LETTER OF AGREEMENT
DELTA AIR LINES, INC.
and the Air Line Pilots in the service of
DELTA AIR LINES, INC.
as represented by the
AIR LINE PILOTS ASSOCIATION, INTERNATIONAL
Transatlantic Joint Venture Agreement
This LETTER OF AGREEMENT is made in accordance with the provisions of the Railway Labor Act, as amended, between Delta Air Lines, Inc. (“Company”) and the Air Line Pilots Association, International (“Association”).
WHEREAS, the Company and the Association are parties to a collective bargaining agreement setting forth the rates of pay, rules and working conditions for the Company’s pilots (“Pilot Working Agreement” or “PWA”) effective October 30, 2008, and
WHEREAS the Company has entered into a new Transatlantic Joint Venture Agreement (JV) with Air France, KLM and NW, dated May 20, 2009, to establish a long-term alliance between the parties, linking their route networks and enabling them to market globally integrated air transportation services, and
WHEREAS the Company and the Association desire to amend the existing Joint Venture language in the PWA to reflect the terms of the new Joint Venture.
NOW THEREFORE, it is mutually agreed:
Amend Section 1 B. to add new definitions:
- “AF” or “Air France” means Société Air France.
- “KL” or “KLM” means Koninklijke Luchtvaart Maatschappij N.V.
- “EASK” means equivalent available seat kilometers, a measurement of capacityadjusted for an aircraft’s seat density and cargo capacity, as defined and calculated in the AF/KL JV agreement.
- “Bundle 1” means flying on all routes (a) between Europe, on the one hand andNorth America, on the other hand, (b) between French Polynesia, on the one hand, and North America on the other hand, until such time as Air France/KLM ceases operations on any such routes, and (c) between AMS, on the one hand, and India on the other hand, until such time as the Company ceases operations between AMS and Mumbai. Terms in this definition are as defined in the Air France/KLM JV Agreement.
- “Air France/KLM joint venture” or “AF/KL JV” means the business relationship between Delta, Air France and KLM in which the costs and revenues of international flights within the AF/KL JV are shared between or among the air carrier partners, as typified by the business relationship between Air France, KLM and Delta that is embodied in the AF/KL JV agreement.
- “Air France/KLM JV agreement” or “AF/KL JV agreement” means the Transatlantic Joint Venture Agreement between Delta Air Lines, Inc., Societe Air France, Koninklijke Luchtvaart Maatschappij N.V. and Northwest Airlines, Inc. as in effect on May 20, 2009.
Amend Section 1 E. 3. to read:
3. If the Company’s ownership level (i.e., the percentage of ownership referred to in Section 1 B. 16. a.) in a foreign air carrier exceeds 25%, the Company flying block hours scheduled in any month between the United States and any country to or from which the foreign air carrier operates from or to the United States, will not be less than the Company flying block hours scheduled between the two countries in the same month of the twelve-month period prior to the month in which the Company’s ownership level first exceeds 25%. The Company will be excused from compliance with this provision in the event a circumstance over which the Company does not have control is the cause of such non-compliance.
Amend Section 1 E. 5. to read:
5. Neither the Company nor an affiliate will place its code on the flight of a foreign air carrier that operates any flights in which it takes on for hire persons, property or mail at any point in the United States that is destined to be transported to any other point within the United States, except for property transported between the state of Alaska and the mainland United States pursuant to 49 U.S.C. § 41703(e).
Amend Section 1 E. 7. to read:
7. In addition to all other restrictions specified in Section 1, the Company or an affiliate may only enter into or maintain a profit/loss sharing agreement with a foreign air carrier engaged in international partner flying the home country of which is served by at least four Company roundtrips per week between the U.S. and that country.
Add Section 1 E. 9. (new) to read:
9. The Company will review with the Association any Company plans to amend the existing AF/KL JV agreement, or enter into a new profit/loss sharing agreement with AF/KL or another carrier. Before any such new or amended agreement is finalized, the parties will meet for the purposes of negotiating terms applicable to such agreement.
Amend Section 1 E. to add the following Note:
Note: For purposes of Sections 1 E. 7. and 8., the “home country” means the foreign country from which a foreign air carrier (“carrier A”) in a profit/loss sharing agreement with the Company primarily operates; it also means a foreign country which is the primary point of operations for an air carrier that:
a. was acquired by, or is a parent, a subsidiary, or under common control with carrier A;
b. operates within the same primary geographical scope of the profit/loss sharing agreement between the Company and carrier A but is not included in such agreement;
c. operates four or more weekly roundtrips between the United States and its primary point of operations; and
d. is not otherwise subject to terms in the agreement between the Company and carrier A consistent with the provisions of Section 1 P. 7.
Amend Section 1 K. to add Section 1 K. 3. (new) to read:
K. Labor Dispute
During a labor dispute involving an air carrier (other than the Company):
1. the Company will not perform training of airmen for service as employees ofthe air carrier (replacement airmen) in connection with a labor dispute,
2. an affiliate will not perform training of airmen for service as employees of theair carrier (replacement airmen) other than itself, and
3. the provisions of Section 1 P. 8. as they apply to the AF/KL JV will apply toeach air carrier that engages in international partner flying with the Company.
Exception: With respect to labor disputes other than those involving a codeshare partner of the Company, this provision will not prevent the training of airmen by the Company at the current training rate pursuant to agreements entered into prior to October 1, 2004.
Amend the second sentence of Section 1 L. 2. b. to read:
b. The Company will also provide all operational and financial information, historical and projected, concerning the AF/KL joint venture.
Amend Section 1 P. to read:
P. Delta / Air France / KLM Joint Venture
1. Delta, Air France and KLM are partners in a series of agreements establishing a long-term alliance between them, linking their route networks and enabling them to market globally integrated air transportation services. The U.S. Department of Transportation has granted certain of these agreements immunity from the U.S. antitrust laws, subject to certain conditions, to facilitate the integration of the DL, AF and KL route networks.
2. Full implementation of the AF/KL JV commenced on April 1, 2009.
3. Each party’s economic share of the AF/KL JV will be determined in accordance with the formula delineated in the AF/KL JV agreement.
4. The amount of flying subject to the AF/KL JV for Bundle 1 was determined from an EASK baseline period for the twelve months ending March 31, 2009 (the baseline EASK). The baseline EASK allocations are 51.7% for DL and 48.3% for AF/KL. The Company will manage increases and/or decreases in EASK capacity so as to maintain the Company’s EASK capacity share in accordance with the terms of the AF/KL JV agreement. EASK capacity share will be measured in rolling three year periods. In the case of the two rolling three year measurement periods ending March 31, 2011, and March 31, 2012, these terms shall require the Company to maintain no less than 49.95% (Company’s baseline EASK allocation minus 1.75%) of the EASK capacity, and in each subsequent rolling three year measurement period the Company shall be required to maintain no less than 50.2% (Company’s baseline EASK allocation minus 1.5%) of the EASK capacity.
Note one: The Company’s baseline EASK allocation and the Company’s minimum EASK allocation in Section 1 P. 4. will be adjusted accordingly in the event the parties to the AF/KL JV agreement reset or adjust the baseline EASK allocation as a result of:
a. capacity adjusted as a result of the inclusion of a third party carrier or new competing operations (using the methodology in the AF/KL JV agreement),
b. capacity added by a party in response to competing operations that are not included in the AF/KL JV agreement (using the methodology in the AF/KL JV agreement), or
c. a change in the scope of flying included in Bundle 1. Any such adjustment to the Company’s baseline EASK allocation shall:
1) be from the baseline EASK allocation established for the 12-monthperiod ending March 31, 2009 (51.7%), and
2) reflect the parties’ respective shares of EASKs attributable to thechange in the scope of the flying included in Bundle 1, using the Company’s proportionate level of flying to the country(ies) included/excluded from Bundle 1. The adjustment shall be no greater than the larger of:
a) the actual change in EASK capacity in the 12-month period ending March 31, 2009, or
b) the actual change in EASK capacity in the 12-month period preceding the change in the scope of Bundle 1 flying.
Note two: In the rolling three year measurement periods ending March 31, 2011, and March 31, 2012, the Company’s minimum EASK allocation will be the Company’s adjusted baseline EASK allocation minus 1.75%. In every subsequent measurement period, the minimum EASK allocation will be the Company’s adjusted baseline EASK allocation minus 1.5%.
5. The provisions of Section 1 E. 7. and 8. will not apply to Company flying performed under the AF/KL JV.
6. If the Company is not in compliance with the minimum EASK capacity allocation under Section 1 P. 4. for any measurement period, the Company will cure any such breach by increasing the number of DL EASKs or decreasing the number of AF/KL EASKs to return the Company’s EASK capacity share to compliance with the minimum EASK allocation under Section 1 P. 4. for the then current rolling three year measurement period.
Example: If the Company’s EASK capacity share is out of compliance with its minimum EASK allocation for the three year measurement period ending March 31, 2012, then the Company will return its EASK capacity share to compliance with its minimum EASK allocation for the three year measurement period ending March 31, 2013.
7. If AF or KL establish, acquire control of or implement any contract or agreement for the establishment of competing operations and, within twelve months of the acquisition, either no agreement is reached on terms to include such competing operations within the AF/KL JV agreement or AF or KL has not definitively discontinued, divested or otherwise definitively ceased to operate such competing operations, then the competing operations’ capacity will not be increased above its capacity on the date of the acquisition consistent with the terms of the AF/KL JV agreement. The terms “competing operations” and “acquisition” shall have the same meaning as in the AF/KL JV Agreement.Exception: Consistent with the terms of the AF/KL JV agreement, the provisions of Section 1 P. 7. will not apply to competing operations of Martinair Holland N.V. prior to December 31, 2010.
8. Labor Disputes
a. There will be no increased use of the DL code (i.e., an increase over andabove that which was loaded in Deltamatic in the 90-day period prior to the commencement of the cooling off period) by AF or KLM during a cooling off period (under Section 5, 6 or 10 of the Railway Labor Act) applicable to Delta pilots. In the event of a lawful primary strike against Delta by the Delta pilots, the DL code will not be used by AF or KLM at any time during such strike.
b. There will be no payments other than those payments occurring during the ordinary course of business to Delta from AF or KLM during a cooling off period (under Section 5, 6 or 10 of the Railway Labor Act) applicable to Delta pilots or a lawful strike by Delta pilots.
c. No airman trained by AF or KLM in the prior 12 months will be hired to serve as a Delta pilot during a cooling off period (under Section 5, 6 or 10 of the Railway Labor Act) applicable to Delta pilots or a lawful strike by Delta pilots.
d. There will be no increased use of the AF and/or KLM code (i.e., an increase over and above that which was loaded in Deltamatic in the 90-day period prior to the commencement of the strike) by Delta during a lawful strike by the AF and/or KLM airmen.
e. Without the consent of the Delta MEC Chairman, there will be no increase of gauge on any Delta route which carries the AF and/or KLM code (i.e., an increase over and above that which was loaded in Deltamatic in the 90-day period prior to the commencement of the strike) during a lawful strike by the AF and/or KLM airmen.
9. Definitions for the terms EASK, acquisition and competing operations contained in the AF/KL JV agreement that are incorporated by reference into this LOA shall not be amended without the consent of the Delta MEC. The baseline EASK allocation, the Bundle 1 definition and the competing operations capacity limit may not be changed except as provided in Section 1 P. 4. and Section 1 P. 7., respectively.
This LOA will become effective on its date of signing and will remain in effect concurrent with the PWA.
IN WITNESS WHEREOF, the parties have signed this Letter of Agreement, this ___ day of July, 2009.
FOR THE COMPANY
Stephen E. Gorman
Michael H. Campbell
Captain Stephen M. Dickson
Brendan M. Branon
FOR THE ASSOCIATION
Captain John Prater President
Captain Donald L. Moak
Captain Timothy S. O’Malley
Captain John L. Haase
Captain Rick Dominguez
Captain Randy Worrall
Captain Daniel J. Vician