March 15, 2019
Fellow Delta pilots,
Last week, your MEC held its first Regular MEC Meeting of 2019 in Atlanta. We addressed more than 10 local council and MEC-generated resolutions, received reports from all MEC standing committees and heard presentations from a number of our committee chairs. In addition, the Delta MEC considered confirmations of the various committee chairs and elected NYC A320 Captain Chris Hazelton as our Pilot Director to the Delta Board of Director for a two-year term; Captain Hazelton’s nomination to the Board is expected to be confirmed at its June board meeting. All in all, we completed a comprehensive agenda; your representatives remained focused on the task at hand and did a great job of representing your interests. Visit the Delta MEC website for a daily summary of the MEC’s activities; committee reports and resolutions will be posted on the MEC Secretary’s page.
Aeroméxico Stock Buyback
While in session, the MEC discussed two important developments related to stock buybacks. The first concerns Aeroméxico. Since 2011, Delta has been purchasing and increasing its number of shares in partner Aeroméxico. In 2017, Delta’s equity stake reached 49%. Aeroméxico, much like Delta, has been participating in a stock buyback program, which has resulted in Delta now owning a nearly 51% stake of Aeroméxico. We are performing a thorough analysis on this development to ensure the Company is in full compliance with our PWA. I will keep the MEC and our pilot group informed of our findings as we learn more.
Delta Stock Repurchasing Program
The second stock buyback development concerns Delta. The Company continues to aggressively implement its own stock repurchase program, which I believe bodes well for our upcoming negotiations. Recently, the Company announced it had secured a $1 billion short-term loan to implement a much faster buyback schedule than originally planned.MEC Brief 19-03 has more details on this announcement. The idea that Delta executives would borrow such a sum of money just to burn it by repurchasing stock is surprising. If the Company is able to continue with these types of risky investments, the news is good for Delta pilots as there can be no valid reason to not fund meaningful enhancements to the value of our pay, retirement and insurance, scope and work rules.
Financial experts often disagree on the value of stock buybacks, but Delta’s decision shows that the Company is flush with cash as we head into contract negotiations. Historically, the overall value of pilot compensation, work rules and benefits were higher than our current PWA at a time when the Company was less profitable than it is today. These recent events and the year-over-year financial success show that Delta should be fully prepared to restore the Delta pilot contract and recognize the value of our profession. The timing of these developments could not be any better for the Delta pilots.
The MEC continues to closely monitor the Company’s continual and growing number of egregious scope violations – now at 22 and counting – as outlined in a recent Chairman’s Letter. Violations of our scope language are not a recent phenomenon. In fact, Delta has been out of compliance in some aspects of scope for several years now. I continue to meet with Delta executives to reiterate that the violations must stop. Agreements to ensure equitable growth must be reached to ensure there are opportunities for Delta pilots now and in the future.
At a bare minimum, our PWA requires that Delta must meet with ALPA to attempt to negotiate a production balance before a joint venture is finalized. This did not occur prior to Delta entering into its joint venture with Korean Air. We have had a couple of conceptual discussions on global balance ideas, and we are hopeful these discussions can lead to an agreement in the near future.
While it’s disappointing that the Company will not meet until after a violation occurs, we remain committed to finding a solution that will end the continuing scope violations and protect Delta pilot jobs. I hope that the Company is equally committed to solving these violations and providing equitable growth for Delta pilots. To be clear: we will not continue to entertain reduced flying opportunities for Delta pilots or the lack of compliance withSection 1 of the PWA. As a former Delta CEO emphatically stated, “A contract is a contract.”
In the very near future, I will be asking for your collective help to let the Company know where you stand on this degradation of flying for Delta pilots. Stay tuned for much more information, including an updated dalscope.org website with new information about Delta’s scope violations and comparisons of Delta’s widebody fleet versus those of our partner carriers.
Countdown to Section 6
Finally, we are just a few weeks away from contract openers and the beginning of our Section 6 negotiations process. Your MEC and Negotiating Committee are fully prepared to carry your priorities forward. We have completed a number of Special MEC Meetings dedicated solely to collating the input you have provided through a myriad of sources to craft an opener that meets your direction. We have an in-depth plan that will unfold soon, and I will be asking for your assistance to show unity behind your team as well as solidarity throughout the process. As the great football coach Vince Lombardi said, “People who work together will win, whether it be against complex football defenses, or the problems of modern society.” If we work together, we will win together.
Ryan Schnitzler, Chairman
Delta Master Executive Council