Chairman of Delta Pilots Union Endures Turbulent Year

By Russell Grantham, The Atlanta Journal-Constitution

Feb. 19–Lee Moak probably expected turbulent times when he was elected chairman of the pilots union at Delta Air Lines last August — but not as quickly as they arrived.

One day after he was elected head of the 6,000-member union last August, Moak was in New Orleans, evacuating his family before Hurricane Katrina roared ashore. Afterward he canoed into the flooded city, paddling through a cemetery to check his and his neighbors’ homes. He helped rescue dozens of stranded people.

“It was quite a surrealistic experience,” he said. “Helicopters were going everywhere.”

Just a couple of weeks later, Delta filed for Chapter 11 protection from creditors — a financial hurricane that has pulled Moak and the pilots union into the center of the airline’s restructuring efforts.

Late last year he and other union officials trekked to the bankruptcy court in New York, where Delta sought to ditch the pilots’ contract and impose concessions. The union agreed to a temporary 14 percent pay cut that defused the court showdown.

But that was just a temporary deal, and the union and company are now in tense talks to reach a longer-term deal before March 1. If no deal is reached, the issue goes to a three-man arbitration panel that would decide whether Delta can still impose the deeper cuts it wants.

The two sides appear far apart, with the airline seeking much more than the December deal included and the pilots offering a smaller pay cut. Moak seems unruffled, however. Katrina’s aftermath helps keep things in perspective, he explained.

“As bad as this is, when I go home on the weekend … I drive into total devastation,” he said. “If that doesn’t give you clarity, I don’t know what else does.”

QUESTION: Pilots ratified the temporary pay cut [in December] by a fairly slim margin. Would pilots vote for deeper pay cuts and concessions, if it was necessary?

ANSWER: The money that we believe the Delta pilots should contribute in the restructuring is significantly less than the 14 percent pay cut. We felt that the 14 percent pay cut at this time — to allow the parties more time to negotiate — was appropriate. … [Delta is] still working through their [aircraft] lease negotiations, so they haven’t firmed up what airplanes they’re going to have. Therefore they can’t firm up their network. Therefore they can’t firm up their marketing, yet they’re trying to have a [pilot] contract that goes out to 2009.

Q: But Delta’s asking for [an 18] percent pay cut. What chance would that have of passing a pilot vote?

A: I don’t see the pilots participating at a level above what they have, nor do I believe there’s a need.

Q: You’ve said you expect Delta to terminate employees’ pension plans. When do you expect that to happen, and how do you plan to allow for that in negotiations? [If Delta terminates its employees' pension plans, they would be handed over to the Pension Benefit Guaranty Corp., which guarantees retirees' pension benefits up to certain limits, reducing many pilots' benefits.]

A: What I believe is … if the management team continues to not fund the pension plan … there is a high probability of it being terminated. We still stand by the statement that they should be funding the pension plan. It was a contract between the management and the pilot group.

Q: By the time this is all over, Delta pilots could lose much of their pension benefits and drop from the industry’s highest-paid to about the same level as AirTran pilots. How do you expect pilots to react to that situation?

A: We contend that the Delta pilots bring a unique set of skills to Delta Air Lines, and we believe that we’re going to be here long after this current management team leaves. As far as pay, working conditions and a pension [are concerned], we’re confident that we’re going to achieve … pay, working conditions and a pension commensurate with our experience. That’s what I believe, and Delta pilots believe in their leadership. We’re going to deliver that.

Q: So you don’t foresee employee morale issues and an exodus of pilots … if that scenario comes to pass?

A: Well, that’s a defeatist attitude.

Q: How confident are you that the union and the company can reach a deal before this March 1 deadline?

A: I’m confident that the union can reach a deal tomorrow, when the company comes off their figures and becomes reasonable. As far as March 1 is concerned, it takes two parties to negotiate.

Q: But how confident are you that both sides can reach a reasonable compromise?

A: I’m always optimistic. … I just believe that if you’re in management, at some moment in time, reason has to prevail.

Q: If no deal is reached before March 1, how do you feel about the decision going to the three-person panel, since ALPA picked two of them?

A: I believe in the Delta pilots’ case. I think the three neutral [panel members] would clearly rule in the Delta pilots’ favor.

Q: You’ve said before that the union would call a strike or other labor action if the contract is voided. Do you agree with Delta’s contention that a strike would kill the company?

A: I agree with the contention that actions by the management team could kill the company. I also believe in the statement that the costs are rapidly becoming competitive here at Delta Air Lines. … The revenue picture in the industry is improving, and we’ve seen some of the other so-called legacy carriers report [financial results] and analysts are predicting that the full-service network carriers are going to be competitive. What remains to be seen is if our legacy management can compete.

Q: ALPA says Delta needs smaller concessions from pilots than the $325 million a year it is seeking. [That figure has been reduced to $315 million since the interview.] If that’s true, what’s Delta’s motive?

A: Let me clear this up, right off the bat. … The reality is it’s $325 million, plus they’re not funding the pension. The real demand here … is approaching $500-$600 million.

Q: Why is Delta seeking that amount, if you don’t believe it’s necessary?

A: With our economic and financial people, we’ve looked at it using the same time-honored process that we used last year when they said they needed $1 billion [annual concessions], and we ended up giving $1 billion. So we used the same process this time, and they’re saying they need $500-$600 million, and the same people looked at it and said it was substantially less. The only difference this time is … the management team has decided … ‘We really don’t need the pilots to vote for it. If we can get a rejected contract, we can get whatever we want.’ So they’ve used the bankruptcy process.

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