Oh... sorry!
I just wasn't sure as to what's going/coming ahead in the near future...
DATE: November 30, 2003
TO: All Comair Pilots
FROM: Captain J.C. Lawson
Chairman, Comair Master Executive Council
SUBJECT: A Snapshot In Turbulent Times
As most of us know well, mainline Delta management has enjoined Delta pilots at the mid-contract negotiating table. It’s “old news” that Delta mainline faces financial challenges, both immediate and long term. Delta management believes they can only overcome their financial shortfalls if mainline Delta pilots willingly contribute, by way of concessions, and particularly, pay cuts. Sensing a target of opportunity, Delta Connection, Inc. (DCI) (dba Comair) has invited Comair pilots to offer “relief” from our own Contract, specifically citing reduced pay rates, among other things.
Comair management has characterized their “need” for contractual relief as an “Opportunity for Growth”, and bases their need on their claim that it’s not about financial “survival”, (i.e., we’re not in danger of bankruptcy - we’re profitable), but rather that Comair is not competitive when compared to other airlines within, and outside of DCI. While they have never offered guarantees of growth, they have claimed that forty-five airframes “might” become available if we “cut (crew) costs”.
Due diligence dictated that we solicit data that expresses Comair’s financial performance and justifies their alleged needs. Comair provided, and we retained the economic experts at ALPA’s Economic and Financial Analysis (E&FA) to assist us in analyzing that data. The analyses revealed that Comair is, in fact, profitable, i.e., we’re making money today within our current crew cost structure, and that, based upon standard industry financial performance indicators, Comair is also competitive, today, without taking concessions from our employees, specifically Comair pilots.
Having established all of that, and setting it aside momentarily, still, we view virtually every page of our Contract as “legal tender”. Since Delta (dba Comair) management wants something we possess, we may be able to find some common interests to support mutually beneficial discussions. Therefore, we view our management’s need as a potential investment opportunity for Comair pilots. In the event our management is willing to pay a “reasonable price” for whatever we have that they want, we may be previewing an opportunity to improve our future beyond what we have today.
Our position is enviable. We are under absolutely no obligation to negotiate any changes to our current working agreement. Should we discover, at any time, that the return on any investment we may consider is less than worthwhile, we could withdraw immediately, without penalty, from all negotiations.
Another foreboding piece to this complex puzzle now rises: The Request for Proposal (RFP). Delta (dba Delta Connection, Inc.) has solicited an RFP that entices the eight selected participants (CMR, ASA, CHQ, SKW, CALEX, PCL, MSA, and MAG) to “bid” on the offering, with the award going, ostensibly, to the lowest bidder. DCI has expanded its “portfolio” to non-DCI carriers within the Delta-Continental-Northwest Alliance, and we have expanded our communications and coordination to accommodate the new and expanded DCI RFP participant pilot groups. Isn’t it interesting that management calls the Delta-Continental-Northwest relationship an “alliance” while, simultaneously, they openly encourage internal, cutthroat competition specifically designed to reduce employee pay and benefits, and they refer to that as “capitalism at its best”.
To date, the offering appears to be forty-five 50-seat jets to be delivered during 2005 and 2006. This launches a “bidding war” that formally introduces a treacherous “race to the bottom”. DCI is finally transmitting their concessionary aspirations “in the clear”. One can only guess where that “graveyard spin” could end. If all goes per management’s design, somebody could conceivably fly those jets for free!
Sound ominous? There is a bright side. We are ALPA. We have many allies. There’s us, and then there are more of us at ASA. The Comair and ASA MEC’s have been in direct communications constantly, meeting jointly, routinely, for years, and we’re meeting again on December 4th. We have good friends flying ASA airplanes. They trust us, and we trust them. There will be no bidding war. We will not “low ball” one another. Our intra-MEC communications has been continuous, frank, and candid. Our relationship is strong, built on honesty and trust.
Comair MEC members have been in the Comair pilots’ lounge, face-to-face with most of our pilots since early in September. Since early spring, we’ve been expecting our management to seek concessions and we’ve planned accordingly; we’ve been ahead of the wave, and intend to keep you out in front.
Delta may send 50-seat jets to any of the other “competitors” within the RFP to prove that they can; to suggest that they’re willing to allow Comair to “wither on the vine” unless we agree to take reductions in our current Contract. Well, OK, maybe they can, but that is akin to “cutting off your nose to spite your face”. We wonder just how long Delta’s stockholders would tolerate such obstinate behavior while we are generating the profits and slowing the hemorrhaging that threatens Delta’s long-term health and survival.
In the spring of 2001, Delta (dba Comair) managed to squander many hundreds of millions of dollars to sustain a strike on Comair property that former Delta CEO, Mr. Leo Mullin, later characterized as “unfortunate”. In a recent article for Commuter/Regional Airline News entitled “Regional Jets ‘Critical’ In U.S. Airlines’ return to Profitability”, Mr. Doug Abbey, Executive Director of the Regional Air Service Initiative (RASI) wrote:
"As the legacy majors restructure, regional carriers continue to expand the choice of air service available to American cities, focusing on adding new market-pairs, the majority of which were never served nonstop before. Not surprisingly, the number of routes where RJs replaced major carrier jets accounted for only a small portion (4%) of all new service. This confirms that small capacity jets are critical if the U.S. airline industry is ever to return to profitable growth."
The world is watching, yet again, to judge Delta’s financial wisdom should they threaten now to “bite the hand that feeds them”. By all indications, Delta needs every seat and every airframe it can fly, and more, to remain competitive. Sitting any of its assets “on the bench” is not likely a prudent or “competitive” choice.
As we step back for a clearer view, we believe this is not about forty-five 50-seat jets that are due for delivery in 2005 and 2006. It’s definitely not about bankruptcy or our profitability. It’s not even about our competitiveness. This is about “potential” growth beyond ’05 and ’06, to ’08, ’10, ’12, and so on. It is about cutting Comair crew costs to drive Comair’s operating costs below what the market will bear to improve Delta’s “bottom line”. It’s about plundering employee pay and benefits to enhance Delta’s profit margins. It’s about reviving a “B” scale pay rate, this time within the small jet structure, and establishing a foothold to perpetuate its use in the future. This is about forcing the industry “pendulum” to swing past market equilibrium to an artificial imbalance that, this time, favors management. Sadly, an imbalance in any environment is temporary, harmful over time, and still an imbalance, no matter whom it favors. It invites turmoil and unrest, and if imposed, is destined to suffer another violent and costly recoil.
Finally, before competing airlines can operate at “cut rates”, they must first negotiate those sub-standard rates with their respective pilot groups. Herein lays our front line of defense. We are already communicating regularly with all carrier pilot groups within the DCI RFP to encourage them to resist this “race to the bottom”, fueled by an RFP “bidding war”, and ignited by suggestions of potential future growth. Additionally, we are communicating and coordinating with the Leadership of the Delta pilot group. Our communications with these carriers have been productive, and universally recognized as a unified determination to resist this classic, regressive whipsaw tactic.
We will soon know where this “potential investment opportunity” will lead, and we will communicate further as new information becomes available.