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October 20, 2020

Win-Win Solutions

 “You know. I have heard people say we’re only going to do win-win deals. We keep the Company alive and protect jobs. That’s win-win. Win-win should not be viewed as some pilots are going to leverage the situation to take advantage of the fact we have pilots on a furlough roster and notice. That’s awful to be thinking about things in those kinds of terms. So, we need to pull together. We need to get it done.”

 -CEO Ed Bastian – Town Hall Interview, September 22, 2020

 

Dear Fellow Pilots:

I want to take a moment, break down this statement, and present my view of these issues starting with the pending furlough along with facts.

Facts: Management created the UNA category. Management sent the WARN Act notices. Management sent furlough letters. It is management who will ultimately decide if pilots are furloughed. It is ALPA’s firm opinion that management is using potentially furloughed pilots as pawns. Delta holds these pilots’ fate in the balance, insisting that they will let these pilots go unless concessions are granted. To twist the facts and imply that pilots are trying to take advantage of their fellow pilots facing furlough is outrageous and offensive.

Win-win deals: Mr. Bastian’s statement indicates he believes a win-win deal is “we” – the senior executives – “keep the Company alive” and, therefore, you will have a job. That is not what ALPA considers a win/win deal, also known as integrative bargaining. A win-win deal is rooted in trust in which collaboration occurs, and both parties’ needs are met. A win-win deal is the opposite of a zero-sum outcome where one party wins and the other loses. These types of deals and bargaining were each illustrated at the onset of the COVID-19 pandemic. Here is our analysis.

LOA #20-01: Win/Win

While the MEC was in session in early March, your PBS and Scheduling Committee observed that Delta was having difficulty loading the April schedule for bidding. As the deadline loomed, ALPA offered the Company extra time to solve its evolving and deepening difficulties. Management rejected that offer; the deadline came and went. Hours later, Delta asked to begin negotiations centered on finding solutions brought on by the unfolding pandemic. Negotiations began the next day and quickly resulted in LOA #20-01. The agreement gave management the ability to re-bid April, saving Delta well over $50 million immediately. While it was an uncertain time, we felt secure that we had a collaborative agreement with management built on trust. Pilots not only led at Delta, but we also led the industry as uncertainty mounted. 

LOA #20-01 was the clearest example of a win-win agreement in which working together succeeded — until it didn’t. Our trust, which is required to collaborate, was breached when Mr. Bastian disallowed the use of SILs. He single-handedly turned the win-win agreement that many in management and ALPA worked hard to achieve into a zero-sum “I win, you lose” deal. The LOA became the pilots’ first pandemic sacrifice after Bastian materially altered it. We then took the challenge of having the SILS excluded and refocused by combined innovative thinking on creating scheduling modifications that could deliver value and crafted the ideas you see in LOA #20-03. 

A win-win deal is structured on the same principles as, say, a loan that Delta would conceivably get from an equity firm or a large bank. When the Company applies for a loan, terms — such as interest and reimbursement — are agreed upon, and capital is provided. In ALPA’s case, there is no difference. Capital represents relief from our contract, the terms are for a defined time, and there is some form of remuneration and repayment. Management gets its win from obtaining relief that saves money, prevents destruction of its balance sheet, and secures much needed time to recover effectively.

Delta is no stranger to this concept as it often enters into business agreements such as these. Just recently, the Company leveraged its SkyMiles program revenue in exchange for $9 billion by structuring a Cayman Islands holding company to facilitate raising senior secured notes from a consortium of banks. This involved coordinating with the financial institutions, explaining their need for the money, collaborating to secure and structure the deal, and finally executing it. It was a true win-win business deal.  

Lately, management has gone public with its insistent and urgent pleas regarding its recent furlough mitigation proposal. We are ready and willing to collaborate when management demonstrates that we, the pilots of Delta, can trust them. C.E. Woolman, Delta’s revered founder, penned the notes that became the Rules of the Road that all Delta employees are expected to follow. The keystone rule is always keeping your deals. This executive management team continues not to honor our Pilot Working Agreement, as evidenced by the many scope violations and thousands of scheduling abuses that have willfully occurred, have been contended by ALPA, and yet continue unabated.

 New Scope Concerns: 76-Seat Fleet Cap

Last week, ALPA received data raising serious questions about whether the Company has complied with new 76-seat aircraft restrictions that were triggered when the shutdown of Compass Airlines left Delta pilots without the protection afforded by their right to flow down to Compass under LOA 9 (page 389 of the PWA).Under Section 1 B. 47. f. Exception two (page 9 of the PWA), when Compass flow down rights ceased to be available to Delta pilots, the fleet cap on DCI 76-seat “permitted aircraft” was automatically reduced by 35, from 223 to 188.

In other words, Delta can no longer use more than 188 76-seat airframes in its DCI operations. The Company’s most recent compliance report identified 186 76-seat aircraft being used to perform DCI operations as of August 31, 2020. Data gathered from other sources, however, appears to show subsequent DCI flying by at least 12 other 76-seat aircraft that do not appear on that list.  

Any DCI flying by a jet that is not a “permitted aircraft” would violate Section 1 of our PWA. ALPA takes these apparent Scope violations very seriously—not least because the limit in question was specifically intended to safeguard Delta pilots denied flow down rights in the face of looming furloughs. 

The Association issued a “cease and desist” demand on October 14. We are actively pursuing the information necessary to assess Company compliance and ensure that Delta fully honors its PWAobligations going forward. I have been in regular contact with management on this important matter and believe we are making progress toward resolving it. 

Conclusion 

When Mr. Bastian proclaims, “We need to pull together,” the entire management team must prove that we can trust them. They must respect this pilot group by acknowledging the vast sacrifices that we have given — shared and not — and commit to cease violating our contract, particularly Section 1- Scope. Once we establish that mutual respect and determine management is ready to engage in an actual win-win, business-like agreement with the pilots — as it does with its other business partners — then we, the long-term stakeholders in Delta that want to see the Company back at the top of the industry, are ready.  

I ask something from every one of you. I ask we stand shoulder-to-shoulder with your MEC members, resolved and unified, in defense of our PWA’s provisions. I ask that you not take the gospel of social media as the news rather than listening to the collective word coming from your representative body, the Delta MEC. I ask that you make your voice heard by your direct supervisor if you are as disappointed as I am with management’s willful transgressions at a time when they are seeking to reestablish our trust in them. I ask that those facing furlough stand firm and be patient. Please know that your union leadership is doing everything available to prevent furloughs while at the same time protecting the value of the career you’ve worked so hard to achieve.

 

In Unity,

Ryan Schnitzler, Chairman
Delta Master Executive Council