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Delta bankruptcy tomorrow (13 Sep) - AP
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Here comes another industry leading contract...
______________________________________ September 12, 2005 Delta Asks Pilots for More Wage and Benefit Cuts By MICHELINE MAYNARD Delta Air Lines, which is said to be on the brink of filing for bankruptcy protection, asked its pilots for a second round of wage and benefit cuts late today, according to the Air Line Pilots Association. The move came as Northwest Airlines, which is seeking more cuts from employees in order to fend off its own bankruptcy filing, considered giving permanent jobs to some substitute mechanics starting Tuesday. Delta's request for cuts was disclosed in a message from the pilots' union to its 6,500 members. It said negotiators for the airline and the union met today at Delta's request. "The company presented the negotiators with a comprehensive, deeply concessionary contract proposal," the message said. The message did not disclose the size of the cuts sought by Delta, which obtained $1 billion in wage and benefit concessions a year ago, including about a one-third cut in pay. Delta also did not give details. But in a statement, the airline said it had made proposals that were "necessary to address the severe financial problems that the company and its people are facing." People with knowledge of the proposal said it would cut pilots' wages and benefits to roughly the levels of their counterparts at low-fare airlines. But pilots at those airlines, like Southwest and JetBlue, receive bonuses and other compensation because their companies are profitable. Delta, by contrast, has lost nearly $10 billion this decade. The pilots' message said leaders would meet today to discuss whether to hold formal negotiations. But that may come after a bankruptcy filing, which could occur late this week, according to people with direct knowledge of Delta's plans. Delta shares fell 25 cents today, closing at 85 cents... http://www.nytimes.com/2005/09/12/bu...rtner=homepage ____________________________________________ For perspective, a flashback to the heady days of 2001 when the wind was blowing the other way: Delta, pilots reach deal April 23, 2001: 10:08 a.m. ET Four-year tentative pact with union averts strike, makes pilots best paid NEW YORK (CNNfn) - Delta Air Lines won't face the risk of a pilots' strike next week after agreeing to pay billions more in a tentative contract agreement. The agreement with the Air Line Pilots Association, reached Sunday, makes the 9,800 pilots at Delta (DAL: up $0.39 to $44.00, Research, Estimates), the nation's third largest airline, the industry's best paid. The union said it gives them raises of between 24 and 34 percent over the four-year pact. It also closes much of the wage gap for nearly 600 additional pilots who fly 737 jets at Delta Express, the low-price carrier that flies between Florida and the Midwest and Northeast, and which had paid its pilots about 25 percent less than those who flew the same Boeing 737 jets for the mainline airline. Those pilots would see raises of 63 percent over the life of the proposed contract. The company's previous offer had been for only a 38 percent raise for the Delta Express pilots. An airline analyst said he wasn't all that surprised that Delta had stepped up to many of the union's demands. "Peace at any prices appears to be a necessity," said Ray Neidl, analyst with ING Barings. "I won't say it's a good deal, but it's a necessity." Delta's labor pains haven't completely abated though. It still faces a four-week long pilots strike at Comair Inc., its feeder airline unit that flies about half of its Delta Connection flights. That strike cost the company about $14.7 million in profit and $24 million in revenue in its first six days. A spokesman for the union told Associated Press that the union is pleased with the tentative pact, that it would make up for concessions pilots made in 1996, when the Atlanta-based airline was emerging from several years of financial losses. "This gives the pilots pretty much what they were looking for," said Gregg Holm, a union spokesman and Delta pilot. "I think this is going to go a long way toward repairing the rift that was caused by the 1996 contract." Delta's statement said the agreement is good for the company. "This tentative agreement gives Delta the financial and competitive framework required to be profitable and successful, especially in an uncertain economy," said a statement from Leo Mullin, CEO of Delta, in a statement issued Sunday. Tentative deal will cost billions over four years The new deal moves pay for Delta pilots ahead of pilot pay at United Airlines, the world's largest carrier. United pilots won a new deal from management of the employee-owned company last August. United has not posted a profit since, and warned last week it would lose money again in the second quarter. Total cost of the new pact at Delta was not immediately available. The airline said earlier this month that the pilots' demands would add $3.7 billion to the airline's labor costs over four years, compared with the company's offer that he said would increase costs by $2.0 billion. Earlier this month, Mullin had also called for intervention by President Bush to stop a possible strike, saying the two sides were too far apart to reach a deal by the 12:01 a.m. March 29 strike deadline. He said last week he had received assurances from federal officials that the President would have used his powers under labor law controlling the airline industry to keep pilots in Delta's cockpits. The statement from ALPA did not declare victory in the deal, but said the union was pleased that it could be reached without presidential intervention. "This is proof that if both parties are committed to the process, a solution beneficial to everyone can be reached," said Capt. Charles Giambusso, head of the union's bargaining unit at Delta. The two sides returned to the negotiating table last Wednesday, in the middle of a 30-day cooling off period. The expiration of that cooling off period on Sunday without an agreement that would have opened the door for a strike by the pilots if there had not been Presidential intervention. - Associated Press contributed to this report |
Yep. Already being discussed in SLF & Pax.
At some point, someone is going to have to pull the plug on companies that are supposedly operating in a climate of commercial reality but actually get nursed by the state. The US air industry NEEDS someone to cease trading altogether. In the current trend of Ch 11, then everyone's wages and conditions get squeezed. Not nice and some unpleasant times ahead but, like a boil, it will be better when it is lanced. |
If I add up the numbers correctly Delta would already have 3300 pilots on layoff?Is that correct?
Anybody have any idea how many are still laid off at other majors? |
And if Delta is subsequently followed into Ch 11 by NWA, the vast majority of the US network will be operating in technical bankruptcy - so much for the 'free market'.
At some point, out of simple economic imperative, some of these carriers will have to be allowed to die, as Pan Am and TWA et al before them. Despite the ongoing artificial competition, South West and others have continually demonstated that it is possible to make money in this market and grow. It really is very simple. The longer Ch 11 protection is given, the harder the eventual fall-out is going to be. |
Its a while since I flew with them (so perhaps its changed) but the part I dont understand is how an airline whose flights seemed to be so consistantly full, or nearly full, could be in financial difficulty?
Got to be something wrong with something.....now there is a profound statement!!!......did I write that? |
Balmy
Load factor and yield are two different things. If you sell your tickets at a price which is lower than the costs you incur to run the flight, you make a loss. You could still make a loss even if your flights were 100% full, if you sold the seats at below cost. Problem these US majors have is their inability to raise revenues due to competition, plus a cost structure that remains, even today, too high. |
Also, the reason that they are often known as 'legacy carriers' is the legacy that they carry! Typically these include:[list=a][*]Large corporate offices[*]Numerous corporate staff[*]Big pension schemes covering several decades[*]Fierce competion from those that specialise in one niche - be it short/long/charter[*]High expectations from financial institutions[*]The inertia of already having grown to full size[*]The reluctance to do anything that might reduce the size of the company as only 'big' is considered good[/list=a]
Somewhere in the future, people will be saying the same things about South West! |
.............frequent flyer programmes that give too many miles too easily!!!.
WTDWL. |
It's funny how these big US airlines go 'bankrupt' yet continue to operate as if everything was fine. In the UK the whole shooting match would be down the lavvy and it would be Her Majestys' Government that would pull the handle!
It seems verging on dishonest, I mean, what does 'bankruptcy' mean? Shades of Enron style accounting methinks:confused: |
It seems verging on dishonest, I mean, what does 'bankruptcy' mean? |
The media popularly equate 'bankruptcy' and 'Chapter 11' together. This is because the US Bankruptcy Code is a body of legislation which is divided into a number of Chapters, which have different applications for different situations. Chapter 11 of this code is designed to assist companies in financial difficulties from avoiding payment of most of their immediate bills and obligations in order to give the business time to reorganize itself and, ideally, emerge from Chapter 11 down the line in a stronger position. A business requires court permission to enter Chapter 11.
Thus, paradoxically, when a company files under Chapter 11, it is ironically NOT bankrupt. It is, in fact, technically called bankruptcy protection, or protection from creditors. It is a still a live and active business, merely under new temporary management. In the case of the airlines, passengers rarely notice any difference. Under Chapter 7 of the Code you would have bankruptcy, as filing under Chapter 7 you file for liquidation of the business. If United, for example, didn't come out of Chapter 11 (it plans to late this year, in fact), it would liquidate under Chapter 7, and only then would become bankrupt. The question of whether the airlines in the US are abusing Chapter 11 is arguable and a very live issue right now. On balance, they probably are. I am sympathetic to the poster who says we need one big carrier to go out of business for shock value purposes, if nothing else. |
How can one fly from Rome to Venice and Back for under 3 Euro? (Plus tax =40E) I understand the theory and the business model but booking it is a bit like going flying in a C150 and then getting on a Jumbo. They fly for the same reason but there has to be something wierd about it, doesn't there?
Just looking at the numbers from a passenger point of view you would think it would have to be the European LoCos that are in trouble. We flew American this Summer. The planes were nearly all full, the service was much reduced from the old days and everything beyond a coffee or soft drink cost and the tickets weren't particularly cheap. How can the big airlines be in so much trouble? Yes, I know the answer, just seems wierd from Px point of view. THAT MUCH overhead? |
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How can one fly from Rome to Venice and Back for under 3 Euro? (Plus tax =40E) I understand the theory and the business model but booking it is a bit like going flying in a C150 and then getting on a Jumbo. They fly for the same reason but there has to be something wierd about it, doesn't there? >>> Probably because those 3 euros are being paid by only the first 10-15% of the passengers who book that particular flight. As the seats on a flight are sold, they usually become more expensive. So, on that flight, maybe the last 10 passengers are paying 200 euros, for example. The technical term for this is 'yield management'. Also, the theory is that a low-cost carrier makes some more money on each passenger on things like refreshments, car hire/hotel booking commissions and even in some cases local authority passenger fees at certain airports. The other thing is that low-cost carriers are really just that - low-cost, not low-fare carriers. Their entire structure is based on lower costs, ie. small head offices, flat management, no interlining at hubs, internet booking/e-tickets, quick turn-arounds, more poorly paid staff, much lower (if any) health care and pensions commitments etc. etc. |
ChrisVJ - overall AA is just barely breaking even, and only slightly profitable internationally, and it's the best performing of the 'legacy' carriers...
A new CEO, early concessions, and the advantage of being on the outside of bankruptcy looking at the travails of others are what's making AA's staff tread lightly and try and keep the ship on an even keel. AA is weighed down by a crushing long- and short-term debt load, although the pension plans are in suprisingly good shape at over 80% (real) funding level. I will admit though, that there are those who are still in the 'nuclear option' mode of passenger service - who just don't seem to get it. It only takes one disgruntled employee to ruin the travel experience that 40 others are doing their best to sustain. One of the core issues that is inevitably going to come up sooner rather than later is whether Air Transport in the US is a utility and should be more closely regulated. The Republicans hate regulation, but some experts are now writing papers to the effect that permanent damage is being done to the US air network, particularly threatening places where the discounters cannot fly, such as the snow resorts. I think a double CH11 filing is going to raise eyebrows in Washington, and lead to hearings..... |
But guess who was in Glasgow today having a look around the Airport ?????
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Delta bankrupt but?
The thing that is interesting is all the 'legacy' US carriers are expanding international service. Delta is dumping domestic routes and adding flights to Europe and S America. I guess these makets are the only areas where they can generate more revenue than expenses (I won't say make a profit)
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Delta files for Chapter 11 bankruptcy
http://www.bradenton.com/mld/bradent...s/12644994.htm
ATLANTA - Delta Air Lines Inc., hobbled by high fuel costs and heavy debt and pension obligations, filed for bankruptcy protection from its creditors Wednesday, becoming the third major carrier to enter Chapter 11 since the 2001 terrorist attacks. The filing came as Northwest Airlines Corp., struggling with similar issues, was also expected to enter bankruptcy proceedings. Delta's total debt is roughly $20.5 billion, and it listed $21.6 billion in assets as of June 30. The asset figure would make Delta's bankruptcy the ninth-largest in U.S. history, according to bankruptcy tracker New Generation Research Inc. The ranking could change depending on how Delta accounts for its recent $425 million sale of feeder carrier Atlantic Southeast Airlines to SkyWest Inc. Passengers were not expected to see any immediate effects from the filing. Delta was expected to continue its normal schedule. However, as the company makes its way through bankruptcy court, some changes to Delta's operations could occur, analysts say. Atlanta-based Delta, the nation's third-largest carrier, has lost nearly $10 billion over the last four years despite announcing it would cut up to 24,000 jobs. In September 2004, it also said it would shed its Dallas hub as part of a sweeping turnaround plan aimed at saving the airline. It has since scaled back its operations in Dallas. Delta follows into bankruptcy UAL Corp., the Elk Grove Village, Ill.-based parent of United Airlines, and Arlington, Va.-based US Airways Group, Inc., which is undergoing reorganization for the second time in three years. Fort Worth, Texas-based AMR Corp., the parent of American Airlines, the nation's biggest carrier, teetered on the verge of bankruptcy before winning deep concessions from its employees. The other so-called legacy carriers, those with a large presence in multiple regions prior to deregulation in 1978, are Eagan, Minn.-based Northwest and Houston-based Continental Airlines Inc. |
Delta and Northwest bankrupt
Both filed for chapter 11 protection today. Interesting that they filed at the same time.
I hope peoples pensions will be ok. Delta here NWA here |
Delta, even before deregulation, were known for their agility in the marketplace. Their slogan should have been "Delta is ready when you aren't!" - they could eat their competitors' lunch.
NWA decades ago were known as Cobra Airlines: "We strike at anything!" |
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