Why Delta can afford a new plane in hard times
When Delta baggage loader Mike Ashe first heard about a plan by three flight attendants for employees to pay for one of the airline's new $30 million planes, he was skeptical.
So was Delta's management.
The plan was supposed to give employees a way of saying ''thank you'' to the company for a recent 8 percent pay raise and no layoffs of permanent employees, in the face of plunging Delta profits. Many airlines already in the red have felt compelled to make layoffs during the current recession.
''I didn't think there would be enough (interest) to keep it going,'' Mr. Ashe said of the plan, as he sat at a table in one of the rooms under Concourse A of Atlanta's international airport, where a group of other Delta employees were also taking a break between loading, cleaning, and fueling planes.
But as of late December, more than 70 percent of Delta's 36,000 employes had pledged in excess of $20 million of their pay over the next year or so to help pay for a new Boeing 767.
And the pledges for voluntary reductions in paychecks are ''still rolling in, '' says a company official.
''This is a first,'' says Eliot Fried, an airlines analyst with Shearson-American Express in New York.
Unlike a voluntary pay reduction plan approved by employees at Eastern and in effect since 1977 (and accumulating some $130 million to date), the Delta project was initiated by employees, not management.
The plan first took shape one day last summer when Diane Carvelli and two other Delta flight attendants were working on the Atlanta-Boston-Bangor (Maine) route. During one of their brief layovers, they got to talking about their recent raise in the face of plunging Delta profits. The raise was ''unexpected, '' she says.
''The company has given the employees so much, given us job security. We just thought buying an airplane was a logical thing to do'' - a way to say ''thank you,'' she recalls.
But Delta's management didn't want to end up with egg on its face: what if the plan failed and it became a divisive issue among employees? Or what if employees felt pressured to take part? After some discussion, the management agreed to let the employees try, and even provided them an office, says Ron Allen, senior vice-president for administration and personnel.
Random Monitor interviews with Delta employees in various parts of the airport here revealed wide support for the voluntary, temporary pay cuts - but also some complaints.
Delta pilot Toby Harrell is one of those pledging part of his salary. He has been switched to ground passenger work because fewer pilots are needed in the current recession. But he is happy still to have a job. ''I feel like the company is going to take care of me. Consequently I'm more than willing to help them out,'' he says.
Former police officer Hugh Dendy is a baggage loader who stands at the end of a conveyor belt that automatically delivers luggage to the right place for loading on the right plane - most of the time. He likes the job stability of Delta and pledged 5 percent of a year's salary after he got a $240 raise last August.
But as another baggage loader stood in the chilly wind that whipped through the baggage sorting and loading area, he complained that the ''multi million-dollar corporation'' should spend a little less on planes and a little more to make the area a warmer place to work, with better equipment.
Another employee said he felt ''intimidated'' by the voluntary pay-cut plan, feeling lack of a pledge could be tracked by the company and could have some negative effects on careers. Vice-president Allen denies that anyone will keep track of who has not pledged. And company public relations personnel are at pains to distance themselves from the whole project, calling it an employee project.
Some employees say they cannot afford to give up any of their pay. ''My money is slow,'' says a Delta skycap, as he pushes a wheelchair down the hallway of Concourse A. He says he has not made a pledge.
Delta's long-standing practice of no layoffs of permanent personnel makes good business sense, said Allen in an interview. It means having a trained team ready to ''pounce'' when business picks up.
Delta's profits dropped by 86 percent to about $21 million from fiscal year 1981 to 1982, but many other airlines have been running in the red.