And it begins.....

Kristie

Mama Bear....
Staff member
Airlines in Turmoil
UAL's Machinists Back Pact; Delta Seeks Pay Cuts for Pilots
By NICOLE HARRIS and SUSAN CAREY; Staff Reporters of THE WALL STREET
JOURNAL

As airlines suffer steep losses amid a sharp downturn in passenger traffic, UAL Corp.'s United Airlines won approval from the last of its five unions to sharply reduce its labor costs, and Delta Air Lines proposed a 22% pay cut for its pilots.

Ratification of concessions by United ground workers represented by the International Association of Machinists union means the country's second-largest airline now has agreements with all its unions for a total $2.5 billion in annual labor-cost savings. The move clears a big hurdle as UAL seeks to negotiate a successful Chapter 11 reorganization with its creditors. The bankruptcy-court judge Wednesday approved the new labor pacts.

Meanwhile, Atlanta-based Delta sought savings from its pilots to remain competitive with big rivals. Last week, AMR Corp.'s American Airlines, the No. 1 carrier, agreed with its unions to cut $1.8 billion in annual costs in order to head off a bankruptcy-court filing.

In addition to the pay cut for pilots, Delta is proposing, among other things, to rescind two 4.5% wage increases that take place today and in May 2004.

The Air Line Pilots Association, which represents more than 9,000 pilots, said it will consider the proposal, but cautioned that, if it negotiates concessions, it wants to share in any additional profits the airline might generate.

With the highest-paid pilots in the industry, Delta has been under increasing pressure to reduce its labor expenses. Like the other airlines, Delta faces huge financial losses stemming from reduced traffic due to terrorism fears, the slow economy and high costs relative to discount
carriers.

Delta recently reported a $466 million first-quarter loss on revenue of $3.16 billion. The company's first-quarter salary and related costs of $1.63 billion amounted to nearly 52% of revenue.

<font color="red"> "We are rapidly eroding our financial base, and have just about exhausted our ability to generate additional liquidity," Joe Kolshak, Delta's senior vice president of flight operations, said in a message to Delta pilots. He added that the nation's No. 3 carrier is financing operations with "debt that will be a drag on the business for years to come."</font>

<font color="blue"> hmmm.. why would that be? maybe.... uhhh... bonus is the correct phrase.. or pension security... or how bout pay increase??? Don't make your employees pay for your mistakes - put the money back into the pot....and you might keep "some" of your employees loyal </font>

Mr. Kolshak said that even with the lower pay rates requested, Delta's pilots would still be paid as much as 28% more than those at American and as much as 13% more than United's pilots.

Jamie Baker, an airline analyst at J.P. Morgan, estimated the proposed 22% pay reduction would save Delta about $375 million in the first year, a far cry from the bigger savings at rival carriers. He called the proposal "uniquely unambitious."

Airline-pilot pay rates vary widely depending on type of aircraft and a pilot's years of experience. Delta pays a 12-year Boeing 757 captain $244.97 an hour; Northwest Airlines pays the same pilot $208.49 an hour, while Continental Airlines pays $178.66. After the recent concessions, the
same pilot is paid $169.79 an hour at United and $149.68 at American.

Delta's pilots aren't contractually bound to open their contract until May 2005. The union has been conducting its own analysis of the airline's finances, and the findings are to be presented to the union's governing body May 5.

While Delta has reported a weakening financial position, it is seen as stronger than either American or United, and that could make it more difficult to wring stiff concessions out of Delta's pilots.

Analysts expect Delta also to reduce expenses from other work groups. Delta has more flexibility than other airlines in this regard; because pilots are Delta's only major unionized workers group, the airline can unilaterally cut pay and benefits of other workers without lengthy negotiations with unions.

Delta is also proposing a second phase of pilot negotiations that essentially asks the union to open up the contract to address a broad range of issues, including work rules and benefits.

UAL, based in Chicago, said it also is on track to cut $1 billion in nonlabor expenses from its operations and gain another $500 million in annual savings through renegotiating aircraft lease and mortgage rates. UAL has sketched out a restructuring plan to its unions and creditors'
committee. It hopes to win approval from creditors and the bankruptcy judge later this year. UAL also must focus on the challenge of recapitalizing the company, possibly through attracting private-equity investors and raising new debt financing with or without the help of a government loan guarantee.

The Machinists concessions will help United "avoid liquidation," said Scotty Ford, president of the mechanics group. "The problems and solutions of the airline's latest crisis go far beyond labor costs, but immediate action was needed to ensure the survival of this airline."

United's pilots, dispatchers and meteorologists earlier agreed to savings, and cost reductions were imposed on salaried workers.

Write to Nicole Harris at nicole.harris@wsj.com and Susan Carey at
susan.carey@wsj.com
<font color="red"> </font>
 

pilot602

If specified, this will replace the title that
[ QUOTE ]
"We are rapidly eroding our financial base, and have just about exhausted our ability to generate additional liquidity," Joe Kolshak, Delta's senior vice president of flight operations, said in a message to Delta pilots. He added that the nation's No. 3 carrier is financing operations with "debt that will be a drag on the business for years to come."

[/ QUOTE ]

Translates to ...

"Ahh, yeah, so we want to take from your (the pilot's) pockets and put into ours (senior execs). Um, you, yeah see, you need to sacrifice in the name of team spirit so we can continue to give 200% pay increases to our CEO, fund and secure our executive pension plans and generally keep our execs in 'the good life' regardless of the fact we don't know our a$$es from the proverbial 'hole in the ground' as we continue to allow our company to post $1+ billion losses two years running. Thanks guys (pilots) we owe ya one! Um, yeah and don't let the door hit you in the ass on the way out!"

- what Joe Kolshak, Delta's senior vice president of flight operations, really said.
 

E_Dawg

Moderator
[ QUOTE ]
Still Delta continues to pump money into Song. First reform the mainline carrier, then consider a subsidary.

[/ QUOTE ]

HEY! That reminds me of a certain OTHER 'small' issue; I don't want to give names, but the initials are U.S.A.

(ducks for cover)

Back on topic; How easy it seems to be to publicly blame the visible parts of the airlines (Joe Pilot, FAs, and Bob the ramp agent) for the troubles.

Now for my question(s): What do you (everyone) suggest the airlines do? What proportion of total cost are labor, fuel, management, etc?
 

Derg

Cap, Roci
Staff member
Phuck the Wall Street Journal.

I've started to realize that if they cover mutual funds and the stock market as poorly as they report the airlines, I'd better divest myself and start buying gold!
 

aloft

New Member
Why's everyone acting so surprised? Delta management is finally on board with "United+1%".
 

cointyro

New Member
Capitalism is a b*tch like this.

As long as people demand cheaper and/or fewer airline tickets and management can get the unions to agree to concessions, labor compensation will be driven lower.

Is there any way that DALPA can hold the line? Or would that just make Delta say "OK we'll go Ch. 7 and screw you pilots in reorg?"

I hope Doug and Kristie remains safe and as low-stressed as possible through this all until the next econ upswing.
 

Kristie

Mama Bear....
Staff member
[ QUOTE ]
Not suprised; just dissapointed / frustrated.


[/ QUOTE ]

same here.. quite disappointed really...we were wondering when delta would try to pull this little stunt...

we're hoping - actually the pilots are demanding, kicking and screaming (after talking to doug tonight) - that the union holds the line...and considering that Delta has over 2.4 BILLION + some... in CASH reserves ... they shouldn't even be asking for concessions... the only reason their doing this is because the war is officially declared over and if they don't, they'll lose that bargaining power... sad.. just really sad for them to even contemplate such a feat...

actually, in a sense, i already find the union in the wrong for even looking into accepting concessions... they should know better than to even agree to look at the financials to see if the pilots need to agree to a pay drop... or at least step up to the plate and tell the uppers that they need to fulfill their end and give back the bonus's, pensions and pay raise, take a decrease in pay themselves - then ask the employees for concessions... know what i mean (especially after what we've been seeing the past few months)?

I'm thinking if the union fails to properly represent the pilots in this - they need to be replaced and i'm sure many of the wives would back up our pilots to make sure that happened...

but then again, this is only my opinion and i'm just plain ticked off that this is happening to MORE people that are just trying to make a decent living and enjoy their work...I think us wives are going to have to start standing up and shouting with our men - trying to think up ways to show and voice our concerns in a group effort... if anyone has ideas, let me know!
 

PurduePilot

New Member
&gt;&gt;I think us wives are going to have to start standing up and shouting with our men&lt;&lt;

Don't you already do that?




...oh... you said with... my mistake!
 

Kristie

Mama Bear....
Staff member
purduepilot - you are too sly... love your humor! we don't scream AT our husbands (or at least I don't) but I dont think us wives ever thought we had a say... i sure didn't until now!


btw - my dad's a hoot... he sent this to doug today...wonder if this would be what most typical people/consumers/passengers out there would be thinking...

_________________________________________
That's what I want to see:

Pilots who make minimum wage! - that way there's little incentive to bring
the plane in for a smooth landing cause at minimum wage....who cares?

What's also needed are mechanics who are at minimum wage too - that way
they
won't have to speak english and reading directions when installing new
parts
is so booooring anyway...why bother...just do the best you can.....and
don't
waste time tightening all the bolts.....

So why not also lets start looking for cheaper dentists, and when you need
surgery...be sure to get bids first!!!!!!

Ludicrous...give me an expensive airline anyday......., but if someday I
want to fly into the Florida swamps, at night, at 300 mph.....I'll take
AIRTRAN.......the cheap..est flight around!

Maybe if this "Quality" and "Cost Conscious" management team has it's way
with the pilots and others.....I might one day say......"but if someday I
want to fly into the Florida swamps at night, at 300 mph, I'll take
DELTA....the cheap..est flight around!".
_____________________________________________
do I feel a new slogan coming on? haha
 

PurduePilot

New Member
&gt;&gt;purduepilot - you are too sly... love your humor! we don't scream AT our husbands (or at least I don't) but I dont think us wives ever thought we had a say... i sure didn't until now!&lt;&lt;

Thanks! Most people don't get my dry humor. I'm glad that someone's picked up on it!
 

E_Dawg

Moderator
[ QUOTE ]
Thanks! Most people don't get my dry humor. I'm glad that someone's picked up on it!

[/ QUOTE ]

I know the feeling; I am really a genious inside but somehow my intelligence fails to be recognized
 

I_Money

Moderator
I have a very subtle sense of humour, and during high school no one would get my jokes, or they could not understand what I was saying. Heck if I did not make jokes high school would have been super boring.
 
Top