1/10/08

Bankrupt airline's union revs strike committee

Dear Fellow Pilot,

The financial press continues to report almost daily on developments on the airline industry consolidation front. Industry analysts and self-proclaimed insiders casually predict the most likely pairings and even the timing of proposed events. While they do not always agree on details, Delta remains a common element in almost every scenario.

Meanwhile, many airlines are warning that fourth-quarter results will be disappointing, citing decreased demand and increased fuel prices. The price of crude oil remains a primary concern, and just last week, it briefly broke the $100 per barrel mark for the first time before retreating to close just below $100. The Amex Airline Index, a financial index designed to measure the performance of the airline industry, remains anchored near its historic low. Just this week, the price of Delta stock closed below $12 per share for the first time since it was relisted on the New York Stock Exchange last May.

While we have been hearing about "inevitable consolidation" for many years, it is becoming increasingly difficult to discount these facts and other recent events as simply more rhetoric. Consolidation may indeed be at our door. How we face its challenges will have a significant impact on our careers and profession for decades to come.

This week, your elected representatives are meeting in special session in Atlanta. While the MEC [Master Executive Council] will discuss a variety of issues, much of the meeting will focus on the fact that our company may soon be involved in some form of industry consolidation. The MEC remains fully engaged with all relevant issues, and I want to provide you with an update on your union's efforts as we continue to prepare for different possibilities.

In recent Chairman's Letters, I reviewed some of our ongoing efforts. In November, the MEC unanimously voted to retain the Merger Fund. This fund, now with a balance of over one million dollars, was initially authorized and funded by the Delta pilots early in Delta's bankruptcy while our company was extremely vulnerable and even facing the possibility of liquidation. While the bankruptcy threat is now behind us, the potential for a consolidating event is every bit as real.

The MEC has also retained legal counsel specializing in the field of mergers and acquisitions. This counsel has joined our existing legal and financial advisors to provide us with an outstanding team of professionals, supplying your elected representatives with the guidance, advice, and support they will need to properly represent your interests. We continue to meet with the team on a regular basis to refine our strategy as the situation warrants.

Finally, we continue to send a very clear and consistent message to all concerned parties, and that message is this: We do not oppose consolidation, and may even determine that consolidation is desirable. But as I wrote to you last month:

The kind of consolidation that the Delta pilots might support is one that will produce an even stronger and growing airline that will vigorously and successfully compete in the international marketplace for years to come, will adequately reward the pilots for their participation as stakeholders in the transaction, and will provide the necessary platform for long-term growth in pilot earnings and career progression. Nothing less can justify a change in the status quo.

Any attempt at consolidation will fail without the active involvement and support of the pilots from the earliest formative stages of the effort. Any consolidated company must provide meaningful protections and added value for the Delta pilots. Without those critical components in place, we will not support a consolidation attempt, and the attempt, like virtually every other airline consolidation attempt over the past two decades, will fail. Management and the financial community must accept the fact that after the sacrifices we made to save our company, we will not be bystanders to career altering events. We are relevant, and we will assert that relevance.

With that in mind, I want to tell you about your MEC's plans over the next few weeks as we continue to mobilize for various contingencies.

I have reactivated the Strike Preparedness Committee (SPC). The SPC is the tactical arm of the Delta MEC. While the traditional objective of the SPC has been to prepare for and, if necessary, execute a strike against Delta Air Lines, ensuring that not a single Delta jet will fly in the event of failed negotiations under the Railway Labor Act, the committee has demonstrated that they are capable of much more. In the past two years, the SPC has demonstrated the capability to react quickly and precisely to carry out short-notice operations in support of the Delta MEC. They have organized picketing efforts not only of airports but also of corporate events and Wall Street. They have supported lobbying efforts on Capitol Hill including those to successfully kill the US Airways hostile takeover attempt of Delta Air Lines. They have embraced the technology necessary to create a virtual strike center in very short order at the location of our choice.

Conversely, the flexible nature of the SPC will also allow your MEC to task them in support of a consolidation effort—but if and only if it is the right consolidation, a merger opportunity that provides the Delta pilots with the protections and equity we have communicated so clearly and unambiguously from the outset.

In concert with the mobilization of the SPC, later this week, the Delta MEC Strike Operations Center will open just a short distance from Atlanta's Hartsfield-Jackson International Airport. This physical location will help to provide the infrastructure in the event the MEC deems it necessary to call you to action.

Also at this week's MEC meeting, your MEC will elect a three-member Merger Committee. While we have an extremely talented and dedicated committee already in place, the Merger Committee is one of only two MEC committees (the other being the Negotiating Committee) that is elected by the MEC. Since the MEC has had some turnover due to regular election cycles, it is prudent to ensure that the Merger Committee in place is reflective of the desires of the current MEC.

The Pilot-to-Pilot Committee is being reconstituted as a means of two-way communication between Delta's line pilots and their elected representatives.

Finally, the MEC has scheduled a "State of the Union" rally on Wednesday, January 23 at 10:00 a.m. at the Georgia International Convention Center. We are operating in a very dynamic environment. Consequently, a precise agenda will depend on what events, if any, occur between now and the time of the rally. In general terms, the rally will provide an overview of your union's recent efforts with an emphasis on the consolidation related activity that has dominated the industry's financial press and how you can participate to craft our collective future. You will receive more details in the near future. Please make every effort to attend.

Since Delta entered bankruptcy in September, 2005, the ride has often been turbulent and as we enter the New Year, the course ahead appears no less arduous. You are extremely well represented by the pilots you elected to serve, but their best efforts cannot succeed without your continued support and resolve. Please continue to stay informed, and be willing to answer the call to action, whenever and in whatever form that call might come.

Fraternally,

Lee Moak, Chairman, Delta MEC

(ajc.com)

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