Council 1 Update.
06-02-2016, 01:36 PM
#1
Gets Weekends Off
Thread Starter
Joined APC: Oct 2009
Posts: 3,108
Council 1 Update.
June 2, 2016
(pdf attached as a viewing option)
Fellow Council 1 Pilots,
Summer is here! Amongst family plans, fishing trips, and yardwork, you will undoubtedly spend a large amount of time this summer in the cockpit generating revenue for Delta Air Lines. We wanted to share our perspective of the recent financial news shared in Delta’s 8K report filed on May 16 with the SEC.
What did it say?
· Delta resides in the top 10% of S&P Industrial corporations (not just airlines) on free cash flow and return on invested capital metrics.
· Delta now maintains a 10% revenue premium to our peers.
·
Taken from the 8k filing
Delta’s operating margin framework for the 2016–2018 period is projected at 17–19%.
· Delta plans to maintain an ongoing operating cash flow of $8–9B (yes, billion) per year, with $4.5–5.5B of free cash flow (money left over after all planned capital expenditures, debt repayment, and discretionary items are paid for).
· Delta plans to return over 70% of the free cash flow to investors via dividend increases and stock repurchase programs. This equals $3.15–$3.85 billion per year repurchasing stock and paying dividends.
***Remember—the failed TA2015 had an advertised yearly value just over $300 million***
· Adjusted net debt of $4B by 2020.
· In 2009 interest expenses on debt was $1.3B. By 2020 it will be $200M—a $1.1B annual savings from interest expense alone!
· Target for nonfuel cost per seat mile growth is 2% due to anticipated productivity increases.
· Ongoing pension expenses will decline at an accelerating pace until 2019, in which the pension fund will become a source of income for Delta.
What’s going on here?
We are witnessing a “new normal” in the airline industry. Delta has positioned themselves at the top of the industry (by a 10% margin) in financial performance. Let us not forget that the Delta and Northwest pilot bankruptcy concessions have contributed in excess of $15B toward the bottom line since 2005, and it would take an increase of at least $1.4B annually to restore our pilot contract to historical prebankruptcy value. Delta pilots remain the only Delta employee group that has not seen their pay return to prebankruptcy levels. Delta pilots are currently 18% below the 2004 high-water mark in hourly wage, and if corrected for inflation the number is over 35%.
Meanwhile, many other pilot groups have been receiving gains to share in their company’s recent success.
· United pilots received a 16% raise on 1/1/16, and also secured a “me too” clause that will provide for raises matching Delta’s next contract. They attained this without trading their profit sharing or horse-trading their contract. We are currently 14–19% behind United pay scales, depending on seat.
· American pilots are also double-digits ahead of Delta pay scales, and just received a new profit-sharing program outside Section 6, as a goodwill gesture from management.
· A Delta 767 pilot would require a 27% pay raise to match their peer at FedEx, who also still has a $130k/year pension, six-hour minimum vacation/training/work day, no PBS, and nearly double the value of our vacation. For perspective—FedEx margin in 2015 was about 4%.
Left Behind . . .
The reality is that Delta pilots are living in a “different solar system”—as Captain Dickson recently stated during a meeting with line check airman. We are being left behind our industry peers at an alarming rate. We are also being left behind our coworker peers, as they have received perfectly timed raises avoiding “me too” triggers contained in Section 3.B.4 of our contract. We are being left behind our own management who receives large amounts of stock as compensation, and enjoy an extremely generous “Management Incentive Program” that is rumored to pay bonuses on top of their salary that eclipse our profit-sharing payouts by several multiples. The aggressive nature of the company stock repurchase program has a direct benefit to our management, who capitalize on the inflated stock price when they “cash out”—as our former CEO Richard Anderson recently did—to the tune of over $32.6M in one transaction on May 17 following the market moving news delivered in the 8k the day prior.
Your Council 1 reps stand ready to embrace this success! We are thrilled to be working for a company that is doing so well. At the same time, we wonder why we have been forced to engage the services of the National Mediation Board to obtain a contract appropriate for the current rising marketplace for pilots, and our company’s overwhelming success?
Our Perspective . . .
We have received questions from pilots concerned about the latest chairman’s letter and the concept that we must help the company with “legitimate operational needs.” We believe our brothers and sisters at United have shown us a clear strategy leading to a strong ratification. Their agreement contained clean raises, no profit-sharing trade, and minimal modifications to the rest of their contract. In light of the last decade living under concessionary contracts, we feel it is inappropriate to further degrade the Delta pilot contract in the current financial environment.
Delta does not “need” our concessions. They clearly have the means to commit the capital required to fix the training and staffing pipeline. They could have been proactive in their staffing approach, and listened to ALPA, Flight Ops, and Training in 2013, who all advised them to begin hiring much sooner. They could end this madness overnight with a clean, concession-free, industry-leading contract and get the Delta pilots back 110% onboard and focused on making Delta the greatest airline in history. They could end this contract fiasco immediately, once again making Delta the airline of choice to the prospective pilot in an increasingly competitive pilot marketplace. They could put to rest the frustration many of you feel on an ongoing basis as we continue to fall behind. But, unfortunately up to this point, they are choosing a different path. They are asking yet again for Delta pilots to tighten our belts, put our backpacks on, and work even harder to fund their corporate success and cover for the lack of planning by properly staffing our airline. This is unacceptable.
We have a reengagement proposal on the table. We believe it is an extremely fair position, but is quickly becoming obsolete and may be nearing the end of its shelf life. Delta management continues to ignore our proposal and reward themselves and our shareholders with nearly $4B per year. Delta pilots do not deserve to be asked to yet again make concessions in trade for a pay raise. This is corporate greed that has been enabled by a failed “proactive engagement” strategy. Your Council 1 reps will not participate in the continued decline of the Delta pilot contract.
An open question to our senior management: Have they been asked to trade their benefits and other items provided by their contracts to fund their eye-watering raises? Why must we?
Make no mistake—we will consider a deal in its entirety before fully judging it—but the Delta pilots have been very clear that they expect a contract that steps forward, not backward, in a vast majority of sections. This one must be done right and, based on your feedback, we are willing to wait!
At next week’s regular MEC meeting in NYC, we will have an opportunity to address ALPA president Captain Tim Canoll, and we ask that you forward any questions or concerns you would like us to present to him on your behalf. We stand committed to follow your feedback via phone calls, e-mails, text messages, and ongoing polling. Please continue to share your thoughts and stay tuned for an update following next week’s meeting.
Summer is here. Now is the time for Delta management to step up to the plate and reward the pilots with the contract they have earned. Please continue to show your support for the negotiators and your brothers and sisters on the line by displaying your orange lanyards and ALPA pins. Thank you for staying engaged.
Fraternally,
Jon, Eric, and Eric
Jon Lewis, Captain Rep
Chairman
[email protected]
715-896-1963
Eric Hall, F/O Rep
Vice Chairman
[email protected]
612-805-5379
Eric Criswell
Secretary-Treasurer
[email protected]
612-251-3521
Air Line Pilots Association, International
http://www.alpa.org
(pdf attached as a viewing option)
Fellow Council 1 Pilots,
Summer is here! Amongst family plans, fishing trips, and yardwork, you will undoubtedly spend a large amount of time this summer in the cockpit generating revenue for Delta Air Lines. We wanted to share our perspective of the recent financial news shared in Delta’s 8K report filed on May 16 with the SEC.
What did it say?
· Delta resides in the top 10% of S&P Industrial corporations (not just airlines) on free cash flow and return on invested capital metrics.
· Delta now maintains a 10% revenue premium to our peers.
·
Taken from the 8k filing
Delta’s operating margin framework for the 2016–2018 period is projected at 17–19%.
· Delta plans to maintain an ongoing operating cash flow of $8–9B (yes, billion) per year, with $4.5–5.5B of free cash flow (money left over after all planned capital expenditures, debt repayment, and discretionary items are paid for).
· Delta plans to return over 70% of the free cash flow to investors via dividend increases and stock repurchase programs. This equals $3.15–$3.85 billion per year repurchasing stock and paying dividends.
***Remember—the failed TA2015 had an advertised yearly value just over $300 million***
· Adjusted net debt of $4B by 2020.
· In 2009 interest expenses on debt was $1.3B. By 2020 it will be $200M—a $1.1B annual savings from interest expense alone!
· Target for nonfuel cost per seat mile growth is 2% due to anticipated productivity increases.
· Ongoing pension expenses will decline at an accelerating pace until 2019, in which the pension fund will become a source of income for Delta.
What’s going on here?
We are witnessing a “new normal” in the airline industry. Delta has positioned themselves at the top of the industry (by a 10% margin) in financial performance. Let us not forget that the Delta and Northwest pilot bankruptcy concessions have contributed in excess of $15B toward the bottom line since 2005, and it would take an increase of at least $1.4B annually to restore our pilot contract to historical prebankruptcy value. Delta pilots remain the only Delta employee group that has not seen their pay return to prebankruptcy levels. Delta pilots are currently 18% below the 2004 high-water mark in hourly wage, and if corrected for inflation the number is over 35%.
Meanwhile, many other pilot groups have been receiving gains to share in their company’s recent success.
· United pilots received a 16% raise on 1/1/16, and also secured a “me too” clause that will provide for raises matching Delta’s next contract. They attained this without trading their profit sharing or horse-trading their contract. We are currently 14–19% behind United pay scales, depending on seat.
· American pilots are also double-digits ahead of Delta pay scales, and just received a new profit-sharing program outside Section 6, as a goodwill gesture from management.
· A Delta 767 pilot would require a 27% pay raise to match their peer at FedEx, who also still has a $130k/year pension, six-hour minimum vacation/training/work day, no PBS, and nearly double the value of our vacation. For perspective—FedEx margin in 2015 was about 4%.
Left Behind . . .
The reality is that Delta pilots are living in a “different solar system”—as Captain Dickson recently stated during a meeting with line check airman. We are being left behind our industry peers at an alarming rate. We are also being left behind our coworker peers, as they have received perfectly timed raises avoiding “me too” triggers contained in Section 3.B.4 of our contract. We are being left behind our own management who receives large amounts of stock as compensation, and enjoy an extremely generous “Management Incentive Program” that is rumored to pay bonuses on top of their salary that eclipse our profit-sharing payouts by several multiples. The aggressive nature of the company stock repurchase program has a direct benefit to our management, who capitalize on the inflated stock price when they “cash out”—as our former CEO Richard Anderson recently did—to the tune of over $32.6M in one transaction on May 17 following the market moving news delivered in the 8k the day prior.
Your Council 1 reps stand ready to embrace this success! We are thrilled to be working for a company that is doing so well. At the same time, we wonder why we have been forced to engage the services of the National Mediation Board to obtain a contract appropriate for the current rising marketplace for pilots, and our company’s overwhelming success?
Our Perspective . . .
We have received questions from pilots concerned about the latest chairman’s letter and the concept that we must help the company with “legitimate operational needs.” We believe our brothers and sisters at United have shown us a clear strategy leading to a strong ratification. Their agreement contained clean raises, no profit-sharing trade, and minimal modifications to the rest of their contract. In light of the last decade living under concessionary contracts, we feel it is inappropriate to further degrade the Delta pilot contract in the current financial environment.
Delta does not “need” our concessions. They clearly have the means to commit the capital required to fix the training and staffing pipeline. They could have been proactive in their staffing approach, and listened to ALPA, Flight Ops, and Training in 2013, who all advised them to begin hiring much sooner. They could end this madness overnight with a clean, concession-free, industry-leading contract and get the Delta pilots back 110% onboard and focused on making Delta the greatest airline in history. They could end this contract fiasco immediately, once again making Delta the airline of choice to the prospective pilot in an increasingly competitive pilot marketplace. They could put to rest the frustration many of you feel on an ongoing basis as we continue to fall behind. But, unfortunately up to this point, they are choosing a different path. They are asking yet again for Delta pilots to tighten our belts, put our backpacks on, and work even harder to fund their corporate success and cover for the lack of planning by properly staffing our airline. This is unacceptable.
We have a reengagement proposal on the table. We believe it is an extremely fair position, but is quickly becoming obsolete and may be nearing the end of its shelf life. Delta management continues to ignore our proposal and reward themselves and our shareholders with nearly $4B per year. Delta pilots do not deserve to be asked to yet again make concessions in trade for a pay raise. This is corporate greed that has been enabled by a failed “proactive engagement” strategy. Your Council 1 reps will not participate in the continued decline of the Delta pilot contract.
An open question to our senior management: Have they been asked to trade their benefits and other items provided by their contracts to fund their eye-watering raises? Why must we?
Make no mistake—we will consider a deal in its entirety before fully judging it—but the Delta pilots have been very clear that they expect a contract that steps forward, not backward, in a vast majority of sections. This one must be done right and, based on your feedback, we are willing to wait!
At next week’s regular MEC meeting in NYC, we will have an opportunity to address ALPA president Captain Tim Canoll, and we ask that you forward any questions or concerns you would like us to present to him on your behalf. We stand committed to follow your feedback via phone calls, e-mails, text messages, and ongoing polling. Please continue to share your thoughts and stay tuned for an update following next week’s meeting.
Summer is here. Now is the time for Delta management to step up to the plate and reward the pilots with the contract they have earned. Please continue to show your support for the negotiators and your brothers and sisters on the line by displaying your orange lanyards and ALPA pins. Thank you for staying engaged.
Fraternally,
Jon, Eric, and Eric
Jon Lewis, Captain Rep
Chairman
[email protected]
715-896-1963
Eric Hall, F/O Rep
Vice Chairman
[email protected]
612-805-5379
Eric Criswell
Secretary-Treasurer
[email protected]
612-251-3521
Air Line Pilots Association, International
http://www.alpa.org
06-03-2016, 05:42 AM
#4
Runs with scissors
Joined APC: Dec 2009
Position: Going to hell in a bucket, but enjoying the ride .
Posts: 7,756
I'd like to see something similar from my Reps, ATL Council 44. I did read and respond to JJ's 5 questions, but I'm hearing rumors he's being grilled for asking for input?! That's just wrong.
BTW, is Council 1 MSP or NYC? I wish they would list the base, I can't keep up with all the different council numbers.
BTW, is Council 1 MSP or NYC? I wish they would list the base, I can't keep up with all the different council numbers.
06-03-2016, 05:53 AM
#6
Runs with scissors
Joined APC: Dec 2009
Position: Going to hell in a bucket, but enjoying the ride .
Posts: 7,756
06-03-2016, 07:42 AM
#7
Banned
Joined APC: Oct 2012
Posts: 335
It's wrong to be grilled for seeking input from your council, but that is not what Jimmy did, he sought input from only those on his private email list while not giving the majority of his council an equal opportunity to provide that input. Jimmy deserved a spanking for that, I hope he learned that he is suppose to represent his entire council, not his privately selected few.
06-03-2016, 07:54 AM
#8
Banned
Joined APC: Oct 2012
Posts: 335
I support John Malone and I hope that my reps do the same. John knows how to get us to a deal the pilots will overwhelmingly support. It's time to get serious.
"Negotiations, by their very nature and definition, involve an exchange between two parties."
"We see significant opportunities to leverage changes the company needs into changes we need that far outweigh any real or perceived negatives. The question becomes - does addressing a legitimate operational need in exchange for items addressing our own needs deserve the label “concessions”?"
"Here’s what I promise – your Negotiating Committee, under the direction and oversight of your MEC, will carefully listen to management’s proposals, determine if the corporation has legitimate needs and craft an agreement acceptable to management and embraced by the pilot group."
"Negotiations, by their very nature and definition, involve an exchange between two parties."
"We see significant opportunities to leverage changes the company needs into changes we need that far outweigh any real or perceived negatives. The question becomes - does addressing a legitimate operational need in exchange for items addressing our own needs deserve the label “concessions”?"
"Here’s what I promise – your Negotiating Committee, under the direction and oversight of your MEC, will carefully listen to management’s proposals, determine if the corporation has legitimate needs and craft an agreement acceptable to management and embraced by the pilot group."
06-03-2016, 08:31 AM
#9
Gets Weekends Off
Joined APC: Apr 2007
Position: Flying the SEC
Posts: 2,350
The question becomes - does addressing a legitimate operational need in exchange for items addressing our own needs deserve the label “concessions”?"
HELL YES!! Those "legitimate operational needs are do to mgt's own screw ups. Not my job to fix them. Why should I suffer to make their job easier? A few pieces of silver is not reason enough to make me have to work more to make that silver.
HELL YES!! Those "legitimate operational needs are do to mgt's own screw ups. Not my job to fix them. Why should I suffer to make their job easier? A few pieces of silver is not reason enough to make me have to work more to make that silver.
06-03-2016, 08:46 AM
#10
Gets Weekends Off
Joined APC: Mar 2015
Position: stake holder ir.delta.com
Posts: 10,571
United...mid-contract...no concessions...industry leading pay rates.
American...mid-contract...in response to a letter from union leadership...not in a negotiation at all...5% profit sharing.
Delta...section 6...quick deal filled with concessions...temporarily circumvents pay raises...uses accounting changes to lessen profit sharing...slow plays negotiations...TBD.
Who values their employees and their moral?
American...mid-contract...in response to a letter from union leadership...not in a negotiation at all...5% profit sharing.
Delta...section 6...quick deal filled with concessions...temporarily circumvents pay raises...uses accounting changes to lessen profit sharing...slow plays negotiations...TBD.
Who values their employees and their moral?
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