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Pay cuts sweep airlines
By DAVE HIRSCHMAN
The Atlanta Journal-Constitution
Published on: 10/28/04
Pattern bargaining in union contract negotiations isn't supposed to work this way.
Instead of moving forward, with each new collective bargaining agreement leapfrogging the pay and benefits of the last one, airline pilots are stuck in reverse. In the three years since the terrorist attacks of 2001 traumatized their industry, airline pilots have steadily given up years of gains.
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If Delta pilots ratify the cuts agreed to by union negotiators late Wednesday, pilots at five of the seven biggest carriers will have taken substantial wage reductions.
US Airways, United and American have already made deep pay, retirement and work rule concessions, and leaders of Northwest's pilots union recently agreed to cuts. Only Continental — which had wage rates below most peer carriers' when the bad times started — and profitable Southwest have held out.
Pilots have long been accustomed to the highest pay for American hourly workers, and even after the cutbacks they make money most people would consider good.
But financial advisers say the pay cuts and work rule changes in the last three years will permanently take some of the luster off flying careers.
"The glory days are over," said Jim Stainbrook, a financial planner who advises airline pilots.
Pilot union leaders aren't quite ready to throw in the towel. Last week at the national meeting of the Air Line Pilots Association, union chief Duane Woerth called the givebacks a "tactical retreat."
He expressed optimism that wages will rebound as the industry reshapes with fewer hubs and more efficient operations.
"It's not your fault and, more importantly, there is a bright future out there," Woerth said he told union delegates.
For the time being, however, most of the industry's growth is in smaller discount carriers such as AirTran Airways and regional operations such as Delta's Atlantic Southeast Airlines unit. Wages at such airlines are well under those at the big carriers, and benefits often are not as good either.
Delta pilots negotiated their previous deal in early 2001 at the height of the cyclical industry's prosperity — and just three months before 9/11. It was the most lucrative pilot contract in airline history.
Since that contract was signed, however, Delta has posted net losses of nearly $6 billion and been under siege from growing low-cost competition, cheap Internet fares, higher taxes and surging fuel costs that have added $950 million to its gas bill this year.
Union officials point out that the wage inflation that culminated with the Delta deal in 2001 followed concessions by pilots in the mid-'90s that helped the industry rebound from a previous downturn.
Financial advisers who specialize in managing pilot portfolios say the pay cuts their clients have taken go beyond a temporary belt-tightening.
"Flying for the airlines is still going to be a decent job," said George Mathes, a retired United pilot and vice president at a Wisconsin financial management firm that advises pilots.
"But the pay is going to be nothing like it used to be."
By DAVE HIRSCHMAN
The Atlanta Journal-Constitution
Published on: 10/28/04
Pattern bargaining in union contract negotiations isn't supposed to work this way.
Instead of moving forward, with each new collective bargaining agreement leapfrogging the pay and benefits of the last one, airline pilots are stuck in reverse. In the three years since the terrorist attacks of 2001 traumatized their industry, airline pilots have steadily given up years of gains.
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If Delta pilots ratify the cuts agreed to by union negotiators late Wednesday, pilots at five of the seven biggest carriers will have taken substantial wage reductions.
US Airways, United and American have already made deep pay, retirement and work rule concessions, and leaders of Northwest's pilots union recently agreed to cuts. Only Continental — which had wage rates below most peer carriers' when the bad times started — and profitable Southwest have held out.
Pilots have long been accustomed to the highest pay for American hourly workers, and even after the cutbacks they make money most people would consider good.
But financial advisers say the pay cuts and work rule changes in the last three years will permanently take some of the luster off flying careers.
"The glory days are over," said Jim Stainbrook, a financial planner who advises airline pilots.
Pilot union leaders aren't quite ready to throw in the towel. Last week at the national meeting of the Air Line Pilots Association, union chief Duane Woerth called the givebacks a "tactical retreat."
He expressed optimism that wages will rebound as the industry reshapes with fewer hubs and more efficient operations.
"It's not your fault and, more importantly, there is a bright future out there," Woerth said he told union delegates.
For the time being, however, most of the industry's growth is in smaller discount carriers such as AirTran Airways and regional operations such as Delta's Atlantic Southeast Airlines unit. Wages at such airlines are well under those at the big carriers, and benefits often are not as good either.
Delta pilots negotiated their previous deal in early 2001 at the height of the cyclical industry's prosperity — and just three months before 9/11. It was the most lucrative pilot contract in airline history.
Since that contract was signed, however, Delta has posted net losses of nearly $6 billion and been under siege from growing low-cost competition, cheap Internet fares, higher taxes and surging fuel costs that have added $950 million to its gas bill this year.
Union officials point out that the wage inflation that culminated with the Delta deal in 2001 followed concessions by pilots in the mid-'90s that helped the industry rebound from a previous downturn.
Financial advisers who specialize in managing pilot portfolios say the pay cuts their clients have taken go beyond a temporary belt-tightening.
"Flying for the airlines is still going to be a decent job," said George Mathes, a retired United pilot and vice president at a Wisconsin financial management firm that advises pilots.
"But the pay is going to be nothing like it used to be."
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