June 7, 2006
Dear ASA Pilots,
On May 25, ASA president Bryan LaBrecque met with leaders of the ASA ALPA MEC and members of the ASA
ALPA Negotiating Committee to brief the pilot leadership on the decisions that were pending regarding aircraft
allocations that may well determine the future of ASA and all of us who work here.
We felt it was critical to ensure that the ALPA leaders responsible for negotiations were fully informed and
understood the importance of reaching an agreement on a competitive contract amendment and the possible
ramifications associated with falling short of that objective. I am writing to you today because it is equally
important that all of you also understand how these decisions may affect you and all of us who work for ASA.
Based on the exchange of proposals at the last negotiating sessions, the subsequent notice from the National
Mediation Board that mediation meetings have been recessed indefinitely, combined with recent changes in
Delta’s Network plans, it has been determined that SkyWest Airlines will now be the operating carrier of the
initial deliveries of CRJ900s. Obviously, we had hoped and even announced that ASA was going to get the first
12 or 13 of the CRJ900 deliveries as part of a transfer of the SLC flights to SkyWest Airlines. Our announcement
on May 8 regarding the CRJ900s was based on an assumption that we would very soon have a new contract with
competitive costs.
The fact is that the marketplace dictates to us what our costs must be; we don’t dictate to the marketplace. And,
like it or not, our pilot costs are not competitive in all areas. We believe we can compete and earn business based
on our CRJ200 costs but we must improve our CRJ700 and instructor pilot costs. Without competitive costs for
the CRJ700 and CRJ900, we can’t expect to grow – or even hold our own – as long as there are marketplace
alternatives. If we were the only game in town, we could possibly force higher costs on mainline carriers, but all
of us know this is an extraordinarily competitive business.
Our Delta Connection Agreement (DCA) requires that by year three (2008), we must have average costs of all
DCI carriers and that by year five (2010), we must have the second lowest costs of all DCI carriers. It is easy, but
not realistic, to say that someone other than the pilots have to face that reality because the pilots weren’t part of
the “negotiations” for that agreement. We could either abide by the terms of the contract offered by Delta or look
elsewhere for another mainline partner. And, who believes we could get any better deal somewhere else,
particularly with costs that were not completely competitive? Our future is tied largely to our contract with Delta,
although with fully competitive costs, we potentially could establish partnerships with other carriers that could
provide other growth opportunities.
Delta has made it clear that feed from regional carriers is now a “commodity” and the carriers who can deliver the
service for the lowest costs will get the business. DCI carriers are really just “suppliers” and that is a harsh reality
that I don’t like and I am sure you don’t like. But it is our reality. Safety and quality are a given, Delta and other
carriers assume that we will provide both of these just like other regional operators. Cost is the decision maker,
the deciding factor, not only at Delta but also at other major carriers who we hope to do business with in the
future.
Page Two
June 7, 2006
So, what were our options? Bryan laid out for the MEC and Negotiating Committee what the company believed
were our four options and what the results might be of each. At the time of Bryan’s meeting, all four options
were still viable, but we have lost the opportunity to act quickly. Bryan made it clear, and I agree, that you, the
pilots of ASA, will ultimately determine which path we follow.
Dear ASA Pilots,
On May 25, ASA president Bryan LaBrecque met with leaders of the ASA ALPA MEC and members of the ASA
ALPA Negotiating Committee to brief the pilot leadership on the decisions that were pending regarding aircraft
allocations that may well determine the future of ASA and all of us who work here.
We felt it was critical to ensure that the ALPA leaders responsible for negotiations were fully informed and
understood the importance of reaching an agreement on a competitive contract amendment and the possible
ramifications associated with falling short of that objective. I am writing to you today because it is equally
important that all of you also understand how these decisions may affect you and all of us who work for ASA.
Based on the exchange of proposals at the last negotiating sessions, the subsequent notice from the National
Mediation Board that mediation meetings have been recessed indefinitely, combined with recent changes in
Delta’s Network plans, it has been determined that SkyWest Airlines will now be the operating carrier of the
initial deliveries of CRJ900s. Obviously, we had hoped and even announced that ASA was going to get the first
12 or 13 of the CRJ900 deliveries as part of a transfer of the SLC flights to SkyWest Airlines. Our announcement
on May 8 regarding the CRJ900s was based on an assumption that we would very soon have a new contract with
competitive costs.
The fact is that the marketplace dictates to us what our costs must be; we don’t dictate to the marketplace. And,
like it or not, our pilot costs are not competitive in all areas. We believe we can compete and earn business based
on our CRJ200 costs but we must improve our CRJ700 and instructor pilot costs. Without competitive costs for
the CRJ700 and CRJ900, we can’t expect to grow – or even hold our own – as long as there are marketplace
alternatives. If we were the only game in town, we could possibly force higher costs on mainline carriers, but all
of us know this is an extraordinarily competitive business.
Our Delta Connection Agreement (DCA) requires that by year three (2008), we must have average costs of all
DCI carriers and that by year five (2010), we must have the second lowest costs of all DCI carriers. It is easy, but
not realistic, to say that someone other than the pilots have to face that reality because the pilots weren’t part of
the “negotiations” for that agreement. We could either abide by the terms of the contract offered by Delta or look
elsewhere for another mainline partner. And, who believes we could get any better deal somewhere else,
particularly with costs that were not completely competitive? Our future is tied largely to our contract with Delta,
although with fully competitive costs, we potentially could establish partnerships with other carriers that could
provide other growth opportunities.
Delta has made it clear that feed from regional carriers is now a “commodity” and the carriers who can deliver the
service for the lowest costs will get the business. DCI carriers are really just “suppliers” and that is a harsh reality
that I don’t like and I am sure you don’t like. But it is our reality. Safety and quality are a given, Delta and other
carriers assume that we will provide both of these just like other regional operators. Cost is the decision maker,
the deciding factor, not only at Delta but also at other major carriers who we hope to do business with in the
future.
Page Two
June 7, 2006
So, what were our options? Bryan laid out for the MEC and Negotiating Committee what the company believed
were our four options and what the results might be of each. At the time of Bryan’s meeting, all four options
were still viable, but we have lost the opportunity to act quickly. Bryan made it clear, and I agree, that you, the
pilots of ASA, will ultimately determine which path we follow.
•
Option 1. We could have reached an agreement quickly that would make ASA immediately competitive
with other DCI carriers and enable the company to achieve the specific cost targets contained in our DCA.
With competitive CRJ700 and instructor pilot costs, I firmly believe the first 12 or 13 CRJ900s would
have come to us and we would be in a great position to fight to get more of the remaining units on firm
order. And, it would have also positioned the company to compete for business with other carriers.
Unfortunately, we didn’t get the quick agreement and we are now in recess.
with other DCI carriers and enable the company to achieve the specific cost targets contained in our DCA.
With competitive CRJ700 and instructor pilot costs, I firmly believe the first 12 or 13 CRJ900s would
have come to us and we would be in a great position to fight to get more of the remaining units on firm
order. And, it would have also positioned the company to compete for business with other carriers.
Unfortunately, we didn’t get the quick agreement and we are now in recess.
•
Option 2. We could get an agreement that will make ASA competitive over time (the next 12 to 18
months) and meets the cost targets of the DCA. We might get some of the future CRJ900s but the
business case for us to get only a few of them is not very strong. And, during the time we remain
uncompetitive, we face the potential loss of some CRJ700s above the number currently operating in the
SLC hub.
months) and meets the cost targets of the DCA. We might get some of the future CRJ900s but the
business case for us to get only a few of them is not very strong. And, during the time we remain
uncompetitive, we face the potential loss of some CRJ700s above the number currently operating in the
SLC hub.
•
Option 3. If we had gotten an agreement, but with rates that are not competitive now or over time, it
would have made it virtually impossible for the company to achieve the DCA cost targets. In that event,
it is unlikely that we will get any of the CRJ900 deliveries, at least none of the 17 currently on firm order
for delivery in 2006 and 2007. And, it is certainly possible that we will lose CRJ700s above the number
currently operating in the SLC hub.
would have made it virtually impossible for the company to achieve the DCA cost targets. In that event,
it is unlikely that we will get any of the CRJ900 deliveries, at least none of the 17 currently on firm order
for delivery in 2006 and 2007. And, it is certainly possible that we will lose CRJ700s above the number
currently operating in the SLC hub.
•
Option 4. We could reach an agreement after continuing negotiations beyond the next few weeks or even
months that would make ASA either competitive or uncompetitive with other DCI carriers. The ultimate
outcome would dictate the longer term future, but we most certainly would lose in the short-term with the
CRJ900s going to SkyWest Airlines at the very least.
Let me leave no doubt that the company clearly would have preferred option number one. If we’re going to be
successful, we know where we have to be with our costs. Our DCA and the current business environment make
these clear. We have very little leeway in how we get there and the longer it takes to get there, the greater the
potential of at least a reduction in future opportunities for new airplanes, new agreements and growth.
Once again, I believe that it is vital that there be no misconceptions about what is at RISK here and the
ramifications of the decisions we make. We have an opportunity to do what will produce the best possible
outcome for the company, ASA pilots and all ASA employees. The faster we become competitive, the better our
opportunities for continued future growth and success together. I don’t like the prospects that we face with
uncompetitive costs.
Most sincerely,
Charlie Tutt
Vice President, Flight Operations
months that would make ASA either competitive or uncompetitive with other DCI carriers. The ultimate
outcome would dictate the longer term future, but we most certainly would lose in the short-term with the
CRJ900s going to SkyWest Airlines at the very least.
Let me leave no doubt that the company clearly would have preferred option number one. If we’re going to be
successful, we know where we have to be with our costs. Our DCA and the current business environment make
these clear. We have very little leeway in how we get there and the longer it takes to get there, the greater the
potential of at least a reduction in future opportunities for new airplanes, new agreements and growth.
Once again, I believe that it is vital that there be no misconceptions about what is at RISK here and the
ramifications of the decisions we make. We have an opportunity to do what will produce the best possible
outcome for the company, ASA pilots and all ASA employees. The faster we become competitive, the better our
opportunities for continued future growth and success together. I don’t like the prospects that we face with
uncompetitive costs.
Most sincerely,
Charlie Tutt
Vice President, Flight Operations
