nerd2009

The initial 15% paycut was to refinance "revolver" debt that NWA needed. So to prevent going into ch11, we gave up $565 million,... ironically, soon after NWA announced plans to build a $565 million terminal C in Detroit. The next 15% paycut paid for the 36 EMB170 for Compass.

sailingfun

It was the worst 12 years in the history of the airline industry. Both Delta and NW filed chapter 11. DALPA produced a result during this process that was far better then any airline filing chapter 11 going back to the sixties. Many airlines ended up gone, others took far longer to recover. Hourly pay rates also don't tell the entire story. There were lump sum payments for claim money and merger money that were outside the money paid on the retirement termination. The rates you speak of in 04 were also a bit of a aberration if you look at the history of pilot raises. There was a huge spike in the wages caused by 3B6 actions by DALPA on the 737N's and 767-400/777.
SWA seems to be the mantra here but absent that spike in 737 wages by Delta they would never have seen the rates they enjoy today. They still have not matched those Delta rates. Had SW management not won a 5 billion dollar gamble on fuel hedges you would not even be mentioning SW now. Its likely that absent those hedges SW would not have the balance sheet they have today and Delta would never have entered chapter 11.
The new contract at Delta puts our pilot block hour costs on like equipment above SW yet they have a superb balance sheet compared to Delta.
The thing not discussed about Delta is that our balance sheet is terrible if you add in the off the books debt. Most of that Debt is retirement obligations Delta has taken on. Delta is using voodoo economics to try and minimize that debt. The pension liability is near 8 billion dollars according to Delta however to come up with that number they are using a 8 percent assumed ROI on the pension funds. The accounting norm is 3.5 percent. Delta's actual return since the merger has been right at zero over 5 years. Using the 3.5 percent accepted rate of return that debt is actually 14 billion. Using zero its far higher. SW has no pension debt. There are lots of things that bother airline employees. Reality often sucks but to lay the problems of the last decade on ALPA is a beyond short sided view of the industry.

Mesabah

Very true, but I also believe that had ALPA not had the skeletons in its closet, (like the TWA debacle, suing other unions to gain leverage for the pilots, trading scope for pay and pension benefits, etc) they would have had a much much strong position going into the last decade. Hindsight is always 20/20 though.

gloopy

So where do we go from here as a company relative to those obligations? Do we try to hang on until inflation kicks in? Do the pension payments include an inflation based COLA? If not, it will resolve itself. Even if it does, if the COLA is the typical 3% or so, it will still resolve itself. If not, is there any other way to reduce exposure until then? Or do you think this is an inevitable return trip to BK?

If the pension obligation is as dire as some are projecting, we are peeing in the wind playing around with profit sharing payouts based on our short sighted capacity sales to the LCC's and foreign airlines when that should be going to fund pensions that could threaten to take the entire company down.

Gomerglideslope

Me too....I don't like red-eyes.