Pilots Still Undecided About Talking Pay Cuts

I'm sorry for, what I've done.
I broke your heart, now we're apart.
I'm sorry for, making you cry.
I broke your heart, now I'm alone.
I'm by myself.

--"I'm Sorry," Tyrese

It could be the lament of a lot of airline CEOs. The latest to sing this song is Delta CEO Leo Mullin (right). Friday, he apologized for being "insensitive" to outcries about his executive pay package while pressuring employees to make wage and benefit concessions and continuing the process of laying off approximately 8,000 workers.

Delta may indeed still be the healthiest of the big US airlines, but that's not necessarily saying much. This month, Delta reported losses of $466 million. Its cost-per-mile-per-seat rose from $10.49 to $11.11 over the same time last year.

But Mullin's Making Out

Mullin earlier this month defended his compensation package and those afforded other senior executives at Delta. "This program was established in response to 9/11," he said. "We were worrying about every single airplane. This group [the management team] had no protection for their pensions, and we were getting calls deep into the night."

And he continues to defend executives' bankruptcy-proof pensions.

Congressional Outcry

Mullin himself drew the ire of Sen. John McCain (R-AZ, pictured below, right) late last month, when the Senator blasted Mullin's $25.5 million compensation plan. Congressman Martin Sabo (D-MN, pictured bottom, right) went even further, tying airline executive compensation to federal aid proposed for the industry in the wake of 9/11, the war in Iraq and the SARS outbreak.

"Call this our homeland coalition of the willing," Sabo said on April 1.  "When the airlines are cutting employees and flights, the executives should agree to reduce their compensation as well -- particularly as a fair price for the $3.2 billion airline aid contained in this bill."

"My home-state airline, Northwest Airlines, has asked their employees to take a 22% reduction in their salaries. They recently announced planned layoffs of another 5,000 workers. They have lost $1.2 billion in the last two years. Each of us feels the effects of their difficult situation, exacerbated in large part by the war with Iraq. Each of us understands the meaning of shared sacrifice, including airline executives," Sabo stated.

Delta Airlines executives received more than $17 million in total compensation in 2002 while the airline was losing $1.3 billion.  The airline's CEO, Leo Mullin, received almost $13 million, while 16,000 employees lost their jobs.

Continental Airlines CEO Gordon Bethune got a total cash-stock package valued at $11.9 million in 2002, more than twice what he received in 2001 -- while the airline's 2002 losses were $451 million.

Sabo's amendment states, "no airline receiving funding...may provide compensation (pay, benefits, and stock options) to senior executives that exceeds the base pay and benefits that such executives received in 2002."  The amendment would not permit bonuses and stock option compensation, if an airline accepts this new aid.

"We all understand the tremendous economic hit the airlines have taken during these difficult times.  We are willing to do our part to insure both the safety and security of our troops abroad, and the vitality of our economy at home.  Airline executives should do no less," Sabo concluded.

FMI: www.delta.com