Alaska management verbally announces furloughs for

[SRMairlines]

Commuted with SEA LEC CA chair today. He said Gary Beck was also out of the loop. Mr. Beck thought they had mitigated the whole thing and there would be no furloughs and then Greggggggggggggggg sends the letters. A federal court will settle this in 6 months if they actually make it to the street. Until then I will be happy to help out these pilots and their families so that they have health care and more.

Baze - You are right >>> Straight out of the Ford Harrison Book. I have plenty of experience with them from my previous airlines.

 

[Baze]

I found the following quote from the September Hangar Notes interesting:

"During 2009, our airline will focus on increasing revenue and marketing the Alaska brand. In the upcoming months I will ask each of you for input to assure the company’s success in these areas. This success will drive profitability, profitability will drive growth, and growth will create the need for more crews. "

 

[Old School 737]

Even the newest "Hanger Notes" today don't say much about it and does not mention numbers!

 

[Old School 737]

So we are making money. Very Interesting!!

Air Group reports hedge portfolio loss

Drop in oil prices drives decline,
but lowers airline’s fuel bill, too

October 8, 2008

By Paul McElroy

Alaska Air Group announced yesterday that its fuel hedge portfolio declined about $220 million in value during the third quarter due to falling oil prices. In a filing with the Securities and Exchange Commission, the company also said it expects to report an adjusted profit for the quarter.

“Our portfolio decline for the third quarter is significant, but it’s important to note this represents only a paper loss because it involves hedge contracts that will settle in the future,” Air Group CFO Brad Tilden said. “In terms of actual cash, we received about $44 million from contracts we settled during the third quarter.”

Accounting rules require Air Group to periodically report the market value of its hedge contracts that settle in the future. The valuation, made on the last day of each quarter, is known as “mark-to-market” accounting.

Oil has been trading at higher prices throughout 2008 and reached about $140 a barrel when the company valued its hedge portfolio at the end of the second quarter. But it had declined to around $100 a barrel when another valuation was made on Sept. 30. Consequently, mark-to-market gains in the company’s portfolio that it reported in the first and second quarters were reversed by the decline in the third quarter.

Although the company’s hedge portfolio lost value, it is still worth almost $100 million.

Hedge contracts are settled monthly as Air Group buys fuel. Since the company began its hedging program in 2002, it has received cash settlements every month — totaling $495 million. For the first nine months of 2008, the company has received $129 million. Those amounts represent the net benefit to Air Group after deducting premiums the company paid to purchase the hedge contracts.

“Our hedge program has provided a great benefit to the company in softening the impact of rising fuel prices, but it’s like an insurance policy we’d rather not have to use,” Tilden said. “As oil prices drop, so do our future fuel prices. Although the value of our hedge insurance has declined, a $40 a barrel drop in the price of oil reduces our annual fuel bill by $400 million. That’s good news. But the bottom line is fuel prices need to come down even more than they have already in order for us to return to a normal business model.”

Air Group includes mark-to-market gains or losses on its hedge portfolio when it reports financial results under Generally Accepted Accounting Principles — known as GAAP. The company excludes those gains or losses and includes hedge contract cash settlements from the quarter when it reports adjusted earnings.

“We believe adjusted earnings are a more accurate reflection of the company’s financial performance than paper gains or losses we report under GAAP,” Tilden said. “Investment analysts focus on adjusted earnings and we encourage employees to do the same.”

Air Group will report its third quarter financial results on Oct. 23.

 

[ImbracableCrunk]

I think this one is even more "Uh, loss - what loss?"

http://www.bloomberg.com/apps/news?pid=20601103&sid=aI5prS2WNilc&refer=us

Alaska Air to Report `Significant' 3rd-Quarter Loss (Update2)
By Mary Schlangenstein
Oct. 7 (Bloomberg) -- Alaska Air Group Inc. said it expects to report a ``significant'' third-quarter net loss because of costs to reduce the value of its fuel hedges and pay benefits to laid-off workers.
Capacity at its Alaska Airlines will fall further than originally planned this quarter and in the first quarter of 2009 because a strike by Boeing Co. machinists will delay aircraft deliveries, the Seattle-based company said today in a U.S. regulatory filing.
Alaska Air, which also is the parent of Horizon Air, is among U.S. carriers retiring planes and cutting jobs to help end losses from fuel prices that reached a record high in July. Horizon today said it's in talks with Bombardier Inc. about deferring the 2009 deliveries of 11 Q400 aircraft.
The company didn't give a figure for its expected loss, and said it would have a third-quarter profit excluding one-time costs, also without providing a figure. Alaska Air was expected to earn 67 cents a share on that basis, the average of 9 analyst estimates compiled by Bloomberg.
The company said it expects to record a $220 million loss in the market value of its fuel hedges because of the drop in crude oil prices, and expenses of as much as $4 million for severance and medical benefits for laid-off workers. Alaska Air said it will have more costs this quarter as employees accept early-out packages.
Reducing Capacity
Alaska Airlines' capacity will fall as much as 8 percent for fourth quarter and up to 12 percent in next year's first quarter because of delayed Boeing deliveries, the company said. The carrier's capacity for all of next may drop 8 percent, the company said, reiterating a forecast from September.
Alaska Airlines last month said it would eliminate as many as 1,000 positions as capacity declined.
Horizon Air capacity will fall as much as 15 percent in the first quarter of 2009 from a year earlier, and about 9 percent for all of 2009, the company said. Horizon's capacity is slated to drop 22 percent in October, 21 percent in November and 16 percent in December.
Horizon today said it will furlough about 40 pilots in November, with additional layoffs late in the fourth quarter and early in 2009.
Alaska Air fell $2.14, or 12 percent, to $16:05 at 4:15 p.m. in New York Stock Exchange composite trading. The shares have declined 36 percent this year.
To contact the reporter on this story: Mary Schlangenstein in Dallas at [email protected]

 

[ualdriver]

I take my hats off to the NWA ALPA - when over 700 of us wee furloughed in 2002 the pilots gave between $4-12 a month to take care of the furloughees medical COBRA. I for one will be one of the first to voluntarily give for COBRA assistance. As far as I'm concerned, the Co should pay their COBRA since they were the ones to missmanage this company to the point of furlough!

Baja.

Baja-

I don't know if you're an Alaska guy, but the way to get something started like that is through a resolution at your local council meeting. You don't have to be present to write and have a resolution passed.

Have your LEC guys get into contact with the UA MEC guys if they want details on how to set up a fund so that furloughees have medical insurance. Heck, they'll all be at the same meeting in the next week or two. I'm sure they'd be glad to help.

We're in the process of voting for the SECOND time on this health insurance for furloughee deal because unfortunately this is our second furlough in the past several years. I was surprised (and embarrassed) by the fact that it passed with less than a 100% vote for providing the fund, but I bet the majority of pilots wouldn't mind throwing a few bucks a month into a fund to help these guys out until they get a new job that provides insurance for their families.

 

[QCappy]

I just got word that the furlough letters were NOT sent out. Management is in complete disaray.:beer:

 

[becket]

I just got word that the furlough letters were NOT sent out. Management is in complete disaray.:beer:

WTF game are these guys playing?

 

[Mookie]

to say this whole thing has been like watching two monkeys ******************** a football would be an insult to both the monkeys AND the footbal. no one on the second floor has a clue of whats going on including our own chief pilot. sad but very true.

Mookie

 

[turbodriver]

I just got word that the furlough letters were NOT sent out. Management is in complete disaray.:beer:

Source??

And to the Alaska nine: can you confirm? Have you receive your letters yet?? A certified letter from SEA to ANC sent this past Mon. should be here by now....

 

[Rhino]

No letters yet

In speaking with members of the MEC today, October 9th, no pilots have received letters. They did receive a letter from management regarding the company's "intent" to furlough 9 pilots. So, until these letters are sent and received, it is all talk.

Also, the rumor of a cap on "early retire" numbers at 75 is just that, a rumor.

 

[Chief Pilot]

This whole scenario smacks an aweful lot of "Stockholm Syndrome", just on a small scale. Let everyone believe there is going to be a furlough, no matter how small, which gets emotions running high. Then when you don't do it and release that it was all a rumor and maybe a mistake, everyone takes a collective sigh of relief and thinks, "well maybe these guys aren't so bad after all. They aren't really playing mind games and screwing with the lives of these poor guys (and their families) who are still on probation."

This is the beginning of the heavy hitting folks. I'm happy for the 9 if they don't get the official letter. It was bogus to begin with, but don't think for a minute that this wasn't an orchestrated event. They know exactly what they are doing. We need to fly the contract. Be smart individually and collectively so that management can't use any of us as hostages, and realize that these events are part of a greater strategy.

My $0.02.

 

[turbodriver]

Second!

 

[Going2Baja]

Third!

Baja.

 

[Mookie]

I don't think there is a single guy who thinks that these guys aren't so bad b/c the letters were not sent. if there are...and there's always a couple of dbags in every group, then they should have their ATP's revoked for being functionally retarded.

here's how it went down: the second floor was told to make staffing adjustments, and they did based on what they thought the contract stipulated and came up with a number to reduce and began the EO and LOA process. way more people apply for both and they start taking their time as they realize that furloughs probably wont' be necessary but have some issues to work thru. Then...GS, the narcissisted syncophant, swoops down mid meeting (true story) and says FURLOUGH..FURLOUGH...do it now!!!! everyone spazzes, and a low level manager with no knowledge of the contract tells ALPA that there will be a need to furlough up to 9 pilots. alpa calls those 9 hostages to warn them, and then someone on the second floors realizes that the company will get their asses sued and lose if they arbitrarily do this, and somehow those letters are never sent out....shocker

if anything this whole thing has galvanized everyone here against those bafoons. Hopefully alot of you guys were at the Boeing picket yesterday. I was, and was very impressed at the solidarity those guys showed. just hope some of that rubs off on us when the time comes.

Mookie

 

[Chief Pilot]

I wish I could have been at the Boeing picket. I don't doubt that it was an impressive display of solidarity. I was at our picket at the shareholders meeting at Boeing Field and it was no surprise to see who was honking horns in support of us...Boeing machinists and the like. I'm glad that we were able show them our support and hope to see some of them on our picket line when we strike.

 

[Fubijaakr]

Just another example of one hand not knowing what the other is doing in this snake ranch.

 

[AZFr8tPilot]

As one of the nine, I have not received a letter. I had to call ALPA to find out that letters are not going to be sent out. Seems they are quick to call to warn us of a furlough as well as FedEx us a package regarding the furlough, but don't bother to give us a status update when things change....I'm not very impressed with either side at the moment.

Source??

And to the Alaska nine: can you confirm? Have you receive your letters yet?? A certified letter from SEA to ANC sent this past Mon. should be here by now....

 

[sf340flyer]

AZ,
What has changed that ALPA needs to notify? It's all on the company not knowing what they are going to do tomorrow, let alone a month from now.

 

[AZFr8tPilot]

They did receive a letter from management regarding the company's "intent" to furlough 9 pilots.

That letter came FedEx from ALPA. I have yet to receive anything from the company regarding a furlough.

 

[Going2Baja]

Right along the lines of not letting those who interview know whether or not they got the job. In one case they even forgot to call the person who they wanted to hire - when she finally called MONTHS later...oops - we forgot, can you start tomorrow?

Total joke of an airline. I would go as far to say that they are behind the management of a Regional (Skywest.)

Baja.

 

[AZFr8tPilot]

It feels like being a pawn on a chess board. Definitely not a comfortable place to be. Even if the furloughs are mitigated, the issue will continue to arise every month as more MD80 guys/gals finish training (at least through the winter months). I had requested an ELOA to avoid the issue since it seemed fairly evident that I would be furloughed at some point in time and I also had another opportunity to fall back on. That way I could avoid the month to month turmoil and roller coaster when it came to wondering whether or not I would be furloughed.

 

[AZFr8tPilot]

ALPA opened the door by making the phone calls earlier this week and informing us of the impending furlough...making it sound like it was set in stone and the letters were in the mail. It would be nice to at least get a courtesy follow-up call/email to say that they're not sure whether or not it's going to happen now...especially when they get updated information after the fact. The first phone left us hanging. If there was no plan to follow-up, it would have been my preference to just receive the letter in the mail from the company (no courtesy phone call) and have it done and over with as a final event. It's not as if it would be a tremendous surprise...this has been talked about for some time now. But to get a phone call stating that it's going to happen and then no letter appears and there's no follow-up...it leaves you sitting on the edge of your seat wondering with no closure.

AZ,
What has changed that ALPA needs to notify? It's all on the company not knowing what they are going to do tomorrow, let alone a month from now.

 

[Z_Pilot]

I am one of the 9 as well.

Although I share your sentiments regarding the situation, I disagree with you about our MEC. I feel that they are doing the best they can with the information that they have at the time. As of now, we realize that the letters have not gone out, and I bet ALPA is trying to figure out what is going on at the moment, as they do not have any official information to go by.

I agree that this threat will drag on for months. Might as well get stocked up on Pepto and maybe some Zoloft as well.

Best of luck to all of us.

ZP

ALPA opened the door by making the phone calls earlier this week and informing us of the impending furlough...making it sound like it was set in stone and the letters were in the mail. It would be nice to at least get a courtesy follow-up call/email to say that they're not sure whether or not it's going to happen now...especially when they get updated information after the fact. The first phone left us hanging. If there was no plan to follow-up, it would have been my preference to just receive the letter in the mail from the company (no courtesy phone call) and have it done and over with as a final event. It's not as if it would be a tremendous surprise...this has been talked about for some time now. But to get a phone call stating that it's going to happen and then no letter appears and there's no follow-up...it leaves you sitting on the edge of your seat wondering with no closure.

 

[Snapshot]

FR8,

Trust me, I know it sucks.

In all fairness, I've been represented by four different ALPA groups and the Alaska guys are the best by far. They probably thought you did get a letter until you called and told them you didn't, hence the FedEx package and contract job fair thing.

Angle Lake has very deliberately adopted a policy of Misinformation with the goal of dividing you from your representation. They are playing a Stockholm game and you are the hostage. Half of the game is getting you to sympathize with them and the other half is getting you to resent those who are there to help you. Don't fall for it and remember that phones work both ways.

We've called their bluff, and so far no letter. That's good news. The vast majority of understand that we are in this together. For the few that don't.....

Let's not focus--especially in a public forum--on the few bad apples.

How about focusing on them in the back in the crew room with a sockfull of nickels?

 

[turbodriver]

It just occurred to me that there's going to be a lot of people sitting around in ANC in Nov. with 59 lines and all....

unless they come out with say 10-15 open flying lines at the last minute. Anybody heard anything?

 

[ImbracableCrunk]

It just occurred to me that there's going to be a lot of people sitting around in ANC in Nov. with 59 lines and all....

unless they come out with say 10-15 open flying lines at the last minute. Anybody heard anything?

Yeah, I guess I'll finally check out Moose's Tooth and Bear's Tooth! Maybe I'll even get a chance to eat a Thanksgiving dinner. Ooohh ooooh oooooh! Who wants to host a dinner for the reserve commuters??!?!??

 

[AZFr8tPilot]

Although I share your sentiments regarding the situation, I disagree with you about our MEC. I feel that they are doing the best they can with the information that they have at the time. As of now, we realize that the letters have not gone out, and I bet ALPA is trying to figure out what is going on at the moment, as they do not have any official information to go by.
ZP

I definitely agree that the MEC is doing the best that they can with the information that they have. I don't doubt that the MEC are a good group of guys. With that said, my only comment is that they could have passed along what information they did have when they became aware of it (i.e., not letters were sent out for the 10th). Some initial closure would have been helpful, at least that the furlough isn't happening in early November as originally suggested. I was surprised that it was announced so soon since they have yet to send out letters regarding the ELOAs.

Fortunately I won't have to ride the potential furlough rollercoaster since I will be on ELOA beginning November 1st (I did manage to find out that I was granted this). I plan to return when things hopefully stabilize in another year or so.

Good luck to the rest of the junior folks at Alaska. It will be an interesting next few months here.

 

[Old School 737]

There is this!

Title: Furloughs
To: Everyone
From: Gary Beck
Message:
Given the number of recent questions I’ve received about furloughs, I thought a communication to the entire pilot group would be helpful.
As has been announced, Alaska Airlines is reducing capacity. This reduction results in lower block hours, which in turn affects pilot staffing. High fuel prices, the economic downturn and, most recently, the IAM strike at Boeing have all played a part in determining how much capacity to cut. And even though fuel prices have fallen, they haven’t come down nearly enough to allow us to change course. In fact, our capacity reduction forecast has steadily increased throughout the summer and into the fall because of the latter two factors.
The fact that the forecast reduction has changed so substantially has caused the anticipated number of pilot furloughs to change. I regret that various numbers have been circulating and that we have been unable to provide a definitive number, as I know how stressful this uncertainty is to you and your families. The company is currently in the process of offering early out and leave-of-absence programs, as well as discussing with ALPA other possible programs to mitigate the final number of pilots to be furloughed. Until all these programs and efforts are completed, I cannot provide a final furlough count. But I want you to know that we will do so as soon as possible and thank you for your understanding in the meantime.
Gary

 

[Old School 737]

And this!

Wow, what a week! The Dow Jones industrials dropped 2,271 points during the previous 8 trading days and Wall Street capped it off Friday with a wild session that left stocks with a widely mixed finish. Fifty-two economists surveyed by the Wall Street Journal now expect gross domestic product to contract in the third and fourth quarters of this year as well as the first quarter of 2009. This is the first time that survey forecasts for those periods have turned negative. If those predictions bear out, it would mark the first time US GDP has contracted for three consecutive quarters in more than a half century.

On the upside, U.S. benchmark crude fell almost 10% Friday to close at around $78 per barrel. ALK closed up $4.48 to end the day at $18.80 per share. The stock price ranged from a low of $12.89 to a high of $19.23 today on 1.7 million shares traded (1 million is the recent volume average). Recall that we closed at $18.19 on Monday, October 6, and then followed the broader market down this week along with the rest of the airline industry. So we're basically flat for the week, which is a better finish than our peers and the AMEX Airline Index. The primary reasons for this cited by market watchers are 1) lower oil -- which affected the entire airline industry, and 2) a strong rally in small-cap stocks -- which affected ALK disproportionately more than our large-cap peers. Another factor suspected to have played a role is short sellers covering their positions as the strong recovery in small caps triggered margin calls. Alaska's short interest has been greater than most of our peers lately, and a short squeeze probably added to today's price run up.

So, what does all of this mean for Alaska Airlines? Nervousness in the financial markets has certainly translated into a pull-back on travel. We have seen a slow down in bookings across our network this past week and several of our hotel partners have slashed room rates for our Alaska Vacations packages in an attempt to stimulate demand. While it's too early to draw conclusions, we are understandably more bearish about demand over the coming fall and winter schedule period. At the same time, the Boeing strike has already resulted in two missed deliveries and we expect another four B737-800s to miss their planned delivery dates between now and year-end. Four additional deliveries planned for Q1'09 will slip at least a day-for-a-day as the strike drags on -- impacting our April '09 schedule and possibly also impacting the summer 2009 schedule. As a result, we're having to pull down the schedule further starting October 26th. The following schedule reductions will be loaded into our Reservations system this weekend:

SEA-BOS (second daily trip canceled until spring)

PDX-SJD & PDX-PVR (canceled entirely)

SEA-DEN & SEA-SFO (each being reduced one daily frequency through April)

With all these variables it has been difficult to get final block hours upon which to base our pilot staffing for 2009, however one thing is clear -- the current outlook for block hours is shrinking from the plan we had even 30 days ago and the size of our pilot surplus is growing. That said, we're continuing to work with ALPA on voluntary programs including a reduced bid block program and other creative ways to work down the surplus. It appears certain, however, that even if these programs were wildly successful we will be unable to avoid a furlough under any circumstance given the magnitude of our over-staffing. Let me be clear. We will do everything possible to minimize involuntary furloughs and explore any number of programs to accomplish that goal. What we cannot allow is for endless discussions without closure to hold us hostage to moving forward with a plan to right-size and to do otherwise would be irresponsible. I have been working closely with Gary Beck, Bennie Johnson and Elizabeth Ryan to ensure no stone is left unturned and we'll be quick to action a recall if circumstances change or new voluntary programs come to fruition.

As of now, the early out program has generated interest from 132 pilots. The next step is to finalize paperwork to determine how many will actually go "final," a number which we expect before year-end. In addition, we have 20 pilots who have elected the enhanced leave of absence. Despite speculation that there might be nine furloughs in November, we have not yet issued furlough notice and are hopeful that an involuntary reduction can be avoided through December. Rest assured that all provisions of the CBA will be respected as we work through this process. Finally, I have written to our codeshare partner Korean Airlines advising them that we are in an over-staffed situation and asking for special consideration of Alaska pilots should they have a need for qualified B737 co-pilots. As soon as I have a response I will share it with those who may be interested in working abroad during our downsizing. At this time of uncertainty it is imperative that we communicate often and with specifics. Ask questions, stay informed and I will do my best to keep you up-to-date. Fly safely and have a good week.

Greg