which would make Delta's pilots
the highest paid in the industry and which included annual wage increases of 4.5%.
the highest paid in the industry and which included annual wage increases of 4.5%.
14 However, as
13
This description relies on information obtained from articles in the Wall Street Journal, the Atlanta Journal-
Constitution, the New York Times, the Associated Press, the Financial Times and the Dow Jones Business News.
Constitution, the New York Times, the Associated Press, the Financial Times and the Dow Jones Business News.
14
Three years later, in 2004, Delta pilots' average wage was $209,330 while Northwest pilots { the second highest
paid in the industry { earned on average $169,208. Average wages of pilots in Continental, US Airways, United and
paid in the industry { earned on average $169,208. Average wages of pilots in Continental, US Airways, United and
9
a result of the downturn in the industry following the September 11th attacks, Delta asked ALPA
in April 2003 for a 22% cut in pilots' hourly wages and the cancelation of the 4.5% annual raises
due on May 2003 and 2004. Delta executives argued that this cut was necessary for the airline
to remain competitive, especially since its two largest competitors, American Airlines and United
Airlines, recently obtained considerable wage concessions from their labor unions.
What followed was a series of o
ers and countero
ers between Delta's management and the
pilots union. Delta's initial bargaining position was not ideal. On the one hand, employee pension
plans were underfunded by approximately $4.9 billion, implying that pension termination would
be quite costly for labor. On the other hand, Delta's balance sheet was much stronger than that
of American Airlines and United, making it more dicult to extract concessions from labor.
a result of the downturn in the industry following the September 11th attacks, Delta asked ALPA
in April 2003 for a 22% cut in pilots' hourly wages and the cancelation of the 4.5% annual raises
due on May 2003 and 2004. Delta executives argued that this cut was necessary for the airline
to remain competitive, especially since its two largest competitors, American Airlines and United
Airlines, recently obtained considerable wage concessions from their labor unions.
What followed was a series of o
ers and countero
ers between Delta's management and the
pilots union. Delta's initial bargaining position was not ideal. On the one hand, employee pension
plans were underfunded by approximately $4.9 billion, implying that pension termination would
be quite costly for labor. On the other hand, Delta's balance sheet was much stronger than that
of American Airlines and United, making it more dicult to extract concessions from labor.
15
As negotiations drew on, however, Delta's condition deteriorated thereby enhancing the rm's
bargaining position vis-a-vis labor.
By December 2003, ALPA was o
ering a 9% pay cut plus the cancelation of the 4.5% increase
due on May 2004. Management rejected this o
er and by June 2004 was demanding a 30% reduction
in pilot compensation. The pilot union countered with an o
er to cut wages by 23%. By the end of
July, with Delta's condition continuing to deteriorate, management answered with an increased pay
cut demand of 35%, amounting to $1.02 billion a year in pilot concessions. Finally, in November
10, 2004, Delta's management and ALPA reached a deal involving a 32.5% wage cut, changes to
work rules that would increase pilots' ying time, a switch to a cheaper retirement plan for younger
pilots, and the freezing of the pilots' pension plan.
In return, pilots received options on Delta stock as well as other pro t sharing arrangements.
Panel A of Table
bargaining position vis-a-vis labor.
By December 2003, ALPA was o
ering a 9% pay cut plus the cancelation of the 4.5% increase
due on May 2004. Management rejected this o
er and by June 2004 was demanding a 30% reduction
in pilot compensation. The pilot union countered with an o
er to cut wages by 23%. By the end of
July, with Delta's condition continuing to deteriorate, management answered with an increased pay
cut demand of 35%, amounting to $1.02 billion a year in pilot concessions. Finally, in November
10, 2004, Delta's management and ALPA reached a deal involving a 32.5% wage cut, changes to
work rules that would increase pilots' ying time, a switch to a cheaper retirement plan for younger
pilots, and the freezing of the pilots' pension plan.
In return, pilots received options on Delta stock as well as other pro t sharing arrangements.
Panel A of Table
?? displays detailed information on wages and pension plan funding status for
pilots and non-pilots for the years 2004, 2005, and 2006.16 Panel B of Table ?? shows the outcome
of the renegotiations. Consistent with strategic renegotiation, pilots { whose average wages were
much higher than the PBGC maximum guarantee { made wage concessions of 32.5%. In contrast,
non-pilot employees were mostly covered by the PBGC guarantee and hence agreed only to a much
smaller 10% wage cut.
pilots and non-pilots for the years 2004, 2005, and 2006.16 Panel B of Table ?? shows the outcome
of the renegotiations. Consistent with strategic renegotiation, pilots { whose average wages were
much higher than the PBGC maximum guarantee { made wage concessions of 32.5%. In contrast,
non-pilot employees were mostly covered by the PBGC guarantee and hence agreed only to a much
smaller 10% wage cut.
American Airlines were $145,060, $132,715, $131,930 and $129,947, respectively.
15
See The Wall Street Journal, July 23, 2003, \Delta Pilots Contract Talks Break Down."
16
Data sources are described in detail in the next section.
10
B. The Second Negotiation
Four weeks after the $1 billion agreement, Delta's management returned to the bargaining table
arguing that to avoid bankruptcy the pilots would need to agree to further concessions. The threat
of bankruptcy was particularly acute for labor, as at the time, the airline's de ned bene t pension
plans were underfunded by approximately $3.3 billion (Table
arguing that to avoid bankruptcy the pilots would need to agree to further concessions. The threat
of bankruptcy was particularly acute for labor, as at the time, the airline's de ned bene t pension
plans were underfunded by approximately $3.3 billion (Table
??).
In the ensuing months, Delta unsuccessfully sought additional concessions from its pilots, and
as a result, led for Chapter 11 on September 14, 2005. Upon ling, Delta presented its unionized
pilots with a new compensation plan calling for further annual concessions of approximately $325
million which included a 20% pay cut. Further, in October of the same year, Delta received
permission from the bankruptcy court to halt pension payments to retirees.
By this time, Delta's pilots were highly concerned that the carrier would opt to terminate their
de ned bene t plan. Such termination would be quite costly for pilots { by the end of the year,
Delta's estimated that its pension plans were underfunded by $4.6 billion. Further, because of pilots
comparatively high wage and retirement bene ts, the PBGC bene t guarantee would provide them
with little coverage in the event of termination. As a result of what appeared to be a credible
threat of plan termination, the pilot union agreed to re-open negotiations with Delta. Central to
the negotiations was the future of the pilot pension plan.17
In the ensuing months, Delta unsuccessfully sought additional concessions from its pilots, and
as a result, led for Chapter 11 on September 14, 2005. Upon ling, Delta presented its unionized
pilots with a new compensation plan calling for further annual concessions of approximately $325
million which included a 20% pay cut. Further, in October of the same year, Delta received
permission from the bankruptcy court to halt pension payments to retirees.
By this time, Delta's pilots were highly concerned that the carrier would opt to terminate their
de ned bene t plan. Such termination would be quite costly for pilots { by the end of the year,
Delta's estimated that its pension plans were underfunded by $4.6 billion. Further, because of pilots
comparatively high wage and retirement bene ts, the PBGC bene t guarantee would provide them
with little coverage in the event of termination. As a result of what appeared to be a credible
threat of plan termination, the pilot union agreed to re-open negotiations with Delta. Central to
the negotiations was the future of the pilot pension plan.17
In March 2006, Delta asked its pilots for additional concessions worth $305 million a year for
four years, including a 18% pay cut. ALPA's countero
er included concessions amounting to $140
million a year and a demand for a $1 billion note from Delta payable in case the pilot pension plan
was terminated. For the rst time during negotiations, Delta's executives told the pilots that it was
likely that the rm would terminate their pension plan. Finally, in June 2006, Delta's pilots rati ed
a 3.5 year agreement on concessions that included cost savings of $280 million a year with a 14%
wage cut, reducing average pilot pay from $151,000 to just under $130,000 a year. Additionally,
the new contract paved the way for Delta to seek termination of the pilots' pension plan. In
return, Delta promised the union a $650 million payment and a $2.1 billion claim convertible into
a yet-to-be-determined stake in the reorganized Delta.
four years, including a 18% pay cut. ALPA's countero
er included concessions amounting to $140
million a year and a demand for a $1 billion note from Delta payable in case the pilot pension plan
was terminated. For the rst time during negotiations, Delta's executives told the pilots that it was
likely that the rm would terminate their pension plan. Finally, in June 2006, Delta's pilots rati ed
a 3.5 year agreement on concessions that included cost savings of $280 million a year with a 14%
wage cut, reducing average pilot pay from $151,000 to just under $130,000 a year. Additionally,
the new contract paved the way for Delta to seek termination of the pilots' pension plan. In
return, Delta promised the union a $650 million payment and a $2.1 billion claim convertible into
a yet-to-be-determined stake in the reorganized Delta.
17
Indeed, during one of the hearings in bankruptcy court, an ALPA attorney said to his Delta counterpart that
\we'll go out in the hall and get a deal if the airline would guarantee it would not terminate the pilot's pension plan."
(The Atlanta Journal-Constitution, December 6, 2005: \Judge Tells, Delta, Pilots to Work Out Di
erences".)
\we'll go out in the hall and get a deal if the airline would guarantee it would not terminate the pilot's pension plan."
(The Atlanta Journal-Constitution, December 6, 2005: \Judge Tells, Delta, Pilots to Work Out Di
erences".)
11
C. The Pilot Pension Plan Termination
On September 1st, 2006, Delta requested that the bankruptcy judge allow the rm to terminate the
pilots' pension plan and to transfer its liabilities to the PBGC. The judge approved the termination
request on September 6th, thereby allowing Delta to avoid approximately $3 billion in payments
needed to bring the plan to full funding { Delta transferred $1.7 billion in assets to the PBGC to
cover more than $4.7 billion in bene t liabilities. The PBGC estimated that out of the $3 billion
in underfunded pension liabilities it would be liable for $920 million, implying a loss of more than
$2 billion for the ALPA pilots. As Panel A of Table
pilots' pension plan and to transfer its liabilities to the PBGC. The judge approved the termination
request on September 6th, thereby allowing Delta to avoid approximately $3 billion in payments
needed to bring the plan to full funding { Delta transferred $1.7 billion in assets to the PBGC to
cover more than $4.7 billion in bene t liabilities. The PBGC estimated that out of the $3 billion
in underfunded pension liabilities it would be liable for $920 million, implying a loss of more than
$2 billion for the ALPA pilots. As Panel A of Table
?? shows, the pilots' pension plans were
more underfunded { arguably strategically { than those of the non-pilot employees. As a result,
post-bankruptcy the pilots agreed to an additional wage concession of 14% compared to only 7.5%
by non-pilots.
more underfunded { arguably strategically { than those of the non-pilot employees. As a result,
post-bankruptcy the pilots agreed to an additional wage concession of 14% compared to only 7.5%
by non-pilots.
I
VIII. Conclusion
We analyze the ability of airlines to renegotiate wages, using their financial position to extract
concessions from labor. Our empirical results indicate that airlines in poor nancial position are
able to renegotiate and reduce labor costs of those employees whose pension plans are underfunded.
Furthermore, exploiting the exogenously given PBGC maximum guarantee, we show that airlines
extract larger concessions from employees with average salaries higher than the PBGC limit. Our
evidence supports the view that rms take advantage of their nancial position when negotiating
with labor and strategically use the threat of `pension dumping' to extract concessions from labor.
As such, our paper should be viewed as part of a growing literature on the interplay between
nance and labor market conditions. Recent events in the financial crisis of 2007{2009, and the
ongoing disruptions in the labor market, underscore the importance of a deeper understanding of
such rm-labor interactions.
And there you have it. Do we want the same advisors, lawyers, & EFA folks negotiating with pilots for 2012 that couldn't see this two bite of the apple then termination plan coming?
Last edited by TheManager; 10-30-2010 at 11:37 PM.
10-31-2010, 04:08 AM
#1987
Gets Weekends Off
Joined APC: Apr 2008
Posts: 1,462
Originally Posted by TheManager
VIII. Conclusion
We analyze the ability of airlines to renegotiate wages, using their financial position to extract
concessions from labor. Our empirical results indicate that airlines in poor nancial position are
able to renegotiate and reduce labor costs of those employees whose pension plans are underfunded.
Furthermore, exploiting the exogenously given PBGC maximum guarantee, we show that airlines
extract larger concessions from employees with average salaries higher than the PBGC limit. Our
evidence supports the view that rms take advantage of their nancial position when negotiating
with labor and strategically use the threat of `pension dumping' to extract concessions from labor.
As such, our paper should be viewed as part of a growing literature on the interplay between
nance and labor market conditions. Recent events in the financial crisis of 2007{2009, and the
ongoing disruptions in the labor market, underscore the importance of a deeper understanding of
such rm-labor interactions.
10-31-2010, 04:23 AM
#1988
Happy to be here
Joined APC: Jun 2006
Position: A-320A
Posts: 18,563
Originally Posted by Carl Spackler
So people can threaten other people on APC and it's not against the TOS? OK then.
It is very important to all the posters and lurkers on this thread to know what kind of a "person" slowplay is. He/she is a person that will go as far as threatening people (via PM) if they don't stop posting an opinon that he/she disagrees with.
Carl
It is very important to all the posters and lurkers on this thread to know what kind of a "person" slowplay is. He/she is a person that will go as far as threatening people (via PM) if they don't stop posting an opinon that he/she disagrees with.
Carl
We the Mods, have gone over this internally many times. PM's are not part of our scope of Moding. As Slow has done, he can post his PM to you, but you cannot post his PM. In effect, the author can post it, but the receiver cannot. Other than that, ppl are really free to do what they want in a PM exchange.
10-31-2010, 04:49 AM
#1989
The Brown Dot +1
Joined APC: Jun 2009
Position: 777B
Posts: 7,775
Originally Posted by tsquare
No.. it would require getting elected, and national doesn't want anybody that will rock the boat. They would rather have the guys that have no passion and are (in your opinion) on the right track....
It's so easy to play this game. And ya know what? It really works. ALPA is STILL broken.
It's so easy to play this game. And ya know what? It really works. ALPA is STILL broken.
10-31-2010, 05:06 AM
#1990
Gets Weekends Off
Joined APC: Dec 2007
Position: No to large RJs
Posts: 369
Manager,
Thanks for the good history review. What was left out was Scope. C2K giveaway, percentage increases after 9/11 and of course the illustrious "line in the sand" from our now new National prez. Yes, what would we do without ALPA?
Thanks for the good history review. What was left out was Scope. C2K giveaway, percentage increases after 9/11 and of course the illustrious "line in the sand" from our now new National prez. Yes, what would we do without ALPA?
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