Would Delta really suffer from a status quo pilot contract after a NO vote?
http://ir.delta.com/files/Conference...001_t25a0p.pdf
The growth of the company and shareholder returns are the focus of our executive team so they will act prudently to continue the record profits while returning that money to the shareholders.
1. The Delta brand is built on customer service and personal interaction, this suffers if there is labor unrest. A prudent response would be to continue negotiations.
2. 3.B.4. is real and effective. This TA changes this and makes it ineffective in the future. If raises are granted on 12/31/2015 excluding the pilots from those raises, labor relations will suffer. The flight attendants representing 30+% of the non pilot labor force will attempt another union drive around the first of the year which will compound the labor issue. If they get raises, we do too. Once UA and AA book their raises on 1/1/2016 Delta's next non pilot raise will trigger a review and increase.
3. Growing the company is now a question of markets outside the U.S. With a stable industry and sensible capacity management the industry will continue to earn profits. A price war for market share is highly unlikely in the domestic market. The easiest and most efficient way to grow the international business is through JVs and code shares. The future will require our being very careful about these agreements and the production balances. The next step on the growth ladder is to industrialized the company. This means gathering brands that are recognized by the locals in other countries and growing them while associating the brand with Delta. We already have several examples of this: Virgin Atlantic, GOL, Aeromexico which are partly owned by Delta and are turning around their respective companies now generating profits where losses were. The other growth strategy is vertical integration of the supply and distribution chains. This has also occurred with the purchase of Trainer and the bookings migrating to Delta outlets like Delta.com.
The company will continue to grow and develop the brand with or without this deal. The dollars may not increase much, perhaps adding 3% to the first two years of the deal resulting in 11/9/3/3 with the real deal being 11/3/3/3 with the profit sharing give back or the QOL affecting "needs" will be lessened. Delta as a company and a brand has more to lose than gain form not engaging us after the NO vote. This executive team has a track record of success and it will continue. With a $1.7B loss on hedges absorbed this year the marginal increases we are asking for are well within the affordable range. The profits only increase with the hedge losses behind us now.