Looks like the earlier report was accurate. Now that United has made moves to discontinue pension payments, Delta is after "pension plan changes" as well.
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Delta to pilots: Must cut $1 billion
By KIRSTEN TAGAMI
The Atlanta Journal-Constitution
Published on: 07/30/04
Delta Air Lines must get at least $1 billion in concessions from pilots, well above their union's latest offer of $705 million, the ailing airline said Friday.
The company response by Chief Executive Officer Gerald Grinstein leaves the two sides far apart as Delta struggles to cut costs and avoid bankruptcy.
Grinstein, in a letter to pilots, said management will negotiate the elements of a cost-cutting package, but not the amount.
"The $1 billion in annual savings represents the minimum amount, in combination with reductions from other stakeholders, required for our company to regain long-term viability," he said.
Delta has proposed "certain pension plan changes" for pilots, Grinstein said, although he didn't elaborate. A company spokeswoman declined to be more specific.
The Air Line Pilots Association issued a brief statement saying leaders are examining the proposal, which they said includes a 35 percent pay reduction. The union's most recent offer, made last week, included a 23 percent pay cut.
ALPA said the company's response contains too few specifics on key issues, such as future benefits pilots might get when the company recovers and how much Delta's various creditors might give up as part of a restructuring.
"Unfortunately, the proposal contained no specifics on equity, economic returns, no-cost items or any plan for a comprehensive economic restructuring that would include other Delta stakeholders," pilots union spokesman Chris Renkel said.
Grinstein said Delta is trying to save money by restructuring debt and renegotiating jet leases and deals with vendors and suppliers.
Grinstein, who took Delta's helm in a management shake-up last winter, also signaled that pilot pay cuts will be part of a broader shift away from top-flight compensation at the company.
"Our circumstances do not permit us to enjoy the benefits of being at the top of the industry compensation ladder," he said. "Our goal is for Delta's compensation packages to be market-competitive . . . — not the highest, not the lowest, but midrange."
The airline and the pilots union are in ongoing informal discussions, said Delta spokeswoman Meghan Glynn.
Discussions began in mid-2003, under former CEO Leo Mullin. There was little movement until last week, when the union substantially sweetened its offer after a review of the airline's finances.
The union said its new offer is "contingent on Delta restructuring all of its costs."
Delta has lost more than $5 billion since 2000. Grinstein, a longtime Delta board member who once ran Western Airlines, says the main culprit is high costs that will not allow profits in an era of feisty discount competitors and Internet travel bargains.
The long slump has prompted concern about a possible Chapter 11 bankruptcy filing unless Delta can slash its costs. One critical element is a cut in pay for pilots, who became the industry's highest-paid under a contract signed three months before the terrorist attacks of Sept. 11, 2001, that rocked airline travel.
A typical midcareer pilot at Delta earns $200,000 a year.
In his letter Friday, Grinstein said he wants to work out details of the pilots' pension plan as soon as possible. He made a distinction between Delta and United Airlines, which is operating under Chapter 11 protection and has stopped funding its pension plans.
Delta says it plans to meet the funding requirements for the pilots pension fund this year and has already fully funded the pension funds for other employees.
"We are watching United closely, as I am sure you are, because what happens there could have far-reaching effects throughout our industry," Grinstein said in his letter.
"Delta's objective is to maintain the ability to fund the existing plans and provide a secure, sustainable new retirement plan for the future, within the boundaries of viability for Delta," he said.
While the company negotiates with pilots and creditors, management also is working on a strategic overhaul due for review by the board of directors in August.
Grinstein told pilots it will include "decisive, strategic initiatives" that will "carve out new and previously uncharted airline territory."
He also insisted his goal is to avoid a Chapter 11 bankruptcy filing.
"Make no mistake," he said of the strategic plan, "this is designed as an out-of-court solution."
http://www.ajc.com/news/content/busi...4/31delta.html