Delta pilots agree to approve pay cut
December 30, 2005
Delta pilots, this week, voted to approve a 14-percent union-management negotiated pay cut, but the measure passed by only a small margin. By noon Wednesday, 85 percent of Atlanta-based Delta’s 6,000 pilots had voted, according to local union head for Delta pilots, Ed Thiel, and when the ballot closed at 2 p.m., only 58 percent of the pilots had agreed to concede a portion their salaries to help the bankrupt carrier manage its finances. As a result, Delta management will receive an estimated $143 million on top of the $1 billion in annual concessions the company’s pilots gave up in a five-year deal beginning in 2004 a compromise that resulted in a 32.5-percent reduction in pilots’ pay. Thiel insists the threat of an imminent pilot strike announced earlier this month is not over, just postponed for three months to allow Delta the time necessary to work out the details of a long-range plan by March, 2006. Thiel represents nearly 700 Delta pilots in the Salt Lake City area, 170 of which reside in Park City, and without hesitation, he describes the overall feeling among his coworkers as "very angry" with company management. "It’s mean spirited. It’s 25 years worth of revenge here," he claims. "The [Delta] company has completely overreached. It’s abusive, vindictive. They’re out of line."
According to Thiel, the company has wasted precious negotiating time in an attempt to bypass bargaining with the pilots’ union altogether, demanding $325 million from pilots’ salaries over the last few months through the court system. It was a demand based on poor research and amateur financial analysis, he says, since the request was made using salaries earned during the second quarter of 2005, which includes pilots being paid for unused vacation time, inflating the payroll. Additionally, almost 400 pilots who retired in August and September were included in the calculation, again boosting the numbers.
"They calculated their need based on some very bad numbers," he said. "I mean, they did their homework very badly and in addition, their demands are just outrageous. They’ve never liked dealing with us, and now they’ve got the upper hand, and they’re just abusing that."
Thiel says that the creditors committee, representatives from companies like Boeing, General Electric and American Express have been observing Delta since it filed for Chapter 11 bankruptcy protection Sept. 14, and that they could see that the financial people of Delta were "either terribly incompetent or hadn’t done their homework." When the company filed for bankruptcy, it had reportedly lost $11 billion over the last five years.
After the executive committee of the pilots union at Delta Air Lines Inc. voted unanimously to authorize a strike, Delta spokeswoman Chris Kelly said the company would continue to try to reach a "consensual agreement in time to save the company," according to a Washington Post article Dec. 9.
According to Thiel, the real pressure that got management to begin to work with pilots came from the government.
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"The U.S. Trustee that is part of the [U.S.] Department of Justice that oversees bankruptcy cases got [management] to negotiate with us," he said. "We don’t know what kind of pressure he put on the company, but he suggested strongly that we negotiate an agreement."
The pay cut does not include pensions, which was part of the issue, Thiel says.
"Part of our big battle is that our pension fund is under-funded at only 53 percent of the required funding. And on top of that, Delta has stopped putting any money into it, so it’s doomed to fail. They just won’t admit it," he said. "We fully expect to lose our retirement plans."
Though Thiel, 48, does not intend to leave the company, he says younger pilots are currently looking into other careers in aviation or going into new professions altogether.
In previous articles, Delta spokespeople have quoted the average salary for pilots at $170,000, which Thiel says is well over the average. While some pilots earn a salary of $200,000 a year, many earn $75,000. "We even sat down with the company’s public relations people and showed them that [the $170,000 average] wasn’t possible, and they were kind of shocked, because they said, ‘well, that’s what our management is telling us,’" Thiel explained. "And that’s just not accurate."
For younger pilots, he says, the latest pay cut will put their salaries below AirTrans and Southwest airlines to right around the amount made by Jet Blue and other low-cost carrier pilots.
Thiel said that he was in favor of the approved temporary agreement this week, since it was at least a start in the right direction.
"Delta’s been pushing the courts to impose something on us, so I’m happy to get them into actual negotiations," he said.
But at this point, he noted, pilots are not as amenable to contractual concessions as they have been in the past. "I think the potential problem is that they’re sitting on a powder keg here," Thiel observed. "This pilot group is not going to take a whole lot more, if anything."