BUSDRVR
24th Apr 2001, 05:50
Look at the similarites in the story of the Delta Pilots, every airline has the same issues, same ego's etc.
We like Delta and United can achieve the same results with Unity!
FROM the DALPA Web site:
by John Ley, Vice Chairman, PDX Council 124, Delta ALPA MEC
January 25, 2001--As Delta pilots closed out the year 2000, there was much to reflect on, and much more to prepare for. February 28th looms ever larger on the horizon. The pressure continues to build on Delta management to reach an acceptable deal with the Delta ALPA negotiators. The pressure also builds on each Delta pilot to continue our strike preparations. This is for the unfortunate possibility that Mr. Mullin will not live up to his own promises of "Top Pay for Top Performance". We have done our part--four and one-half years service under a highly concessionary contract. Now it's time for Mr. Mullin and management to live up to their part of the bargain.
A Look Back
The Delta pilot group has undergone a true metamorphosis over the past four years. We have seen the CEO who negotiated our Contract '96 fired. In that contract, we were asked to "invest" $340 million per year in our company. It was a company bleeding red ink profusely. We had lost decades worth of profits. Delta pilots stepped up to the plate and invested roughly $250 million per year--by conservative company estimates--to equal $1 BILLION over our 4-year contract. Additionally, we sacrificed the Pre-72 Minimum (retirement) Benefit which saved the company roughly a one-time $1 BILLION dollars over a 10 year period.
By the time the ink was dry on Contract '96, changes were under way at both our company and the industry. Our fellow employees received the first of several raises; (good for them -- they deserved them). The industry went from making a 5% profit margin in its BEST years, to making 10-12% profit margins annually. Delta went from $250-$300 million annual profits to making that much EACH QUARTER! New, Wall Street savvy managers were hired. Here at Delta, GE became the source of inspiration for Mr. Mullin's new management team. Warren Jenson and Bob Colman were the hallmark of Mr. Mullin's "dream team". Thank goodness he also hired Fred Reid, who at least had some history with running airlines.
Mr. Mullin was hired to "fix" the problems created by Ron Allen's Leadership 7.5 program and then lead Delta into the 21st Century. (Leadership 7.5 was designed by Ron Allen to drive Delta's cost/seat-mile down to 7.5 cents). Delta pilots picketed the day prior to Mr. Mullin's arrival. We wanted to ensure that when Mr. Mullin began allocating resources to fix the multitude problems within the company, the pilots would not be overlooked.
The first decision that unfortunately set the tone for Mr. Mullin's relationship with the pilots came on the subject of vacations. Our fellow employees had their vacations restored to pre-Leadership 7.5 levels (except no 7th week). The pilot's contract had a "me too" clause which the company unfortunately refused to honor. We lost that grievance. Apparently 'me too' wasn't strong enough in court, but the pilots' eyes were opened. For the first time, we did not share in a restoration of benefits our fellow employees received.
With the advent of our fellow employees first 5% pay raise, we had asked former CEO Ron Allen for a mid-contract pay raise. If employee concessions were no longer needed to "save the company", then how about returning a little of the pilots concessions? In January 1998, 4 months into his tenure as CEO, Mr. Mullin said "no". He told pilots that "a contract is a contract". Mr. Mullin also informed the MEC leadership that he was "decoupling" the pilots from the rest of the employees. No more would we automatically get improvements just because the other employees received them. We were told he believed in "pattern bargaining" and that when our contract became amendable, he would address our concerns. The eyes of Delta pilots opened much wider now! What was becoming of the company they had invested their careers and dreams in?
Later that month, Mr. Mullin attempted to buy Continental Airlines. Mr. Mullin mentioned the possibility of layoffs for "some" Continental employees. Their CEO, Gordon Bethune, informed the IACP, the Continental pilots' union, of the decision to sell shares to either Northwest or Delta. (Nice bit of team building by Mr. Bethune). The Continental pilots looked at the Delta pilots' Scope clause regarding mergers and balked. The IACP asked Bethune to get an assurance that Allegheny-Mohawk Labor Protection Provisions would be observed in the merger. Bethune asked and Mullin replied that he could not guarantee such a thing -- without even asking Delta ALPA.
The IACP told Bethune that if he sold to Delta, they would shut the airline down the next day. Additionally, Bethune sought layoff protections for CAL employees that Mullin would not give. Bethune therefore sold the Continental shares to Northwest. A stunned Mr. Mullin was quoted in the press as saying "Labor? You mean this fell apart over labor?" It is rumored that Mr. Mullin was stunned that consideration of employees would prevent the deal. People were apparently just another budget line item to Mullin.
Mr. Mullin quickly began his second attempt at "a deal". In March '98, the MEC Chairman and (non-voting) Pilot Director were informed of a possible domestic code-share with United Airlines. Our Scope clause gave the Delta pilots veto power over this domestic code-share deal. They told Mr. Mullin that two items would be "deal breakers" -- we had to be guaranteed access to all information regarding the code-share, and we would need a voting seat on Delta's Board of Directors. We had to have equal footing with the United pilots. "No vote, no deal".
Mr. Mullin flew to an April MEC meeting in Portland and made his sales pitch. This deal would bring $300 million directly to the corporate bottom line. There would "sweeteners" to be negotiated for the Delta pilots. The Delta MEC reaffirmed the stance of the MEC Chairman and Pilot Director -- we had to have guaranteed access to the information, plus a voting board seat. Mr. Mullin apparently left feeling the MEC had backed away from its board-seat demand. When the MEC reaffirmed its position, the announcement of the code-share deal was canceled. Mr. Mullin flew from NYC back to PDX to plead his case. He asked for an extension. The MEC granted it, but with the same two demands. "No vote, no deal".
In August 1998, Mr. Mullin decided a vote for the Pilot Director was too much to pay for $300 million per year to the corporate bottom line. This was in spite of the fact that there were pilots and other employees on the boards of several other airlines including United, Northwest, and TWA.
With the Delta pilots, and their union leadership, now becoming more aggressive as a result of Mr. Mullin's actions (and chaffing under a concessionary contract), plans were made to begin preparing the pilots for Contract 2000 negotiations. Contract Education and Contract Enforcement became watchwords. The union began aggressively informing pilots of their contractual rights and obligations.
Understaffing at Delta Express led many Orlando-based pilots to choose to exercise their contractual rights to Green Slip with Conflict, (GSWC). [The pilot contract provides the company four methods of covering 'open time'. They are: 1- pilots on reserve; 2- overtime at straight rates of pay; 3-overtime at double rates of pay called a Greenslip; and 4- GSWC is assigning a pilot to fly a trip that conflicts with one already on his schedule. The pilot is paid straight rates for both trips--the one he flies, and the one that was dropped. The company must then cover the trip that was dropped. The last two choices only happen when there are not enough pilots on reserve--understaffing by the company.] DAL Operations "house of cards" quickly began to fall apart as the first GSWC triggered anywhere from 3-5 other GSWCs due to the shortage of pilots. It was rumored that a DEX Captain was the highest paid Delta pilot that year. Management subsequently increased staffing at Delta Express.
The "bottom-line" focus in Delta management hit flight operations. Someone decided they could save money over the holidays by reducing the number of pilot vacations. Fewer pilots on vacation over Christmas, New Years, Thanksgiving, and July 4th, meant more reserves, which meant that fewer trips had to be paid at premium rates to cover trips over these holidays. VP of Operations Dave Bushy was called "The Grinch Who Stole Christmas" in a local newsletter. The article exposed another management attempt to save pennies, while angering the pilots working under the concessions of Contract '96. "Past practice" won the day and ultimately, the holiday vacations management had taken were restored. A re-bid of all vacations was accomplished.
In the spring of 1999, Mr. Mullin was approached about opening negotiations early. Given his past missteps with the pilots, he agreed to begin negotiations in September, roughly 6 months early. This was set up in part by the United pilots attempt to negotiate a "seamless" agreement by April 12, 2000 -- their amendable date.
In the summer of 1999, many Delta pilots began choosing to no longer fly overtime at straight rates of pay. The example of the Orlando pilots the previous year caught hold. DAL management was again caught poorly prepared and understaffed. Running the operation relied too much on pilot cooperation. Voluntary Greenslips had been on a steady rise. Suddenly Green Slip with Conflict (GSWC) was the word of the day among line pilots. Crew schedulers were told to violate the contract, if need be, in order to keep the operation moving. They were also told to avoid GSWC if at all possible. Delta management very seriously considered taking the pilots to court.
We have recently become aware that experienced mid-level people in Crew Resources urged management to hire heavily starting in late '96 or early '97. Management was using a new computer program with 'softer' requirements. They apparently believed they could just ride out the post Contract '96 signing surge, where 550 furloughed pilots were rehired. The rest is history. A combination of hiring and training limitations caused Delta to get behind in manning. They never caught up. THAT is the genesis of many of our problems today.
In the midst of all this, negotiations were under way for Delta's new B-777's. The Delta MEC's opening position of $346.44 became the shot heard around the aviation world; we just didn't know it at the time. An L-1011 Captain's pay, adjusted for inflation since 1985, should have been paying over $280. It was paying $215.06. The efficiency and productivity of a B-777 mandated a rate over $300. Mr. Mullin threatened to sell the B-777's and in June '99, publicly announced this would happen. Two B-777's had been converted to B-767 orders already. But there was a problem; negotiations also had to begin on Delta's new B-767-400's. This time, Boeing was NOT going to begin production unless Delta committed to actually buying the aircraft. Delta was the launch customer. No more last minute cancellations of orders. In the end, the Delta pilots achieved $265 for the B-777, $243.80 for the B-767-400; plus a 3% raise and the end of the B-scale for ALL Delta pilots, and some small vacation improvements.
Delta's $265 for the B-777 put the United pilot negotiating team in an awkward position -- their table position was less than $265. Plus they now knew that Delta pilots would raise that rate again in Contract 2000 negotiations. UAL management spent 9 months trying to convince the UAL pilot negotiators that the DAL rate was an anomaly. The UAL negotiators knew differently.
In August 2000, the UAL negotiators approached the Delta MEC Chairman and Negotiating Committee -- they HAD to know what our compensation goals were for our Contract 2000. The B-777 agreement had given us huge credibility. The "Delta dot" of $265 was a hurdle that had to be cleared in the first year at United. The UAL negotiators could not significantly undershoot the Contract 2000 goals of the Delta pilots. Although the Delta MEC had not approved any specific compensation numbers, the UAL negotiators were shown "the target". Under the pressure of a pending merger with USAir, plus the United pilots' refusal to fly overtime, UAL management conceded. The "United line" had now exceeded the "Delta dot". "Restore the Profession,"(Delta pilot's Contract 2000 slogan), took on a whole new meaning. It was actually happening faster than many had expected.
On May 2, 2000 Delta pilots picketed for the third time in history. This marked the contract amendable date and the desire of Delta pilots to move forward from the huge concessions of Contract '96. Standing "shoulder-to-shoulder" with fellow pilots took on a whole new meaning. For the first time, Delta pilots realized that they were not alone in their willingness to act in a unified manner. Acting like a union was no longer unthinkable for Delta pilots as over 1200 pilots participated in the picketing.
To mark the one-year anniversary of negotiations, the union hosted a September 8 rally in Atlanta. Again, over 1300 pilots and family members turned out for the "It's About Time" rally. Management was getting nervous -- the pilots were acting in a truly unified manner.
Polling numbers showed that the number of pilots willing to go on strike and shut down the airline was skyrocketing. In the spring of 1996, just prior to signing on to the concessions of Contract '96, barely 20% of Delta pilots were willing to strike for any length of time. Just over four years later, over 95% were now willing to strike "for as long as it takes" in order to achieve an industry-leading contract.
Roughly 300 Delta pilots showed up at the Oct. 2000 Delta stockholders meeting in Cincinnati. Those pilots heard our CEO, and now Chairman of the Board, Mr. Mullin, promise an "industry-leading" compensation package. He told them they would be "pleased" with what they saw on Oct. 31st when the company put its opening pay position on the table.
Unfortunately Mr. Mullin once again disappointed the Delta pilots. Either he or his management team was out of touch with reality. Their Halloween proposal became known as "a trick". "He lied to me," said one pilot who had attended the stockholders meeting. The only thing truly "industry-leading" about the proposal was the proposed duration -- 8 years!
The company proposed to WIDEN the gap between Delta Express and mainline pilot pay. Pilots are the ONLY Delta employees to work for reduced wages and working conditions at Delta Express. United had eliminated the pay differences between shuttle and mainline pilots. The pay rates were not retroactive to the amendable date, and included a "pay for performance" scheme that relied totally on management performance. As one chief pilot later told Mr. Mullin: "You managed to hit every raw nerve the Delta pilots have."
The reaction was immediate. Pilots' enthusiasm for flying overtime dropped to near zero -- even at premium pay rates. The management team which had attempted to steal holiday vacations in order to avoid paying premium pay, was now begging pilots to fly overtime at premium rates. The number of trips paid at premium rates had risen from “hundreds” per month to 3000-5000 per month. Corporate reliance on voluntary overtime had actually increased since the summer of 1999. Where was all the hiring to relieve the staffing problems management had known about for two years?
Instructor pilots were also being squeezed by management. With no contractual language to protect them, instructors were being forced to instruct on "flex" days -- often working 20-25 days per month. A threatened rebellion by pilot instructors added to management's problems.
A November 15 "Practice Strike" was one more "message to management" by Delta pilots. By walking out of the airport, we were simulating the look of an actual strike. Delta management and our customers took notice. We hoped we would not have to do the real thing, but were demonstrating our willingness to do so if Mr. Mullin refused to pay the industry-leading contract he had promised. Two days later, Mr. Mullin met with the MEC Chairman and agreed to a 90-day timeline for mediation. Beginning Dec. 1st, if no agreement was reached by Feb. 28th, then BOTH parties would apply for arbitration. He thought this would buy him some peace from the angst his Halloween pay proposal provoked. The pilots weren't buying--there had been too many missed opportunities in the past.
In December, Mr. Mullin's management team took an unprecedented step. They sued not only Delta ALPA as a union, but also 49 individual pilots. They sought "$100,000 plus" in damages from each individual over an alleged "concerted effort" regarding Delta pilots refusal to fly voluntary overtime. The lawsuit so angered Delta pilots that one pilot who had been a non-member of ALPA since the 1980's, called the union and asked to rejoin ALPA. There are 15 additional non-members considering rejoining ALPA at the moment, with others being contacted daily.
The Executive management team was briefed that the lawsuit and a temporary restraining order (TRO) would be a "no-brainer". Twice they left the courtroom disappointed. No TRO was issued. Additional hearings will be held in 2001. The message to Delta pilots seems to be -- "Pilots want to negotiate -- Delta management wants to litigate."
Over the Christmas holiday, hundreds of thousands of Delta passengers were told misinformation about "a pilot job action" that was canceling flights. Delta employees calling the employee travel line were told to avoid holiday travel due to "pilots". The PR battle had begun. Management was attempting to put black hats on pilots. Gate agents were directed to blame delays or cancelled flights on pilots, regardless of the real reason. Flight attendants were asked to turn in the names of pilots who might be engaging in any of the "alleged" illegal activities.
Team-building Mullin-style has now begun in earnest. MEC Chairman Chuck Giambusso discussed the 'Lorenzo-style tactics' the management team was using in a letter to Delta flight attendants. Their attempts to drive a wedge between Delta employees and our customers are harmful to the company and the service we strive to provide daily.
Looking Ahead at the Next 60-90 Days
Delta pilots and their families will continue their preparations for a possible strike. A strike could begin as early as April 1, 2001. The Delta pilots do not want to strike, but they will do so if forced by management.
It has been said that a strike is the result of one or both parties failing to understand the issues and resolve of their opponent. Delta pilots certainly hope Mr. Mullin now knows the issues and their resolve to achieve an industry-leading contract. Either poor advice or miscalculation has caused unneeded mistrust, animosity, and now lawsuits between the company and the Delta pilots. We hope Mr. Mullin does NOT miscalculate and bring the first strike in history to Delta.
There are three reasons Mr. Mullin must deliver an industry-leading contract for Delta pilots.
First--he promised. Mr. Mullin must live up to his own promises of 'Top Pay for Top Performance' -- or an 'industry-leading' contract.
Second -- the company has benefited from the Delta pilots 'Top Performance' for four and one-half years. Delta pilots invested roughly $2 billion to help save our company. It's now time for Delta pilots to realize a return on that investment.
Third--the United pilots have now defined 'industry standard'. Not only will Delta pilots match that standard, but American, Northwest, Southwest and ALL pilots at major US carriers will rise to that standard. It's just a cost of doing business. It restores the purchasing power of pilots to a 1985 level. We believe that's fair.
Top Pay for Top Performance--how do Delta employees stack up versus Delta management in industry comparisons? A look at the table below quickly demonstrates that Delta employees (including pilots) are the most productive in the industry.
On the other hand, Delta management is charging some of the lowest fares per passenger in the industry. Who is deserving of that 'Top Pay for Top Performance'? (#1 is in boldface)
Employee productivity (1999 form 41 data)
Airline
AA
CO
DL
NW
UA
US
RPM’s/emp.
1,222,753
1,421,876
1,446,239
1,464,526
1,354,388
1,041,068
ASM’s/emp.
1,756,614
1,946,387
1,998,515
1,963,694
1,907,332
1,484,001
Enplaned pax/emp.
904.28
1078.44
1456.58
1080.40
934.75
1400.44
Passenger rev/emp.
160,485
171,220
182,634
169,986
166,910
171,779
Op.Revenue/Emp.
178,511
196,677
205,678
194,679
193,972
212,013
Management productivity
Avg. fare/pax.
$177.47
$158.77
$125.39
$157.34
$178.56
$122.66
You can see Delta employees are first or second in all categories.
During 2000, the airline industry raised fares five times in response to oil prices tripling, ($11/barrel to $35/barrel). The traveling public has not revolted. It was a cost of doing business. Management will either have to raise prices to cover increased labor costs and run the airline more efficiently, or they can accept the old 'standard' of 5% profit margins which was more than acceptable in the 1980's.
Over the past four years Delta management spent over $2 billion buying back stock. They spent almost $1 billion upgrading Delta's computers and technology infrastructure. Management spent billions upgrading airports and passenger facilities. Additionally, they spent $2.5 billion purchasing Comair and ASA. Delta still managed to make net Income of $4.2 billion during those four years, AFTER those extraordinary investments. It's now time for Delta management to invest in its pilots.
In 1998, the Northwest management team miscalculated. Positions at the negotiating table were just over $200 million apart prior to the strike. Rather than settle, management forced a strike. Fifteen days later, a deal was struck. The NWA pilots received roughly $155 million of the difference. The cost to NWA? Over $1 BILLION in lost revenue and ill will among passengers.
The Delta pilots' negotiating team will continue to negotiate hard, but fairly. Mr. Mullin will write the check, sooner or later, for an industry-leading contract. He promised us that three years ago. We sincerely hope he does that without causing Delta pilots to strike first, in order to get what he has already promised.
Addendum--/1/24/01
Holly asked if I'd like to add/change any comments, due to the Appeals Court ruling on Jan. 18th.
One of the news stories on the ruling quoted a judge as saying the following: "It is possible, of course, that ALPA has in fact done all that it can do in directing the pilots to cease their no-overtime campaign,'' the judges said. "We seriously doubt this is the case, however.'' Delta ALPA's reply: "We feel that we have been very forceful in what we have put out to the pilots and were disappointed that the court apparent feels that we haven't done everything we can."
Delta management may have won this skirmish, but it continues to anger the Delta pilots. The place to resolve all these issues is at the negotiating table -- not the courtroom. It was management's opening pay position that failed to deliver on the pay promises of CEO Mr. Mullin. That is what has added to the ire of Delta pilots.
Management could have increased the monthly "cap" pilots fly in November and gotten an additional 40,500 hours of flying. In December, they could have captured an additional 38,500 hours of flying. One of their mid-level managers acknowledged that they "gambled" when they did NOT raise caps in November and December.
The company recognized and expressed its appreciation for the MEC's efforts to curb anti-overtime efforts via a Nov. 28, 2000 letter. Furthermore, the day before Delta commenced the lawsuit -- on December 4, 2000 -- CNN Financial News reported that a Delta spokeswoman stated that the Company "is not charging union leadership with leading [a] job action by pilots," and that Delta has "no issue with the [union] leadership."
The ALPA leadership has regularly communicated to Delta pilots that flying overtime is an individual choice and that all pilots must respect the choices of their fellow pilots. We have additionally communicated that it is our desire to help our customers over the holiday season. We repeatedly tell pilots that it is our right to conduct a lawful strike that remains the ultimate leverage in our negotiations.
That remains the focus of the ALPA leadership and the vast majority of Delta pilots. We continue our strike preparations while hoping Mr. Mullin delivers what he has promised -- "Top pay for top performance" in an industry-leading contract. If he does, then the strike can be avoided.
This lawsuit will not deter Delta pilots from achieving their goals.
by John Ley, Vice Chairman, PDX Council 124, Delta ALPA MEC
January 25, 2001--As Delta pilots closed out the year 2000, there was much to reflect on, and much more to prepare for. February 28th looms ever larger on the horizon. The pressure continues to build on Delta management to reach an acceptable deal with the Delta ALPA negotiators. The pressure also builds on each Delta pilot to continue our strike preparations. This is for the unfortunate possibility that Mr. Mullin will not live up to his own promises of "Top Pay for Top Performance". We have done our part--four and one-half years service under a highly concessionary contract. Now it's time for Mr. Mullin and management to live up to their part of the bargain.
A Look Back
The Delta pilot group has undergone a true metamorphosis over the past four years. We have seen the CEO who negotiated our Contract '96 fired. In that contract, we were asked to "invest" $340 million per year in our company. It was a company bleeding red ink profusely. We had lost decades worth of profits. Delta pilots stepped up to the plate and invested roughly $250 million per year--by conservative company estimates--to equal $1 BILLION over our 4-year contract. Additionally, we sacrificed the Pre-72 Minimum (retirement) Benefit which saved the company roughly a one-time $1 BILLION dollars over a 10 year period.
By the time the ink was dry on Contract '96, changes were under way at both our company and the industry. Our fellow employees received the first of several raises; (good for them -- they deserved them). The industry went from making a 5% profit margin in its BEST years, to making 10-12% profit margins annually. Delta went from $250-$300 million annual profits to making that much EACH QUARTER! New, Wall Street savvy managers were hired. Here at Delta, GE became the source of inspiration for Mr. Mullin's new management team. Warren Jenson and Bob Colman were the hallmark of Mr. Mullin's "dream team". Thank goodness he also hired Fred Reid, who at least had some history with running airlines.
Mr. Mullin was hired to "fix" the problems created by Ron Allen's Leadership 7.5 program and then lead Delta into the 21st Century. (Leadership 7.5 was designed by Ron Allen to drive Delta's cost/seat-mile down to 7.5 cents). Delta pilots picketed the day prior to Mr. Mullin's arrival. We wanted to ensure that when Mr. Mullin began allocating resources to fix the multitude problems within the company, the pilots would not be overlooked.
The first decision that unfortunately set the tone for Mr. Mullin's relationship with the pilots came on the subject of vacations. Our fellow employees had their vacations restored to pre-Leadership 7.5 levels (except no 7th week). The pilot's contract had a "me too" clause which the company unfortunately refused to honor. We lost that grievance. Apparently 'me too' wasn't strong enough in court, but the pilots' eyes were opened. For the first time, we did not share in a restoration of benefits our fellow employees received.
With the advent of our fellow employees first 5% pay raise, we had asked former CEO Ron Allen for a mid-contract pay raise. If employee concessions were no longer needed to "save the company", then how about returning a little of the pilots concessions? In January 1998, 4 months into his tenure as CEO, Mr. Mullin said "no". He told pilots that "a contract is a contract". Mr. Mullin also informed the MEC leadership that he was "decoupling" the pilots from the rest of the employees. No more would we automatically get improvements just because the other employees received them. We were told he believed in "pattern bargaining" and that when our contract became amendable, he would address our concerns. The eyes of Delta pilots opened much wider now! What was becoming of the company they had invested their careers and dreams in?
Later that month, Mr. Mullin attempted to buy Continental Airlines. Mr. Mullin mentioned the possibility of layoffs for "some" Continental employees. Their CEO, Gordon Bethune, informed the IACP, the Continental pilots' union, of the decision to sell shares to either Northwest or Delta. (Nice bit of team building by Mr. Bethune). The Continental pilots looked at the Delta pilots' Scope clause regarding mergers and balked. The IACP asked Bethune to get an assurance that Allegheny-Mohawk Labor Protection Provisions would be observed in the merger. Bethune asked and Mullin replied that he could not guarantee such a thing -- without even asking Delta ALPA.
The IACP told Bethune that if he sold to Delta, they would shut the airline down the next day. Additionally, Bethune sought layoff protections for CAL employees that Mullin would not give. Bethune therefore sold the Continental shares to Northwest. A stunned Mr. Mullin was quoted in the press as saying "Labor? You mean this fell apart over labor?" It is rumored that Mr. Mullin was stunned that consideration of employees would prevent the deal. People were apparently just another budget line item to Mullin.
Mr. Mullin quickly began his second attempt at "a deal". In March '98, the MEC Chairman and (non-voting) Pilot Director were informed of a possible domestic code-share with United Airlines. Our Scope clause gave the Delta pilots veto power over this domestic code-share deal. They told Mr. Mullin that two items would be "deal breakers" -- we had to be guaranteed access to all information regarding the code-share, and we would need a voting seat on Delta's Board of Directors. We had to have equal footing with the United pilots. "No vote, no deal".
Mr. Mullin flew to an April MEC meeting in Portland and made his sales pitch. This deal would bring $300 million directly to the corporate bottom line. There would "sweeteners" to be negotiated for the Delta pilots. The Delta MEC reaffirmed the stance of the MEC Chairman and Pilot Director -- we had to have guaranteed access to the information, plus a voting board seat. Mr. Mullin apparently left feeling the MEC had backed away from its board-seat demand. When the MEC reaffirmed its position, the announcement of the code-share deal was canceled. Mr. Mullin flew from NYC back to PDX to plead his case. He asked for an extension. The MEC granted it, but with the same two demands. "No vote, no deal".
In August 1998, Mr. Mullin decided a vote for the Pilot Director was too much to pay for $300 million per year to the corporate bottom line. This was in spite of the fact that there were pilots and other employees on the boards of several other airlines including United, Northwest, and TWA.
With the Delta pilots, and their union leadership, now becoming more aggressive as a result of Mr. Mullin's actions (and chaffing under a concessionary contract), plans were made to begin preparing the pilots for Contract 2000 negotiations. Contract Education and Contract Enforcement became watchwords. The union began aggressively informing pilots of their contractual rights and obligations.
Understaffing at Delta Express led many Orlando-based pilots to choose to exercise their contractual rights to Green Slip with Conflict, (GSWC). [The pilot contract provides the company four methods of covering 'open time'. They are: 1- pilots on reserve; 2- overtime at straight rates of pay; 3-overtime at double rates of pay called a Greenslip; and 4- GSWC is assigning a pilot to fly a trip that conflicts with one already on his schedule. The pilot is paid straight rates for both trips--the one he flies, and the one that was dropped. The company must then cover the trip that was dropped. The last two choices only happen when there are not enough pilots on reserve--understaffing by the company.] DAL Operations "house of cards" quickly began to fall apart as the first GSWC triggered anywhere from 3-5 other GSWCs due to the shortage of pilots. It was rumored that a DEX Captain was the highest paid Delta pilot that year. Management subsequently increased staffing at Delta Express.
The "bottom-line" focus in Delta management hit flight operations. Someone decided they could save money over the holidays by reducing the number of pilot vacations. Fewer pilots on vacation over Christmas, New Years, Thanksgiving, and July 4th, meant more reserves, which meant that fewer trips had to be paid at premium rates to cover trips over these holidays. VP of Operations Dave Bushy was called "The Grinch Who Stole Christmas" in a local newsletter. The article exposed another management attempt to save pennies, while angering the pilots working under the concessions of Contract '96. "Past practice" won the day and ultimately, the holiday vacations management had taken were restored. A re-bid of all vacations was accomplished.
In the spring of 1999, Mr. Mullin was approached about opening negotiations early. Given his past missteps with the pilots, he agreed to begin negotiations in September, roughly 6 months early. This was set up in part by the United pilots attempt to negotiate a "seamless" agreement by April 12, 2000 -- their amendable date.
In the summer of 1999, many Delta pilots began choosing to no longer fly overtime at straight rates of pay. The example of the Orlando pilots the previous year caught hold. DAL management was again caught poorly prepared and understaffed. Running the operation relied too much on pilot cooperation. Voluntary Greenslips had been on a steady rise. Suddenly Green Slip with Conflict (GSWC) was the word of the day among line pilots. Crew schedulers were told to violate the contract, if need be, in order to keep the operation moving. They were also told to avoid GSWC if at all possible. Delta management very seriously considered taking the pilots to court.
We have recently become aware that experienced mid-level people in Crew Resources urged management to hire heavily starting in late '96 or early '97. Management was using a new computer program with 'softer' requirements. They apparently believed they could just ride out the post Contract '96 signing surge, where 550 furloughed pilots were rehired. The rest is history. A combination of hiring and training limitations caused Delta to get behind in manning. They never caught up. THAT is the genesis of many of our problems today.
In the midst of all this, negotiations were under way for Delta's new B-777's. The Delta MEC's opening position of $346.44 became the shot heard around the aviation world; we just didn't know it at the time. An L-1011 Captain's pay, adjusted for inflation since 1985, should have been paying over $280. It was paying $215.06. The efficiency and productivity of a B-777 mandated a rate over $300. Mr. Mullin threatened to sell the B-777's and in June '99, publicly announced this would happen. Two B-777's had been converted to B-767 orders already. But there was a problem; negotiations also had to begin on Delta's new B-767-400's. This time, Boeing was NOT going to begin production unless Delta committed to actually buying the aircraft. Delta was the launch customer. No more last minute cancellations of orders. In the end, the Delta pilots achieved $265 for the B-777, $243.80 for the B-767-400; plus a 3% raise and the end of the B-scale for ALL Delta pilots, and some small vacation improvements.
Delta's $265 for the B-777 put the United pilot negotiating team in an awkward position -- their table position was less than $265. Plus they now knew that Delta pilots would raise that rate again in Contract 2000 negotiations. UAL management spent 9 months trying to convince the UAL pilot negotiators that the DAL rate was an anomaly. The UAL negotiators knew differently.
In August 2000, the UAL negotiators approached the Delta MEC Chairman and Negotiating Committee -- they HAD to know what our compensation goals were for our Contract 2000. The B-777 agreement had given us huge credibility. The "Delta dot" of $265 was a hurdle that had to be cleared in the first year at United. The UAL negotiators could not significantly undershoot the Contract 2000 goals of the Delta pilots. Although the Delta MEC had not approved any specific compensation numbers, the UAL negotiators were shown "the target". Under the pressure of a pending merger with USAir, plus the United pilots' refusal to fly overtime, UAL management conceded. The "United line" had now exceeded the "Delta dot". "Restore the Profession,"(Delta pilot's Contract 2000 slogan), took on a whole new meaning. It was actually happening faster than many had expected.
On May 2, 2000 Delta pilots picketed for the third time in history. This marked the contract amendable date and the desire of Delta pilots to move forward from the huge concessions of Contract '96. Standing "shoulder-to-shoulder" with fellow pilots took on a whole new meaning. For the first time, Delta pilots realized that they were not alone in their willingness to act in a unified manner. Acting like a union was no longer unthinkable for Delta pilots as over 1200 pilots participated in the picketing.
To mark the one-year anniversary of negotiations, the union hosted a September 8 rally in Atlanta. Again, over 1300 pilots and family members turned out for the "It's About Time" rally. Management was getting nervous -- the pilots were acting in a truly unified manner.
Polling numbers showed that the number of pilots willing to go on strike and shut down the airline was skyrocketing. In the spring of 1996, just prior to signing on to the concessions of Contract '96, barely 20% of Delta pilots were willing to strike for any length of time. Just over four years later, over 95% were now willing to strike "for as long as it takes" in order to achieve an industry-leading contract.
Roughly 300 Delta pilots showed up at the Oct. 2000 Delta stockholders meeting in Cincinnati. Those pilots heard our CEO, and now Chairman of the Board, Mr. Mullin, promise an "industry-leading" compensation package. He told them they would be "pleased" with what they saw on Oct. 31st when the company put its opening pay position on the table.
Unfortunately Mr. Mullin once again disappointed the Delta pilots. Either he or his management team was out of touch with reality. Their Halloween proposal became known as "a trick". "He lied to me," said one pilot who had attended the stockholders meeting. The only thing truly "industry-leading" about the proposal was the proposed duration -- 8 years!
The company proposed to WIDEN the gap between Delta Express and mainline pilot pay. Pilots are the ONLY Delta employees to work for reduced wages and working conditions at Delta Express. United had eliminated the pay differences between shuttle and mainline pilots. The pay rates were not retroactive to the amendable date, and included a "pay for performance" scheme that relied totally on management performance. As one chief pilot later told Mr. Mullin: "You managed to hit every raw nerve the Delta pilots have."
The reaction was immediate. Pilots' enthusiasm for flying overtime dropped to near zero -- even at premium pay rates. The management team which had attempted to steal holiday vacations in order to avoid paying premium pay, was now begging pilots to fly overtime at premium rates. The number of trips paid at premium rates had risen from “hundreds” per month to 3000-5000 per month. Corporate reliance on voluntary overtime had actually increased since the summer of 1999. Where was all the hiring to relieve the staffing problems management had known about for two years?
Instructor pilots were also being squeezed by management. With no contractual language to protect them, instructors were being forced to instruct on "flex" days -- often working 20-25 days per month. A threatened rebellion by pilot instructors added to management's problems.
A November 15 "Practice Strike" was one more "message to management" by Delta pilots. By walking out of the airport, we were simulating the look of an actual strike. Delta management and our customers took notice. We hoped we would not have to do the real thing, but were demonstrating our willingness to do so if Mr. Mullin refused to pay the industry-leading contract he had promised. Two days later, Mr. Mullin met with the MEC Chairman and agreed to a 90-day timeline for mediation. Beginning Dec. 1st, if no agreement was reached by Feb. 28th, then BOTH parties would apply for arbitration. He thought this would buy him some peace from the angst his Halloween pay proposal provoked. The pilots weren't buying--there had been too many missed opportunities in the past.
In December, Mr. Mullin's management team took an unprecedented step. They sued not only Delta ALPA as a union, but also 49 individual pilots. They sought "$100,000 plus" in damages from each individual over an alleged "concerted effort" regarding Delta pilots refusal to fly voluntary overtime. The lawsuit so angered Delta pilots that one pilot who had been a non-member of ALPA since the 1980's, called the union and asked to rejoin ALPA. There are 15 additional non-members considering rejoining ALPA at the moment, with others being contacted daily.
The Executive management team was briefed that the lawsuit and a temporary restraining order (TRO) would be a "no-brainer". Twice they left the courtroom disappointed. No TRO was issued. Additional hearings will be held in 2001. The message to Delta pilots seems to be -- "Pilots want to negotiate -- Delta management wants to litigate."
Over the Christmas holiday, hundreds of thousands of Delta passengers were told misinformation about "a pilot job action" that was canceling flights. Delta employees calling the employee travel line were told to avoid holiday travel due to "pilots". The PR battle had begun. Management was attempting to put black hats on pilots. Gate agents were directed to blame delays or cancelled flights on pilots, regardless of the real reason. Flight attendants were asked to turn in the names of pilots who might be engaging in any of the "alleged" illegal activities.
Team-building Mullin-style has now begun in earnest. MEC Chairman Chuck Giambusso discussed the 'Lorenzo-style tactics' the management team was using in a letter to Delta flight attendants. Their attempts to drive a wedge between Delta employees and our customers are harmful to the company and the service we strive to provide daily.
Looking Ahead at the Next 60-90 Days
Delta pilots and their families will continue their preparations for a possible strike. A strike could begin as early as April 1, 2001. The Delta pilots do not want to strike, but they will do so if forced by management.
It has been said that a strike is the result of one or both parties failing to understand the issues and resolve of their opponent. Delta pilots certainly hope Mr. Mullin now knows the issues and their resolve to achieve an industry-leading contract. Either poor advice or miscalculation has caused unneeded mistrust, animosity, and now lawsuits between the company and the Delta pilots. We hope Mr. Mullin does NOT miscalculate and bring the first strike in history to Delta.
There are three reasons Mr. Mullin must deliver an industry-leading contract for Delta pilots.
First--he promised. Mr. Mullin must live up to his own promises of 'Top Pay for Top Performance' -- or an 'industry-leading' contract.
Second -- the company has benefited from the Delta pilots 'Top Performance' for four and one-half years. Delta pilots invested roughly $2 billion to help save our company. It's now time for Delta pilots to realize a return on that investment.
Third--the United pilots have now defined 'industry standard'. Not only will Delta pilots match that standard, but American, Northwest, Southwest and ALL pilots at major US carriers will rise to that standard. It's just a cost of doing business. It restores the purchasing power of pilots to a 1985 level. We believe that's fair.
Top Pay for Top Performance--how do Delta employees stack up versus Delta management in industry comparisons? A look at the table below quickly demonstrates that Delta employees (including pilots) are the most productive in the industry.
On the other hand, Delta management is charging some of the lowest fares per passenger in the industry. Who is deserving of that 'Top Pay for Top Performance'? (#1 is in boldface)
Employee productivity (1999 form 41 data)
Airline
AA
CO
DL
NW
UA
US
RPM’s/emp.
1,222,753
1,421,876
1,446,239
1,464,526
1,354,388
1,041,068
ASM’s/emp.
1,756,614
1,946,387
1,998,515
1,963,694
1,907,332
1,484,001
Enplaned pax/emp.
904.28
1078.44
1456.58
1080.40
934.75
1400.44
Passenger rev/emp.
160,485
171,220
182,634
169,986
166,910
171,779
Op.Revenue/Emp.
178,511
196,677
205,678
194,679
193,972
212,013
Management productivity
Avg. fare/pax.
$177.47
$158.77
$125.39
$157.34
$178.56
$122.66
You can see Delta employees are first or second in all categories.
During 2000, the airline industry raised fares five times in response to oil prices tripling, ($11/barrel to $35/barrel). The traveling public has not revolted. It was a cost of doing business. Management will either have to raise prices to cover increased labor costs and run the airline more efficiently, or they can accept the old 'standard' of 5% profit margins which was more than acceptable in the 1980's.
Over the past four years Delta management spent over $2 billion buying back stock. They spent almost $1 billion upgrading Delta's computers and technology infrastructure. Management spent billions upgrading airports and passenger facilities. Additionally, they spent $2.5 billion purchasing Comair and ASA. Delta still managed to make net Income of $4.2 billion during those four years, AFTER those extraordinary investments. It's now time for Delta management to invest in its pilots.
In 1998, the Northwest management team miscalculated. Positions at the negotiating table were just over $200 million apart prior to the strike. Rather than settle, management forced a strike. Fifteen days later, a deal was struck. The NWA pilots received roughly $155 million of the difference. The cost to NWA? Over $1 BILLION in lost revenue and ill will among passengers.
The Delta pilots' negotiating team will continue to negotiate hard, but fairly. Mr. Mullin will write the check, sooner or later, for an industry-leading contract. He promised us that three years ago. We sincerely hope he does that without causing Delta pilots to strike first, in order to get what he has already promised.
Addendum--/1/24/01
Holly asked if I'd like to add/change any comments, due to the Appeals Court ruling on Jan. 18th.
One of the news stories on the ruling quoted a judge as saying the following: "It is possible, of course, that ALPA has in fact done all that it can do in directing the pilots to cease their no-overtime campaign,'' the judges said. "We seriously doubt this is the case, however.'' Delta ALPA's reply: "We feel that we have been very forceful in what we have put out to the pilots and were disappointed that the court apparent feels that we haven't done everything we can."
Delta management may have won this skirmish, but it continues to anger the Delta pilots. The place to resolve all these issues is at the negotiating table -- not the courtroom. It was management's opening pay position that failed to deliver on the pay promises of CEO Mr. Mullin. That is what has added to the ire of Delta pilots.
Management could have increased the monthly "cap" pilots fly in November and gotten an additional 40,500 hours of flying. In December, they could have captured an additional 38,500 hours of flying. One of their mid-level managers acknowledged that they "gambled" when they did NOT raise caps in November and December.
The company recognized and expressed its appreciation for the MEC's efforts to curb anti-overtime efforts via a Nov. 28, 2000 letter. Furthermore, the day before Delta commenced the lawsuit -- on December 4, 2000 -- CNN Financial News reported that a Delta spokeswoman stated that the Company "is not charging union leadership with leading [a] job action by pilots," and that Delta has "no issue with the [union] leadership."
The ALPA leadership has regularly communicated to Delta pilots that flying overtime is an individual choice and that all pilots must respect the choices of their fellow pilots. We have additionally communicated that it is our desire to help our customers over the holiday season. We repeatedly tell pilots that it is our right to conduct a lawful strike that remains the ultimate leverage in our negotiations.
That remains the focus of the ALPA leadership and the vast majority of Delta pilots. We continue our strike preparations while hoping Mr. Mullin delivers what he has promised -- "Top pay for top performance" in an industry-leading contract. If he does, then the strike can be avoided.
This lawsuit will not deter Delta pilots from achieving their goals.