View Full Version : Delta Pilots Offer 9% Pay Cut

5th Dec 2003, 01:11
Delta Pilots Offer to Take 9 Pct. Pay Cut

Thursday December 4
By Julie MacIntosh

NEW YORK (Reuters) - Pilots at Delta Air Lines Inc. have offered to take a 9 percent pay cut -- much less than the airline requested earlier this year -- to help the carrier rein in costs, according to a pilots union memorandum.
Talks are progressing again between the No. 3 U.S. airline and the union, which represents about 8,500 Delta pilots, after falling apart over the summer.

But a considerable gap between the pilots' proposal and Delta's request could signal trouble, one analyst said.

In April the airline asked the pilots to take a 22 percent cut in hourly pay and give up scheduled 4.5 percent raises for 2003 and 2004.

"While the market may respond positively to the simplistic notion of labor progress at Delta, the inadequacy of the pilots' proposal highlights that serious, protracted negotiations lay ahead," JP Morgan airline analyst Jamie Baker said on Thursday.

Delta's stock posted moderate gains in early trading on the New York Stock Exchange (News - Websites) but then turned lower. It was down 6 cents at $11.78 by late morning.

Delta's pilots are the highest-paid in the industry. A 2001 contract awarded them a package that topped that at UAL Corp.'s United Airlines. UAL has since filed for bankruptcy and secured cuts in its workers' wages.

Atlanta-based Delta has said its pilots' pay puts it at a $1 billion per year disadvantage to its competitors.


The union's negotiating committee, in a memorandum to members on Wednesday, said Delta has now proposed a contract extension the union had said was necessary for talks to resume.

Included in the pilots' proposal is an offer to eliminate the planned pay increase in 2004 in exchange for the extension.

The committee felt Delta was looking to secure pilot costs similar to those at airlines that have restructured. But the union group said it "does not believe (Delta's) pilot costs must be aligned with the pilot costs at restructured or bankrupt airlines for our company to be profitable."

JP Morgan's Baker warned that the airline industry could suffer if the pilots' proposed rates are accepted, though he said Delta is not likely to agree to the offer. The pilots' plan would still eventually put their pay 45 percent above pay at the two biggest U.S. airlines, AMR Corp.'s American Airlines and United, he said.

Pilots at Delta start at hourly rates that equate to annual pay of about $41,000, according to the union. A few senior pilots can earn as much as $275,000.

Union officials were not immediately available for comment on Thursday.


Delta Chief Executive Leo Mullin unexpectedly announced his retirement late last month in the midst of the stop-and-start talks with pilots. Industry analysts at the time cited hopes that his departure would help the airline win pay cuts.

Mullin came under fire earlier this year after retention bonuses and pension perks given to senior Delta management, and his own hefty compensation, inflamed workers and shareholders.

His departure, which came with a $16 million pretax retirement package, leaves each of the top three U.S. airlines with new leaders since the Sept. 11, 2001, attacks.

The CEO of AMR Corp.'s American Airlines, Donald Carty, recently resigned after infuriating unions with an untimely disclosure on executive retention plans. And James Goodwin was forced to retire as CEO of United Airlines when a firestorm erupted after he told workers the airline might "perish" without massive cost cuts.

5th Dec 2003, 04:04

Sounds like trouble ahead for these fellows. Don't want to slam my fellow pilots but.....when I was still employed last year and my airline was teetering on the brink, we ALL took a 15% involuntary paycut to save our airline and, of course, our jobs. 15% was better than unemployment and like I said we were not given a choice in the matter as we were non-union. However, the carrier still failed, we never received our "foregone" pay and we were all laid off and I'm still looking after more than a year.

I would have thought 15-20% would be closer to the mark and possibly more acceptable to the mgt. Don't price yourselves out of a job - there's enough pilots pounding the market right now - you are the LUCKY ones right now. I know it's diificult and I have first-hand experience of what mgt are capable of but be careful, it ain't worth it, I know from bitter experience. You need to work together on this - somehow.

Human Factor
5th Dec 2003, 06:48
If you give it up, you'll never get it back. Make sure everyone else in the company is taking the same %.

Ignition Override
5th Dec 2003, 07:14
When the negotiators for one or two employee unions refuse to agree to any paycuts or can't agree on various percentages to offer in comparison to other groups, the other unions very often lose their incentive, not being willing to carry the burden for everyone else. And when two unions are replaced by entirely different unions, this can suddenly erase any inter-union progress already achieved.

Unfortunately, when one quarter shows very little loss or even a slight profit (although this can happen more frequently in the summer quarter), people quickly forget about the huge debts being carried by the airlines, and might assume that the debts are not a factor anymore.

One US major airline refuse to accept the pilot union's offer to give up an approx. 4.5% scheduled raise last September, wanting very much more (NOT including huge cuts in benefits). With this tactic, mgmt was able to go to the media, and state that the pilots "refused" a paycut, when the opposite is actually the case. Could this help their case when rescheduling a huge loan from the govt?:E

5th Dec 2003, 07:54
Absolutely spot on Human factor.

i went through a similar scenario years ago, and whilst we (pilots) were accepting fairly substantial cuts, the exec and most other depts did not offer, (nor were asked to) any sacrifices. Fortunately at that time, jobs were somewhat easier to find and consequently I and many colleagues voted with our feet, I hasten to add that this was on principal as i/we could not tolerate persons whom were on double our annual, telling us we were overpaid anyway, yet taking no cut themself!! sound familliar?

I cannot comment on Delta as I have no dealings, but one would seriously hope that it goes clean accross EVERYONE at the co,

Good luck to all.

5th Dec 2003, 10:38
>>If you give it up, you'll never get it back. Make sure everyone else in the company is taking the same %.<<

Well if it is hourly pay, you usually do get it back if the company survives. If it is work rules, I agree, you'll never see it again.

Most expat jobs have little in the way of work rules so hourly pay is the only thing to give up.

Shaggy Sheep Driver
5th Dec 2003, 16:59
A couple of posts here have called for anyone in this situation to check that any cuts affect the whole company, not just the pilots. That might sound fair enough, but it completely misses the point that this is about market forces. In any business, you have to pay the market rate to attract and keep your staff.

If you pay over the market rate, you will attract and keep staff but your costs are higher than your competitors who only pay the market rate; so you go out of business.

If you pay under the market rate, your staff may walk and go and work for the competition, so you can't operate and you go out of business.

If this airline is paying its pilots over the market rate, that is not sustainable. Likewise, if the check-in clerks and managers are being paid over the market rate. But if one bunch is being paid over the rate and the the others aren't (don't know if that is the case here - I'm talking generically) then only that bunch should be brought in line.

This doesn't just apply to aviation - it applies to any industry that operates in an open market, including my own (IT). It doesn't apply to protected markets (such as nationalised airlines) and the public sector.

And of course, in a free market the market rate varies with the laws of supply and demand.

Apologies if this seems bleedin obvious, but a few here don't seem to have hoisted it on board.


6th Dec 2003, 00:18

In the USA there is ZERO portability of a cockpit job in the major airlines. You are married to the company for life because there are no direct entry jobs as captains or otherwise at other airlines.

SO it is ALWAYS the cockpit crews that have the most to lose and why they are strong armed into giving often needless concessions.

During the previous contract to the one that the Delta pilots are on right now they gave HUGE concessions during the last months of the 91 recession, making them the lowest pay among the majors for a long period of time. When the Crisis abated and Delta went on to making record profits, the pilots just asked to go back to where they were before they made the concessions, managment's response was and I quote " A CONTRACT IS A CONTRACT." Furthermore contracts in the USA don't expire, they become "amendable" where the rule of law is the status quo. This status quo period goes on for years while negotiations drag out. Self help (Slow downs and strikes) are not allowed (IF at all, the President of the United States usually steps in and orders you back to work) for 3 or 4 years untill after mediation and an impass have been declared by federal labor negotiators.

Delta management contined to drag out negotions forcing the crews to operate under the old scale for 3.5 more years rather than getting around to giving them a raise. Had they negotiated in good faith the contract would have been well before the United Abberation which raised the bar so high for the Delta pilots. As a result Managment wound up signing a rich contract on the last days of the expansion right before the 2001 recession. Had they acted in good faith, Delta pilots would probably be making less than Management's current request for a salary cut (I said Management's requiest, not the pilot's counter)

You can't blame the pilots for responding "A contract is a contract" after 6.5 years of deliberate mistreatment by Delta Managent, and then continual violations of the current contract (no furlough protections) that had to be corrected by the courts.

Unless Delta want's to go Chapt 11, I suspect they are going to ahve to live with this contract fora while. The phrase "You reap what you sew" comes to mind here...

Furthermore, there is no guarantee that the concessions would keep the company out of bankruptcy. If the company is going to go bankrupt ANYWAY, then you are far better off not having given any concessions so that the starting point for the courts to start chopping your salary is much higher. Otherwise you just wind up giving twice...


6th Dec 2003, 10:38
The size of (outgoing CEO) Leo's retirement package is a poke in the eye as well. Something's wrong in this country when outgoing MBA's can make a killing like that while everyone else is taking it in the shorts. Happened at AA, UA and now Boeing.

6th Dec 2003, 11:28
Remember, the only people that failed at these airlines are MANAGEMENT.

MANAGEMENT, especially senior management's job is allocation of capital. don cAArty is an example of a spectacular failure at this. In his short rein he took the best balance sheet in the industry and turned it into the worst.,

How did he do that?

Bought Candian Airlines (actually bought into it, but close enough) 600 million dollars up in smoke.

Bought Reno Air, operates none of thei equiptment or flies any of their routes, 500 million or so up in smoke.

Stock buy back at over 100 dollars per share. 2.8 Billion dollars just piled up in the corner and set on fire.

Built a new 60 gate terminal at Kennedy airport when in the end we will need about 15 gates. 1.9 billion up in smoke.

Built a new terminal in Miami, 1.8 billion up in smoke.

Built a new terminal in Dallas, billions up in smoke

Bought TWA. 4.5 billion up in smoke. Operates little of its equiptment few of its routes, and has most of the people on the seniority list. While many of the people have been laid off. All these people came in topped out in payscales. So we get new hires for the price of 20 year veterans...

Aircraft purchases are pretty stupid as well. Doesn't decide to "Depeak" the hubs to gain greater scheduling efficieny till AFTER the aircraft are on the property. We could have bought fewer airplanes to fly our routes...

Also, buying the last of an airliner production is NOT smart no matter how cheap they are. We got about 400 MD80s with a seating capacity of around 129 people each that burn more fuel to fly a mile than a 737-800/A320 with around 150 people.

But remember, its all labor's fault. LABOR is the one group that didn't ****up, yet they will be required to foot the bill for cAArty's stupidity for decades to come, if AA survives at all.

Yet when you look at cAArty's severence pay, you would think he was the best CEO ever, when infact he is one of the worst in history.


Ignition Override
6th Dec 2003, 11:56
Huck and Wino, you said it, and very well. The Wall Street Journal is such a tool (Pravda) for the Air Transport Association that they would NEVER print such facts concerning AMR etc.

And do pilots in other countries (continents) not know that we are married to our companies, after we have been here two or three years, especially if one is not so young anymore? I assumed that they all knew that we can't just leave and get a senior FO or Captain job with a major or anywhere somewhere else in the US, without losing all seniority...this helps explain many strange comments on Pprune (from overseas) about US airline jobs...

Our furloughed pilots who flew twin-turbofan jets for one-three years or so with a MTOW of 121,000, even about 140,000 lbs are still hired on as at regional airlines-but only as FO. Even if they train you on an ERJ CRJ or Avro, the first and second year pay is still only about US $ 1600-1700 per month, before taxes and deductions for uniforms. And this "professional" pay only begins after about four weeks of training. And these furloughed "mainline" pilots are NOT allowed to jump over more senior FOs into a Captains seat. We/they have no flow through/down, or such, none at all.:ugh: