Delta Pilots End Era of Luxurious Pay

Did Delta also end an era of luxurious "management pay" by 32.5 percent?
I tend to think not.....


"n+e+w+s" wrote in message
newsqg9p019nhi2h9ugk3in97plpga0ipan5n@news...
November 12, 2004
http://www.nytimes.com

Delta Pilots Vote to Accept 32.5% Pay Cut
By MICHELINE MAYNARD

Pilots at Delta Air Lines overwhelmingly approved a new five-year
contract yesterday with $1 billion in annual concessions sought by the
airline, which had threatened to file for bankruptcy if the pilots did
not acquiesce.

The deal, which cuts pay by 32.5 percent, would reduce the salary of
the highest-paid Delta pilot by more than $90,000, to about $185,000 a
year. It ends an era of luxurious pilot pay in the airline industry,
but does not end Delta's problems.

Delta, the nation's third-largest airline, must still arrange new
terms on its debt, slash its costs and carry out a strategy that it
hopes will take it through the industry's gathering storm.

"There are no winners at this point," Delta's chief executive, Gerald
A. Grinstein, said yesterday in a letter to pilots. "We unfortunately
remain in turbulent times."

The pilots' vote simply allows Delta to "back away from the cliff by
several steps," said Philip A. Baggaley, an airline analyst with
Standard & Poor's Ratings Services.

The Air Line Pilots Association, which represents Delta's pilots, said
the pact was approved by 79 percent of those voting. It said about 91
percent of its members at Delta cast ballots - considered a high
turnout in a union vote. Delta's pilots are the airline's only
unionized labor group.

But the stakes were high for both the pilots and Delta, which is based
in Atlanta. The airline had threatened repeatedly to seek bankruptcy
protection unless its pilots agreed to cut the wages and benefits that
had made them the best paid in the airline industry.

"Our airline has been managed to the brink of bankruptcy and the Delta
pilots had to decide between two bad choices," John Malone, chairman
of the master executive council of the pilots' union, said in a
statement yesterday. "They chose the lesser of two evils."

The union and the airline reached a tentative agreement on Oct. 28,
hours after a deadline for a deal, set by Mr. Grinstein. When the two
sides finally agreed, Delta's lawyers were waiting in New York for a
telephone call from Atlanta authorizing them to file bankruptcy
papers.

"This decision is meaningful to everyone at Delta," Mr. Grinstein said
in his letter to the pilots. But he added, "Delta must stay
competitive with the marketplace if we are to survive and compete."

Delta's most senior pilots, flying its biggest aircraft, earned as
much as $287,000 a year. By contrast, JetBlue Airways, a low-fare
carrier that does not have unions, pays a top salary of $108,000 a
year. Pilots at American Airlines, United, Northwest Airlines and US
Airways have all approved cuts in the last year; Continental Airlines
is in talks with its pilots.

Along with pay cuts, Delta will also freeze its traditional pension
plan for pilots and replace it with a less-generous 401(k) plan. Delta
will also require pilots to pay more for health care. Pilots will be
given the right to purchase options on 30 million new Delta shares.

Delta's salaried employees have already taken 10 percent pay cuts,
while Mr. Grinstein took the equivalent of a 25 percent cut in
September. The airline has said it plans to cut up to 7,000 jobs
through 2006.

Approval of the cuts by Delta's pilots allows Delta to conclude
lending agreements with GE Capital Aviation Services and American
Express Travel Related Services. The airline is also trying to
persuade holders of $20 billion in debt to accept terms more favorable
to Delta. It will get the results of that offer next week.

On top of that, Delta has announced plans to fight both its big rivals
and low-fare airlines that are taking bites out of its traditional
strongholds in Atlanta and Florida. Early next year, it will adjust
its schedules to focus more on direct flights from hubs in Atlanta,
Cincinnati and Salt Lake City, and it will close its hub in Dallas.

But if it cannot knit all those pieces together, analysts said, Delta
could find itself again on the brink of Chapter 11.

One tool the airline expects to lean upon more heavily is Song, the
low-fare operation started by Delta last year, featuring lime-green
Boeing 757 jets and uniforms designed by Kate Spade. Delta's
precarious finances stalled Song's growth plans in 2003. But Delta
plans to add a dozen more planes and new cities to Song's lineup next
year.

Derided in some aviation circles as a marketing gimmick, Song has to
prove it can be consistent - planes range from half-empty to nearly
full and profits from minuscule to generous, depending on the route.

Song does best on routes to Florida, and worst to Las Vegas, people
inside the airline with knowledge of its operations said. Delta has
never broken out separate results for Song.

Another of the industry's troubled airlines, US Airways, reached deals
with lenders and lease holders that will allow it to keep flying most
of its aircraft, although it said leases on four of its 282 planes
were likely to be rejected. On Sept. 12, US Airways filed for
bankruptcy protection for the second time in two years.

Peter MacPherson wrote:
Did Delta also end an era of luxurious "management pay" by 32.5 percent?
I tend to think not.....

Probably not, but there are more pilots than managers (one would hope). It's
the same story. When you look at the bottom line, the total amount of money
spent on payroll by the rank-and-file is a far juicier cost-cutting target than
the amount spent on the few highly compensated executives.

I think they cut non-pilot salaried employees 10% with the CEO taking a 25%
cut. Pilot salaries were the most rediculous so they were cut the most.

Mike
MU-2


"Ron Natalie" wrote in message
m...
Peter MacPherson wrote:
Did Delta also end an era of luxurious "management pay" by 32.5 percent?
I tend to think not.....

Probably not, but there are more pilots than managers (one would hope).
It's
the same story. When you look at the bottom line, the total amount of
money
spent on payroll by the rank-and-file is a far juicier cost-cutting target
than
the amount spent on the few highly compensated executives.

Maybe the senior pilots flying heavies internationally are making the
$285,000
the article was talking about, but what about the vast majority that aren't
making close to that? Their salaries certainly aren't ridiculous(IMO). But
I'm sure the pilots union realizes that a 32.5 percent pay cut is better
than
no pay.



"Mike Rapoport" wrote in message
link.net...
I think they cut non-pilot salaried employees 10% with the CEO taking a 25%
cut. Pilot salaries were the most rediculous so they were cut the most.

Mike
MU-2


"Ron Natalie" wrote in message
m...
Peter MacPherson wrote:
Did Delta also end an era of luxurious "management pay" by 32.5 percent?
I tend to think not.....

Probably not, but there are more pilots than managers (one would hope).
It's
the same story. When you look at the bottom line, the total amount of
money
spent on payroll by the rank-and-file is a far juicier cost-cutting
target than
the amount spent on the few highly compensated executives.

kontiki wrote:
Chris wrote:


It is amazing these airlines have soaked up billions of Dollars in
Federal subsidies and still cannot get by.

Exactly.

When you sell your product for less than it costs to provide, what would
you expect?

Dave

"Dave S" wrote in message
link.net...


kontiki wrote:
Chris wrote:


It is amazing these airlines have soaked up billions of Dollars in
Federal subsidies and still cannot get by.

Exactly.

When you sell your product for less than it costs to provide, what would
you expect?

Dave

Either cut costs, raise the price or get out of the business.

"Peter MacPherson" wrote in message news:464ld.24424$V41.22997@attbi_s52...
Did Delta also end an era of luxurious "management pay" by 32.5 percent?
I tend to think not.....

Perhaps I'm too conservative but I'll never understand that line of
thinking. Pilot's saleries are dictated by unions. There are 100
pilots wanting to work for every airline pilot employeed. Saleries
would normally be quite low with so many wanting those jobs, but the
union makes them high.
Executives have high saleries because they do a job few can do. Not
many people on this planet can be good CEOs. CEOs are highly paid for
the same reason NBA Basketball stars are, not many people can do those
jobs. CEOs can be let go if the board thinks their saleries are too
high, pilots cannot. If another CEO offers to work for Delta for less,
the board can fire the current CEO and hire the less expensive guy at
any time. The board cannot just hire their friends because they can
get fired. The institutional investors and fund managers make their
money 100% on the company's bottom line. They will not stand for
spending their money on a CEO being paid more than he's worth on the
market. The board are elected by these fund managers and institutional
invesytors. If the company spends more money than they need to, the
stock will do less well, the fund managers will lower their efficiency
rating, and investors (mostly retirement accounts) will choose other
funds to invest in. Everyone has someone to answer to. A good CEO can
make or break a company, its worth paying full market rate for a good
CEO.
Free market economics works amazingly well if we just let it be free.

-Robert, FAA Certified Flight Instructor, Commercial Pilot and MBA

"Robert M. Gary" wrote in message
om...

A good CEO can make or break a company


And there's been no lack of "breaking" going on in the airline biz lately.
It's been over 20 years since deregulation, they can't keep using that
excuse. The airlines are where they are today because of management building
companies with high cost structures. Many of those managers are still there.


Free market economics works amazingly well if we just let it be free.


I think you're a little naive about the way business really works at the
level of a company like Delta. CEO pay has been increasing dramatically
across the board not just for companies that have done well, but at those
that haven't. So much so that even the institutions are starting to show
signs of concern. These same wonderful institutional investors who, by the
way, were making billions flipping IPOs and market-timing your mutual funds.
They're all a bunch of crooks and it pains me to say it because I think the
only thing worse than capitalism is everything else. But we've failed lately
in policing the fraud and as a result it's spread far and wide. Somebody
please explain to me why Martha Stewart is in jail and Ken Lay isn't.

"C Kingsbury" wrote in message news

"Robert M. Gary" wrote in message
om...

A good CEO can make or break a company


And there's been no lack of "breaking" going on in the airline biz lately.
It's been over 20 years since deregulation, they can't keep using that
excuse. The airlines are where they are today because of management building
companies with high cost structures. Many of those managers are still there.


Free market economics works amazingly well if we just let it be free.


I think you're a little naive about the way business really works at the
level of a company like Delta. CEO pay has been increasing dramatically
across the board not just for companies that have done well, but at those
that haven't. So much so that even the institutions are starting to show
signs of concern. These same wonderful institutional investors who, by the
way, were making billions flipping IPOs and market-timing your mutual funds.
They're all a bunch of crooks and it pains me to say it because I think the
only thing worse than capitalism is everything else. But we've failed lately
in policing the fraud and as a result it's spread far and wide. Somebody
please explain to me why Martha Stewart is in jail and Ken Lay isn't.



http://www.lcurve.org/images/LCurveFlier2003.pdf

"Robert M. Gary" wrote in message
om...
"Peter MacPherson" wrote in message
news:464ld.24424$V41.22997@attbi_s52...
Did Delta also end an era of luxurious "management pay" by 32.5 percent?
I tend to think not.....
..snip

Executives have high saleries because they do a job few can do. Not
many people on this planet can be good CEOs. CEOs are highly paid for
the same reason NBA Basketball stars are, not many people can do those
jobs.

Baloney. This is just CEO propanganda. Easily, 50% or more, of middle
managers could do the CEO job. There is nothing difficult or special about
it. Simply because management is a pyramid with one job at the top does not
mean that the top job is so special that only a few are capable of doing it.
In the computer industry most engineers could be adequate CEOs, but few CEOs
can be even mediocre engineers.

Earl G