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Posted on Sun, Nov. 13, 2005
Pilot showdown looms for bankrupt Delta
HARRY R. WEBER
Associated Press
ATLANTA - A pivotal week is ahead for Delta Air Lines Inc. The struggling carrier may release more details about its finances in a regulatory filing Monday, its pilots plan a rally Tuesday to defend their contract and a bankruptcy hearing is set for Wednesday to discuss whether to void that contract and allow the company to impose deep pay and benefit cuts.
There's a lot at stake as the pilots have raise the prospect of a strike if the court rejects their contract. Whether they are able to do so legally, however, is a matter open for question.
"I tend to think they probably are," said William Rochelle, a bankruptcy lawyer in New York who represents a major creditor in the Delta case. "If not, I think there's a new form of slavery in the United States."
At Wednesday's hearing in New York, U.S. Bankruptcy Judge Prudence Carter Beatty is expected to hear arguments from lawyers for Delta and the Air Line Pilots Association, the union that represents the Atlanta-based company's 6,000 pilots.
The judge could decide immediately on the company's request to void the pilot contract, though most people connected to the case believe she will give the sides up to 30 more days to reach an agreement before deciding on her own.
The company wants $325 million in new concessions from its pilots, which would include a 19.5 percent pay cut. The pilots union has proposed $90.7 million in average annual concessions over four years, which would include a 9 percent pay cut effective Dec. 1 to last for seven months, followed by 7 percent for six months, then 5 percent thereafter.
The cuts would be on top of $1 billion in annual concessions the pilots agreed to in a five-year deal reached in 2004. That deal included a 32.5 percent pay cut.
Delta pilots currently earn an average of $169,393 a year, according to a company bankruptcy court filing. The document says the figure is a projection based on year-to-date actual earnings by people employed throughout last year and up to Sept. 16 of this year. It does not include proposed pilot pay rate reductions. Junior pilots make considerably less, while senior pilots in some cases make more. The type of aircraft a pilot flies also is a factor in the pay scale.
The company doesn't want a strike, and the pilots have made clear they don't want a judge throwing out their contract. But the pilots have pointed to their past sacrifices and argued that the new cuts they are offering are more than enough to help Delta become profitable again and compete with low-cost rivals.
If the decision gets to the judge, it's not a given how she would rule, though she indicated in an unrelated Delta bankruptcy hearing Thursday that she believes Delta's pilots are overpaid.
"The only people that make more money than Delta's pilots are you," Beatty told lawyers and company executives in the courtroom.
But Beatty also questioned the merits of Delta's business plan, specifically its decision to expand its international flights. "I don't think a business plan is one you just put down on paper," the judge said.
So, what will happen?
"That's a hard one," Rochelle said. "So far, the track record shows in the overwhelming number of cases the two sides agree without the court imposing new terms of employment. If you're a betting man, you follow the odds."
One thing that is clear is the pilots, the only major unionized group at Delta, have promised to fight to protect their contract. On the day before the bankruptcy hearing, the union has scheduled a rally at a suburban Atlanta convention center. Union officials are encouraging as many members and their spouses as possible to attend.
The airline's big week starts with the release of its quarterly report to the Securities and Exchange Commission. In the report, Delta could release more details about its financial condition.
The company said it delayed the filing until then in part because since its Sept. 14 bankruptcy petition it has been engaged in discussions with creditors, financial institutions, its employees and others regarding issues related to the Chapter 11 case.
Delta, the nation's third-largest carrier, has recorded losses of more than $11 billion since January 2001 and over that period has announced that it would cut up to 33,000 jobs. Its loss in the third quarter, reported Thursday, was $1.13 billion.
and now...
Delta, pilots in court over reduced pay
Thursday, November 17, 2005; Posted: 9:54 a.m. EST (14:54 GMT)
NEW YORK (AP) -- Delta Air Lines Inc. asked a U.S. Bankruptcy Court judge to void its contract with Delta's pilots' union so the beleaguered airline can impose deep wage and benefit cuts and avoid further financial erosion.
In a hearing that lasted into early Wednesday evening and was to continue Thursday, Delta attorney Jack Gallagher said the airline valued its pilots and tried to negotiate reductions, but ultimately failed.
Faced with rising fuel costs, Delta is seeking to slash $325 million (euro278 million) from its collective bargaining agreement with its pilots, saying the money is needed to keep its operations running. The ALPA, which has offered $90.7 million (euro77.7 million) in concessions, has threatened to strike if the court grants Delta's request.
"The need is $325 million of cash. That is what our investment bankers tell us. That's what our creditor committee tells us," Gallagher said. "ALPA is fervently urging the court to say it isn't so. We're telling them it is so.
We wish we didn't need $325 million of cash. But the need is real."
With several uniformed Delta pilots looking on in the standing room-only courtroom, union attorney Bruce Simon said the ALPA attempted to come to an agreement on further cuts, including an offer of short-term cuts with the possibility of deeper cuts under binding arbitration, but he said the pilots were rebuffed. He also noted the union agreed to $1 billion in concessions last year, and had given back enough.
"The fact of the matter is in that labor negotiations both sides understand that labor strife is counterproductive," Simon said. "Pilots don't strike for the hell of it. They don't needlessly place their employer in dire jeopardy."
U.S. Bankruptcy Court Judge Prudence Carter Beatty actively questioned both attorneys, but singled out Delta for attempting to draw comparisons to other airline bankruptcies, which she said were useless in considering Delta's unique case.
"I say you're throwing darts at the pilots because they're smaller than you are and you think you can stomp on them. That may or may not be true." Beatty told Gallagher. "I don't think this matter will be resolved until I hear what the pilots have to say and what you have to say."
Delta spokesman Dan Lewis rejected the judge's assertion. "I think the one thing we agree on is that we have a deep respect for the pilots," Lewis said. "But this is not about respect. This is a financial issue."
Outside the courtroom, union officials reiterated their opposition to a court-imposed contract. "The Delta pilots will not willingly work without a contract," said Delta Capt. John Culp, a union spokesman. "If Delta chooses contract rejection over negotiations, we may be forced to choose some manner of self-defense."
No union officials outside the courtroom would say whether that self-defense would include a strike.
The hearing had started with Simon asking Beatty to remove herself from deciding on the union contract and claiming that the judge showed bias through comments in earlier court hearings in which she said pilots wages were "hideously high."
Simon cited a November 10 Associated Press story in which Beatty was quoted as saying: "What's really weird is that anyone agreed to pay them that much money to begin with."
Beatty denied Simon's request, saying that her comments, made in jest, were misinterpreted.
With each side expected to call multiple witnesses, including financial experts from both sides, union officials and a number of pilots, the hearing could continue through the rest of the week. At that point, Beatty could rule on the request or could give the two sides another 30 days to reach an agreement before having to issue her own decision.
In Atlanta Tuesday, 800 pilots' union members and spouses rallied in support of the union's position, insisting the threat of a strike was not a bluff, although Delta maintains a strike would cripple the company and force a shutdown.
In court papers filed Monday, Delta called a potential strike a "murder-suicide" that would eliminate every job at the company. The airline also argued that, under the Railway Labor Act, a strike would be illegal.
Delta pilots currently earn an average of $169,393 a year, according to a company bankruptcy court filing. The document says the figure is a projection based on year-to-date actual earnings by people employed throughout last year and up to September 16 of this year. It does not include proposed pilot pay rate reductions. Junior pilots make considerably less, while senior pilots in some cases make more. The type of aircraft a pilot flies also is a factor in the pay scale.
If the court approves the cuts, they would be on top of $1 billion in annual concessions the pilots agreed to in a five-year deal reached in 2004. That deal included a 32.5 percent pay cut.
Delta, which filed for Chapter 11 on September 14, has recorded losses of more than $11 billion since January 2001 and over that period has announced it would cut up to 33,000 jobs. Its loss in the third quarter, reported Thursday, was $1.13 billion.
I'm just trying to figure out where exactly she stands on the issue of pilot
wages and treatment by management. To me it makes me question this judges ability to examine the issue fairly when she issues two completely opposing statement about the pilot group within ONE WEEK of each other. And I seriously call into question her judgement if she feels it is ok to joke about a case as big as this one that she herself is overseeing. Any thoughts?
Pilot showdown looms for bankrupt Delta
HARRY R. WEBER
Associated Press
ATLANTA - A pivotal week is ahead for Delta Air Lines Inc. The struggling carrier may release more details about its finances in a regulatory filing Monday, its pilots plan a rally Tuesday to defend their contract and a bankruptcy hearing is set for Wednesday to discuss whether to void that contract and allow the company to impose deep pay and benefit cuts.
There's a lot at stake as the pilots have raise the prospect of a strike if the court rejects their contract. Whether they are able to do so legally, however, is a matter open for question.
"I tend to think they probably are," said William Rochelle, a bankruptcy lawyer in New York who represents a major creditor in the Delta case. "If not, I think there's a new form of slavery in the United States."
At Wednesday's hearing in New York, U.S. Bankruptcy Judge Prudence Carter Beatty is expected to hear arguments from lawyers for Delta and the Air Line Pilots Association, the union that represents the Atlanta-based company's 6,000 pilots.
The judge could decide immediately on the company's request to void the pilot contract, though most people connected to the case believe she will give the sides up to 30 more days to reach an agreement before deciding on her own.
The company wants $325 million in new concessions from its pilots, which would include a 19.5 percent pay cut. The pilots union has proposed $90.7 million in average annual concessions over four years, which would include a 9 percent pay cut effective Dec. 1 to last for seven months, followed by 7 percent for six months, then 5 percent thereafter.
The cuts would be on top of $1 billion in annual concessions the pilots agreed to in a five-year deal reached in 2004. That deal included a 32.5 percent pay cut.
Delta pilots currently earn an average of $169,393 a year, according to a company bankruptcy court filing. The document says the figure is a projection based on year-to-date actual earnings by people employed throughout last year and up to Sept. 16 of this year. It does not include proposed pilot pay rate reductions. Junior pilots make considerably less, while senior pilots in some cases make more. The type of aircraft a pilot flies also is a factor in the pay scale.
The company doesn't want a strike, and the pilots have made clear they don't want a judge throwing out their contract. But the pilots have pointed to their past sacrifices and argued that the new cuts they are offering are more than enough to help Delta become profitable again and compete with low-cost rivals.
If the decision gets to the judge, it's not a given how she would rule, though she indicated in an unrelated Delta bankruptcy hearing Thursday that she believes Delta's pilots are overpaid.
"The only people that make more money than Delta's pilots are you," Beatty told lawyers and company executives in the courtroom.
But Beatty also questioned the merits of Delta's business plan, specifically its decision to expand its international flights. "I don't think a business plan is one you just put down on paper," the judge said.
So, what will happen?
"That's a hard one," Rochelle said. "So far, the track record shows in the overwhelming number of cases the two sides agree without the court imposing new terms of employment. If you're a betting man, you follow the odds."
One thing that is clear is the pilots, the only major unionized group at Delta, have promised to fight to protect their contract. On the day before the bankruptcy hearing, the union has scheduled a rally at a suburban Atlanta convention center. Union officials are encouraging as many members and their spouses as possible to attend.
The airline's big week starts with the release of its quarterly report to the Securities and Exchange Commission. In the report, Delta could release more details about its financial condition.
The company said it delayed the filing until then in part because since its Sept. 14 bankruptcy petition it has been engaged in discussions with creditors, financial institutions, its employees and others regarding issues related to the Chapter 11 case.
Delta, the nation's third-largest carrier, has recorded losses of more than $11 billion since January 2001 and over that period has announced that it would cut up to 33,000 jobs. Its loss in the third quarter, reported Thursday, was $1.13 billion.
and now...
Delta, pilots in court over reduced pay
Thursday, November 17, 2005; Posted: 9:54 a.m. EST (14:54 GMT)
NEW YORK (AP) -- Delta Air Lines Inc. asked a U.S. Bankruptcy Court judge to void its contract with Delta's pilots' union so the beleaguered airline can impose deep wage and benefit cuts and avoid further financial erosion.
In a hearing that lasted into early Wednesday evening and was to continue Thursday, Delta attorney Jack Gallagher said the airline valued its pilots and tried to negotiate reductions, but ultimately failed.
Faced with rising fuel costs, Delta is seeking to slash $325 million (euro278 million) from its collective bargaining agreement with its pilots, saying the money is needed to keep its operations running. The ALPA, which has offered $90.7 million (euro77.7 million) in concessions, has threatened to strike if the court grants Delta's request.
"The need is $325 million of cash. That is what our investment bankers tell us. That's what our creditor committee tells us," Gallagher said. "ALPA is fervently urging the court to say it isn't so. We're telling them it is so.
We wish we didn't need $325 million of cash. But the need is real."
With several uniformed Delta pilots looking on in the standing room-only courtroom, union attorney Bruce Simon said the ALPA attempted to come to an agreement on further cuts, including an offer of short-term cuts with the possibility of deeper cuts under binding arbitration, but he said the pilots were rebuffed. He also noted the union agreed to $1 billion in concessions last year, and had given back enough.
"The fact of the matter is in that labor negotiations both sides understand that labor strife is counterproductive," Simon said. "Pilots don't strike for the hell of it. They don't needlessly place their employer in dire jeopardy."
U.S. Bankruptcy Court Judge Prudence Carter Beatty actively questioned both attorneys, but singled out Delta for attempting to draw comparisons to other airline bankruptcies, which she said were useless in considering Delta's unique case.
"I say you're throwing darts at the pilots because they're smaller than you are and you think you can stomp on them. That may or may not be true." Beatty told Gallagher. "I don't think this matter will be resolved until I hear what the pilots have to say and what you have to say."
Delta spokesman Dan Lewis rejected the judge's assertion. "I think the one thing we agree on is that we have a deep respect for the pilots," Lewis said. "But this is not about respect. This is a financial issue."
Outside the courtroom, union officials reiterated their opposition to a court-imposed contract. "The Delta pilots will not willingly work without a contract," said Delta Capt. John Culp, a union spokesman. "If Delta chooses contract rejection over negotiations, we may be forced to choose some manner of self-defense."
No union officials outside the courtroom would say whether that self-defense would include a strike.
The hearing had started with Simon asking Beatty to remove herself from deciding on the union contract and claiming that the judge showed bias through comments in earlier court hearings in which she said pilots wages were "hideously high."
Simon cited a November 10 Associated Press story in which Beatty was quoted as saying: "What's really weird is that anyone agreed to pay them that much money to begin with."
Beatty denied Simon's request, saying that her comments, made in jest, were misinterpreted.
With each side expected to call multiple witnesses, including financial experts from both sides, union officials and a number of pilots, the hearing could continue through the rest of the week. At that point, Beatty could rule on the request or could give the two sides another 30 days to reach an agreement before having to issue her own decision.
In Atlanta Tuesday, 800 pilots' union members and spouses rallied in support of the union's position, insisting the threat of a strike was not a bluff, although Delta maintains a strike would cripple the company and force a shutdown.
In court papers filed Monday, Delta called a potential strike a "murder-suicide" that would eliminate every job at the company. The airline also argued that, under the Railway Labor Act, a strike would be illegal.
Delta pilots currently earn an average of $169,393 a year, according to a company bankruptcy court filing. The document says the figure is a projection based on year-to-date actual earnings by people employed throughout last year and up to September 16 of this year. It does not include proposed pilot pay rate reductions. Junior pilots make considerably less, while senior pilots in some cases make more. The type of aircraft a pilot flies also is a factor in the pay scale.
If the court approves the cuts, they would be on top of $1 billion in annual concessions the pilots agreed to in a five-year deal reached in 2004. That deal included a 32.5 percent pay cut.
Delta, which filed for Chapter 11 on September 14, has recorded losses of more than $11 billion since January 2001 and over that period has announced it would cut up to 33,000 jobs. Its loss in the third quarter, reported Thursday, was $1.13 billion.
I'm just trying to figure out where exactly she stands on the issue of pilot
wages and treatment by management. To me it makes me question this judges ability to examine the issue fairly when she issues two completely opposing statement about the pilot group within ONE WEEK of each other. And I seriously call into question her judgement if she feels it is ok to joke about a case as big as this one that she herself is overseeing. Any thoughts?
