DELTA CUTS JOBS

[triple7]

who will this affect?
delta to cut 7000 jobs

[flyover]

Announcement started at 8:30 am edt. Still listening to it at 9 am. You can hear it at delta.com

[MQAAord]

I was terrified to listen to that webcast this morning, but the job cuts mentioned were clerical, administrative & managerial.

I really expected more substance & details. They'd been working on this 'grand plan' for a year? It took them a YEAR to come up with that?

[flyover]

[ QUOTE ]
I was terrified to listen to that webcast this morning, but the job cuts mentioned were clerical, administrative & managerial.

I really expected more substance & details. They'd been working on this 'grand plan' for a year? It took them a YEAR to come up with that?

[/ QUOTE ]

Well, it was a very general presentation with the details to come out. But my read was that it was pretty earth-shaking. Basically a complete overhaul and realignment of the system with focus on new markets. Elimination of 4 aircraft types. Shuttering DFW (no surprise). Expanding SLC (surprise, although probably all RJ, we'll see) Pay cuts for all and that little comment at the beginning should have made the earth tremble a little bit.

Basically he said if they don't find a way to resolve the pilot early retirement issue by the end of the month, bankruptcy is unavoidable. I can envision a whole lot of pilots starting to fill out retirement paperwork right now.

Then there was new interiors, uniforms, etc. etc. The whole thing is very ambitious and Delta has very little time. So my guess this plan goes forward regardless of whether they are in bk or not. Since they don't really have time for it to "save" them from bk. Now they go to the "stakeholders" and see if they are buying it.

I'll be interested to hear the details that fill in the generalities.

[Tokyo007]

Here is the overview.. bold stuff I find interesting (since i'm in SLC) - this could affect doug in a few ways.

Matthew

(sorry little long)





The Right Airline for the New Era
Delta's Transformation Plan - Key Facts at a Glance

OVERVIEW: The Delta Solution
-- Transformation plan calls for targeting more than $5 billion in annual
cash savings by 2006 (compared to 2002) while simultaneously improving
the customer traveling experience
-- Delta is on track to achieve approximately $2.3 billion of the total
savings target by the end of 2004 - a result of the past 24 months of
Profit Improvement Initiatives (PII).
-- More than 51 percent of the company's network will be restructured by
January 31, 2005 to provide greater choice for customers
-- Improvements to product and services, network and fleet, operational
efficiencies and productivity immediately and over the next 36 months
-- Profit sharing, equity and incentives tied to performance planned in
the face of additional job losses, pay cuts and benefit reductions

Based on the four cornerstones of the Delta Solution - the four ACES
details include:
ACHIEVING VIABILITY
-- Delivering more than $5 billion in additional cash savings by 2006
(compared to 2002)
-- On track to deliver $2.3 billion in savings by the end of this year
(2004) through PII launched in 2002
-- Together with the key initiatives announced today, the requested
$1 billion in pilot savings, a significant expansion of PII, and
contributions from other stakeholders such as lessors, lenders, and
vendors, are intended to deliver the additional savings needed.

CUSTOMER-FOCUSED CULTURE
SIMPLICITY - easier to understand, simpler to use
-- SimpliFares in Cincinnati
-- Making SkyMiles loyalty program easier to understand and awards
simpler to redeem
-- Increase by 15 the cities with kiosk check-in. (81 cities currently
have kiosk check in)
-- Expanding delta.com functionality to include fare search, refund and
reissue transactions. Delta's goal is to migrate 50 percent of its
customer transactions to delta.com by the end of 2005.

COMFORT AND STYLE - inviting cabin interiors with updated and upgraded
features
-- Improving cabin features - leather seats, more comfort, better
lighting
-- First prototype on MD-88 to be flying by mid-September; improvements
to be phased in over next 18 months
-- Continuing two classes of service

FLEXIBILITY - network and fleet customized to the customer with more
flights, better schedules
-- Redesigning Delta's primary hub in Atlanta to add more flights than
any airline has ever flown from any one city while at the same time
reducing congestion
-- Growing Cincinnati and Salt Lake by re-deploying aircraft currently used at Dallas/Ft. Worth
-- Dehubbing Dallas/Fort Worth to retain and build strong competitive service in Atlanta, Cincinnati and Salt Lake City
-- Adding 31 new nonstop flights and 19 additional destinations from key
focus cities
-- Growing Song by initially adding 12 aircraft to its current fleet of
36, beginning late Spring 2005
-- Reducing fleet complexity by retiring a minimum of four fleet types in

EXCEL AT OPERATIONAL PERFORMANCE
-- Unbanking Atlanta hub to increase capacity and reduce congestion
* Adding 81 flights daily and seven new destinations while
decreasing hourly departures and arrivals by approximately 20 per
hour
* A constant flow of arrivals and departures, while reducing
congestion, because of efficiencies built into the system
* Eliminating the peaks and valleys in arrivals and departures and
decreasing the time it takes to turn an aircraft
-- Keeping flight crews together during the day to help the airline and
its crews be more efficient

SUSTAIN PROFITABLE GROWTH
-- Increasing international service: Delta intends to file for new
U.S. - China service
-- Delta will:
* Strengthen secondary hubs
* Build further presence in focus cities
* Improve West Coast through partnerships
* Expand Florida service
* Grow New York/JFK
* Defend Boston

Profit sharing planned in the face of additional job losses, pay cuts and
benefit reductions
-- Reduction of between 6,000 and 7,000 jobs over 18 months -- 15 percent reduction in administrative overhead, including management
reductions, to be announced by the end of September, on top of 41
percent cut in administrative/management costs since 2002 (inclusive
of personnel reduction savings)
-- Reductions to compensation throughout the company to be announced at
the end of September and implemented at a later date
-- Increased employee contribution to health care costs
-- Employee Reward Program
* Includes a combination of equity, profit sharing and incentive
payouts tied to company performance

NETWORK SPECIFICS
ATL Schedule Total Number of Mainline Delta Seats per
Flights Nonstop Flights Connection Departure
Destinations Flights (DL &DCI)
Current* 970 186 625 345 126
Feb. 2005 1,051 193 688 363 126

DFW Schedule Total Number of Mainline Delta Seats per
Flights Nonstop Flights Connection Departure
Destinations Flights (DL &DCI)
Current* 254 69 52 202 72
Feb. 2005 21 3 21 0 156

CVG Schedule Total Number of Mainline Delta Seats per
Flights Nonstop Flights Connection Departure
Destinations Flights (DL &DCI)
Current* 590 135 155 435 73
Feb. 2005 619 138 156 463 76

SLC Schedule Total Number of Mainline Delta Seats per
Flights Nonstop Flights Connection Departure
Destinations Flights (DL &DCI)
Current* 318 67 92 226 79
Feb. 2005 376 80 113 263 81

*Current = September 2004 schedule

[Tokyo007]

what I don't get is salt lake city airport is full from my viewpoint in capacity.. plus retiring 4 types of aircraft (yikes!) that seems like they're going to turn Delta into a Southwest type operation with one type of general aircraft and fast turnaround gate times to take in these extra flights...

Matthew
(amazing news..)

[flyover]

[ QUOTE ]
what I don't get is salt lake city airport is full from my viewpoint in capacity.. plus retiring 4 types of aircraft (yikes!) that seems like they're going to turn Delta into a Southwest type operation with one type of general aircraft and fast turnaround gate times to take in these extra flights...

Matthew
(amazing news..)

[/ QUOTE ]

I think his comments include the RJ operation. So you could see the ATRs going for example. Other likely choices, 737-200, MD-90, 737-300. All small categories. Sitll leaves them with a mix of types.

More emphasis on international and long haul, but you are probably right that they are looking for fast turns. Without connection banks, the need to leave airplanes on the ground in ATL, for example, for an hour or more isn't there.

[Tokyo007]

oh yeah you're probably right on the different types I forgot about that - just amazing how what a turnaround this plan was for salt lake city. Must have been used as a negotiation tactic.. I wonder if they truly can avoid bankcruptcy in time with the cash flow burning at the rate it is.

Matthew

[aviategw]

All right, I'll ask: Pilots and FAs have negotiated contracts negotiated from their respective unions, right? Can Delta force a pay cut on the pilots and FAs?

How will the rest of Delta's workforce receive a cut in pay when the flightcrew does not receive a corresponding cut?

Also, how realistic is it to expect a better customer experience if there are fewer gate agents, CSAa, and the like to provide it? This part sounds like wishful thinking.

[Minnesota_Flyer]

[ QUOTE ]
All right, I'll ask: Pilots and FAs have negotiated contracts negotiated from their respective unions, right? Can Delta force a pay cut on the pilots and FAs?

How will the rest of Delta's workforce receive a cut in pay when the flightcrew does not receive a corresponding cut?

Also, how realistic is it to expect a better customer experience if there are fewer gate agents, CSAa, and the like to provide it? This part sounds like wishful thinking.

[/ QUOTE ]

The airline cannot force a pay cut on unionized employees unless it files for bankruptcy (or possibly during negotiation of an expired labor contract if the parties have reached an impasse).

They probably won't be happy. But the flight crews have taken cuts since 9/11.

It's not realistic.

MF

[kellwolf]

Okay, I read this one and had a "HUH?" moment.....

Reduce the congestion at ATL, but add flights.

The ONLY way I can see them doing this is to blow the whole hub and spoke pulse operation. SWA at MCO is up to about ten flights per GATE now. We can head over to United and set our watch by when the ramp guys are all sitting down. It's about every hour or every 45 minutes. A hub network is designed to have all of their flights on the ground at pretty much the same time so the pax can connect. I noticed they're adding like 19 non-stops to destinations, so those are always good to see. What I wasn't happen to see is that they are adding a/c to Song. Is it actually gonna come out of Song's budget now, or is it still gonna leach off of mainline?

[flyover]

[ QUOTE ]
Also, how realistic is it to expect a better customer experience if there are fewer gate agents, CSAa, and the like to provide it? This part sounds like wishful thinking.

[/ QUOTE ]

Not very realistic. You have to realize this plan is coming out at this time because they have no choice. Their old plan is failing spectacuarly. They don't have enough time to avoid bankruptcy unless the major players agree. So if they don't, this plan will get implemented in bk court.

[kellwolf]

[ QUOTE ]
Also, how realistic is it to expect a better customer experience if there are fewer gate agents, CSAa, and the like to provide it? This part sounds like wishful thinking.

[/ QUOTE ]

I agree with flyover on this one, it's not very realistic. They've already sacked most of their CSA/rampers/customer contact positions. While an automated kiosk will get you there faster, there are some VERY computer illiterate people in airports today. What happens if something goes wrong, and they accidentally print out a ticket to San Fran when they want to go to CLE? On the flip side, take out the customer contact, and you don't have angry letters for BAD customer service since there was none to begin with.

The best thing they can do is train the CSAs they have the best ways they can as far as helping customers and hope that it sticks. Unfortunately, most of the customer contact people they have are long time DAL employees that have seen their company getting flushed down the tubes. The question is how hard are they willing to work for their current management before they start looking for jobs elsewhere?

[MQAAord]

[ QUOTE ]
All right, I'll ask: Pilots and FAs have negotiated contracts negotiated from their respective unions, right? Can Delta force a pay cut on the pilots and FAs?


[/ QUOTE ]

Only the pilots have a negotiated union contract with Delta. The Delta F/As are non-union. The only other work group at Delta that is unionized besides the pilots are the dispatchers.


[ QUOTE ]
How will the rest of Delta's workforce receive a cut in pay when the flightcrew does not receive a corresponding cut?


[/ QUOTE ]

The Delta pilots have offered substantial pay & work rule concessions. It's up to company to accept them.

[ QUOTE ]
Also, how realistic is it to expect a better customer experience if there are fewer gate agents, CSAa, and the like to provide it? This part sounds like wishful thinking.


[/ QUOTE ]

It is. (Wishful thinking)

[jtrain609]

Let's make sure I have this right: Delta has created a new business plan and is saying to the pilots either they will provide the cuts outlined in the business plan, or they'll force the courts to enforce those same (or worse) cuts.

Is that legal? It sounds like going into bankruptcy specifically to get pay cuts outta the pilot group, circumventing the union in the process.

Or am I off base here?

[kellwolf]

[ QUOTE ]
Is that legal? It sounds like going into bankruptcy specifically to get pay cuts outta the pilot group, circumventing the union in the process.

[/ QUOTE ]


Not sure, ask United......

[Minnesota_Flyer]

[ QUOTE ]
Let's make sure I have this right: Delta has created a new business plan and is saying to the pilots either they will provide the cuts outlined in the business plan, or they'll force the courts to enforce those same (or worse) cuts.

Is that legal? It sounds like going into bankruptcy specifically to get pay cuts outta the pilot group, circumventing the union in the process.

Or am I off base here?

[/ QUOTE ]

Delta can't (and won't) go into bankruptcy on a whim. You have to be in bad financial shape to qualify for bankruptcy (unable to pay your bills as they come due or about to reach that state), and bankruptcy usually will wipe out all equity stakes in the company (in other words, most stock shares become worthless or nearly so).

Once in bankrupcy, however, the bankruptcy laws trump basically all other laws. The bankruptcy court has the authority to make binding changes to the company's debts, contracts, etc., and the bankrupcy court can change (or even eviscerate) collective bargaining agreements. Note, though, that Delta doesn't necessarily get its way in the bankruptcy court. The court has to approve its reorganization plan.

Basically, Delta is trying to indicate that it is serious about its financial condition and about its requests for labor concessions. The labor group(s) have to decide whether they are better off taking the concessions or taking their chances in bankruptcy court.

MF

[aviategw]

What is the crisis with pilot retirements that they are referring to?

Another neophyte/naiive question: If a pilot is in the pension plan, and the company becomes bankrupt, does that former employee lose all pension benefits?


[img]/ubbthreads/images/graemlins/banghead.gif[/img]

[ramprat2035]

I read that they are cutting the number of flights from DFW down to about 20 from over 200. Now these are not clerical jobs. Many people will be out of work or forced to move in order to stay employed. I cannot wait for the first bad weather day when more commuters will be stuck comming to either CVG or SLC.

I worked for ASA and my thoughts are with all my former coworkers.

[Minnesota_Flyer]

[ QUOTE ]
Another neophyte/naiive question: If a pilot is in the pension plan, and the company becomes bankrupt, does that former employee lose all pension benefits?

[/ QUOTE ]

It depends on a large number of variables (what type of pension plan, is it funded, unfunded, underfunded, etc.). Short answer: it is very possible for employees and former employees to lose some or all pension benefits in the event of a bankruptcy. That's why you hear about pilots at Delta (and other carriers) taking early retirement and getting their money out of the plan before there's a bankruptcy.

MF

[flyover]

[ QUOTE ]
Let's make sure I have this right: Delta has created a new business plan and is saying to the pilots either they will provide the cuts outlined in the business plan, or they'll force the courts to enforce those same (or worse) cuts.

Is that legal? It sounds like going into bankruptcy specifically to get pay cuts outta the pilot group, circumventing the union in the process.

Or am I off base here?

[/ QUOTE ]

Delta is bankrupt now for all practical purposes. They must either reorganize like AMR did, getting concessions from creditors and employees out of bankruptcy court, or they must do it in bankruptcy court. There is no other option.

Now the big decision for all the "stakeholders" is whether they want what the company is offering now, or do they want to take their chances in bk court.

As someone else mentioned, the difference is bk court wipes out the stockholders, which Delta management does not want to do. But some creditors may prefer that if the medicine Delta offers is too bitter.

There are no eassy answers.

[Kristie]

[ QUOTE ]
Okay, I read this one and had a "HUH?" moment.....

Reduce the congestion at ATL, but add flights.

The ONLY way I can see them doing this is to blow the whole hub and spoke pulse operation. SWA at MCO is up to about ten flights per GATE now. We can head over to United and set our watch by when the ramp guys are all sitting down. It's about every hour or every 45 minutes. A hub network is designed to have all of their flights on the ground at pretty much the same time so the pax can connect. I noticed they're adding like 19 non-stops to destinations, so those are always good to see. What I wasn't happen to see is that they are adding a/c to Song. Is it actually gonna come out of Song's budget now, or is it still gonna leach off of mainline?

[/ QUOTE ]sounds to me like it's leaching off the mainline, but that's IMO...

they didn't say much about the regionals or delta shuttle though which is strange - wonder what will come up with that!

also agree with your ATL statement... ATL is already way congested and making it into "Redesigning Delta's primary hub in Atlanta to add more flights than any airline has ever flown from any one city while at the same time reducing congestion" doesn't sound healthy from a time efficient standpoint....

If they retire the MD series, I wonder why they'd start bringing out MD's with leather seats and upgraded interiors... so i'm thinking they'd probably keep the MD's around.. but it does sound as though they're making the system into a LCC type system with int'l addon...

based on today's new, a lot of the early retiree's may opt out in which case means that DL will have to bring in more of the furloughee's and go thru training etc.. I didn't see any of that converstion in there at all, just the talk about early retirements. I'd expect that to hit the fan pretty quickly here!

I always thought that an airline closed when it filed bankruptcy until it started happening to the airlines. When does an airline close?

[flyover]

[ QUOTE ]
I always thought that an airline closed when it filed bankruptcy until it started happening to the airlines. When does an airline close?

[/ QUOTE ]

After deregulation Braniff was one of the first airlines to declare bankrutcy. They just shut it down, as the conventional wisdom back then was that the public would not fly on a bankrupt airline.

Frank Lorenzo changed all that with Continental. Declared bk and just kept flying. When it worked the thinking was forever changed.

After Continental the bankrutcy laws were changed to make it much harder to use bk for other agendas besides debt.

Now airlines typically try to enter bk with enough cash to keep operating and reorganize. The public seems oblivious to whether their airline of choice is bankrupt or not.

[aviategw]

So, the pilots want to retire so as to get their pension benefits?

I don't quite get this...Do the pilots get a choice to take their pension as a reduced lump sum if they retire early? Thus depleting the pension fund prematurely? Is the pilot's retirement based off of some sort of percentage of the highest average of their earnings? I'm speculating here...

What is the pilot retirement crisis?

Also, I didn't really hear anything about all of the 'regional' Delta connection carriers. If it's not broke, don't fix it?

[img]/ubbthreads/images/graemlins/confused.gif[/img]