Buffett Bites Back at NetJets Pilot Complaints

[Mooneymite]

And as someone who spent many years dealing with the NMB, I'll just say that your analysis leaves much to be desired, and you're likely to be quite disappointed. I wish you the best, though.

Well, let's just connect some dots....I bet you can come up with others, but I can think of these right off the top of my head.

. Hansell is still the accidental CEO after two years. His only expertise is in labor law. There's been plenty of time to replace him since Sokol's departure, but he hasn't been replaced. It is reasonable to think that B-H wants his expertise in place.

. Hansell could have extended the present contract for virtually "no cost" and ensured a stable work force for several more years. He didn't. Not because he wanted to give us more, but because he wants us to have less.

. None of the unions at NetJets have gotten a contract despite years of effort. Hansell has not made a single significant concession to organized labor. He has stuck with his "pillars". It is reasonable to think that he will stick with them to the end of the negotiating process.

. Hansell's "pillars" will not even be passed onto the membership by the union. Hansell knows this. No one expects labor to accept concessions during times of profit. Labor is faced with "take it, or go to self help". For Hansell, self-help = lockout.

. Even though NetJets can handle a lot of flights without sell-offs, there are light days where there are lots of sell-offs. Because NetJets is hiring, there is no restriction on sell-offs and we're seeing a large number. NetJets is lining up and fattening "alternate lift" for a time when needed.

. The NetJets customers are being "accustomed" to non-NetJets operators operating their flights through the large number of sell-offs.

. Notice how many ACP's are floating around all of a sudden? Ever wonder why these useless individuals are at all the hubs instead of in cockpits helping with our pilot shortage? Hansell's team is hoping these individuals will be "management pilots" during the strike/lockout.

Okay, I have no idea how this will play out, but it sure looks like Hansell is going to do his best to bust organized labor. If I'm wrong and we get a juicy contract, I'm happy. However, if I'm right and we are not mentally, financially, strategically prepared for a lockout, we don't have a chance.

Let's hope for the best, but be prepared for the worst.

How do we plan for a lockout?

Sticking our heads in the sand and saying "it can't happen" isn't a plan.

On an individual basis, get your financial house in order, shop for alternative health insurance and get those job applications out there. You don't want to be the last guy in line for a "new job".

 

[BlueNose]

Dude, Where have you been? This $hit has been going on for years now. I think the pilots of Netjets are well prepared by this point.

I wish you guys the best, and I hope you're right. Seems to me, though, that a number of the posters on here are underestimating what management can and will do if push comes to shove, and that's not a good sign. Hopefully we won't need to find out.

 

[FamilyGuy]

I agree that you can probably expect release and a lockout if this continues on to that point. Hopefully it doesn't come to that, but you have to prepare just in case. My guess is Hansell's looking at the Northwest AMFA strike in '05 as the model. That was an independent union that struck in the face of concession demands. The mechanics thought they were too highly trained and valuable to the operation to be replaced. NWA management proved them wrong - they prepared, increased outsourcing while they hired/trained replacements, and ended up breaking the strike. The mechs took a bigger pay cut when they settled than the proposal they struck over. The cleaners & custodians got outsourced, most didn't get their jobs back at all. Effectively killed the union.

Hope your leadership is looking at this as a case study and preparing, I'd bet Hansell and his team are. Selling off lift while hiring and training replacements is all to viable a strategy, and from what you all say it doesn't look like he understands or cares that this would destroy the brand that you and RS built over the years. Maybe you can make the owners (customers) understand that before it progresses too far. There's a reason they chose frax over charter in the first place.

It had occurred to me as well that Jordan may be looking at the NWA-AMFA strike as a model.

If he is, there are a number of important differences that could lead to a totally different outcome:

1 - Outsourcing maintenance is completely different from outsourcing the pilots. Maintenance is largely transparent to the paying customers. They don't see the mechanics and have no idea who they are or what they do. Replacing the pilots, particularly for a fractional where there is a lot more interaction between the crews and the owners, is not transparent and would likely lead to a lot of concern from the owners.

2 - In 2005 there was still a lot of excess capacity in the economy and particularly with the airlines. NWA was able to hire and train a lot of mechanics in the months leading up to the strike. This was well advertised in the months leading up to the strike as AMFA was picketing at their training sites. There isn't enough excess capacity (aircraft and pilots) to handle the NJ demand currently, and the training lead time would be even longer. There is also no sign that NJ is training a pool of replacement pilots on the side.

3 - NJ Sales has been selling the product for over 20 years by telling the owners how highly trained the pilots are and how their safety is never compromised because they have pilots only fly one type of aircraft. I suspect many owners will question what they are paying for if NetJets suddenly relaxes its "standards" in an effort to find pilots to fly the aircraft.



I hope Jordan isn't foolish enough to believe the NWA-AMFA model will work in this situation, but I know he is arrogant enough to try. There have already been plenty of examples where he has totally ignored his own internal industry experts and charged headlong into losing situations.

Knowing that, your advice and the previous posters advice to prepare and get your financial house in order is wise.

 

[BlueNose]

It had occurred to me as well that Jordan may be looking at the NWA-AMFA strike as a model.

If he is, there are a number of important differences that could lead to a totally different outcome:

1 - Outsourcing maintenance is completely different from outsourcing the pilots. Maintenance is largely transparent to the paying customers. They don't see the mechanics and have no idea who they are or what they do. Replacing the pilots, particularly for a fractional where there is a lot more interaction between the crews and the owners, is not transparent and would likely lead to a lot of concern from the owners.

2 - In 2005 there was still a lot of excess capacity in the economy and particularly with the airlines. NWA was able to hire and train a lot of mechanics in the months leading up to the strike. This was well advertised in the months leading up to the strike as AMFA was picketing at their training sites. There isn't enough excess capacity (aircraft and pilots) to handle the NJ demand currently, and the training lead time would be even longer. There is also no sign that NJ is training a pool of replacement pilots on the side.

3 - NJ Sales has been selling the product for over 20 years by telling the owners how highly trained the pilots are and how their safety is never compromised because they have pilots only fly one type of aircraft. I suspect many owners will question what they are paying for if NetJets suddenly relaxes its "standards" in an effort to find pilots to fly the aircraft.



I hope Jordan isn't foolish enough to believe the NWA-AMFA model will work in this situation, but I know he is arrogant enough to try. There have already been plenty of examples where he has totally ignored his own internal industry experts and charged headlong into losing situations.

Knowing that, your advice and the previous posters advice to prepare and get your financial house in order is wise.

Those are all good points. I agree that a lockout using the NWA-AMFA model would do great destruction to the brand, for the very reasons you listed. But from what you guys have said here, you have an aggressively anti-union CEO with no understanding of the industry, who sees private lift as a commodity and pilots as replaceable cogs. I think it's tempting for a guy like that to give it a try. I've long since given up being shocked by the greed and arrogance of any American CEO.

But we disagree in that I believe there's enough charter lift available (not quality lift, but lift) to make him think it might work, with a plan to hire replacement cogs - er, pilots - in the medium term. And there's never a shortage of pilots if you're willing to lower your standards enough. Remember the hiring pace at the Frax back in 99-2000? Don't know about NJ, but we ended up with some real winners at FO, same at RTA. Knew one FO new hire whose most complex plane flown was a C-182. An RTA guy ended up being a bank robber. The companies were able to sell new owners on our pilots' experience and safety back then, so I'm not so sure most owners are educated enough in what we do to know the difference. That's one area where a union education campaign might prove effective.

 

[jtf]

NetJets can't even hire and train enough pilots to keep up with current attrition and demand. No way they can train up pilots fast enough to break a strike. Even with massive lift availability, the customers would revolt. Why would they be willing to pay NetJets prices for charter they don't want? They wouldn't put up with sell off after sell off unless it was comped of severely discounted and then NetJets just hemorages money even faster. No way management really wants a strike to try to break us- but it looks great on news releases in our battle against them. I have a hard time believing we would ever get released anyway, though I personally relish a strike ASAP to get this thing settled quickly. I am financially prepared now to go all in, even if we STMFD. I began preparing when the furloughs were announced, though at the time it wasn't a strike fund- just a fund in case furloughs went deeper. I honestly would prefer to STMFD and start over than accept a POSTA.

 

[T-1GUY]

NetJets can't even hire and train enough pilots to keep up with current attrition and demand. No way they can train up pilots fast enough to break a strike. Even with massive lift availability, the customers would revolt. Why would they be willing to pay NetJets prices for charter they don't want? They wouldn't put up with sell off after sell off unless it was comped of severely discounted and then NetJets just hemorages money even faster. No way management really wants a strike to try to break us- but it looks great on news releases in our battle against them. I have a hard time believing we would ever get released anyway, though I personally relish a strike ASAP to get this thing settled quickly. I am financially prepared now to go all in, even if we STMFD. I began preparing when the furloughs were announced, though at the time it wasn't a strike fund- just a fund in case furloughs went deeper. I honestly would prefer to STMFD and start over than accept a POSTA.

What he said !!!!

 

[PCL_128]

Well, let's just connect some dots....I bet you can come up with others, but I can think of these right off the top of my head.

. Hansell is still the accidental CEO after two years. His only expertise is in labor law. There's been plenty of time to replace him since Sokol's departure, but he hasn't been replaced. It is reasonable to think that B-H wants his expertise in place.

. Hansell could have extended the present contract for virtually "no cost" and ensured a stable work force for several more years. He didn't. Not because he wanted to give us more, but because he wants us to have less.

. None of the unions at NetJets have gotten a contract despite years of effort. Hansell has not made a single significant concession to organized labor. He has stuck with his "pillars". It is reasonable to think that he will stick with them to the end of the negotiating process.

. Hansell's "pillars" will not even be passed onto the membership by the union. Hansell knows this. No one expects labor to accept concessions during times of profit. Labor is faced with "take it, or go to self help". For Hansell, self-help = lockout.

. Even though NetJets can handle a lot of flights without sell-offs, there are light days where there are lots of sell-offs. Because NetJets is hiring, there is no restriction on sell-offs and we're seeing a large number. NetJets is lining up and fattening "alternate lift" for a time when needed.

. The NetJets customers are being "accustomed" to non-NetJets operators operating their flights through the large number of sell-offs.

. Notice how many ACP's are floating around all of a sudden? Ever wonder why these useless individuals are at all the hubs instead of in cockpits helping with our pilot shortage? Hansell's team is hoping these individuals will be "management pilots" during the strike/lockout.

Okay, I have no idea how this will play out, but it sure looks like Hansell is going to do his best to bust organized labor. If I'm wrong and we get a juicy contract, I'm happy. However, if I'm right and we are not mentally, financially, strategically prepared for a lockout, we don't have a chance.

Let's hope for the best, but be prepared for the worst.

How do we plan for a lockout?

Sticking our heads in the sand and saying "it can't happen" isn't a plan.

On an individual basis, get your financial house in order, shop for alternative health insurance and get those job applications out there. You don't want to be the last guy in line for a "new job".

You're over thinking this. I'm sure his strategy is really quite simple, and one used frequently in RLA bargaining:

1. Make demands for concessions that he knows the pilots won't agree to, but will nevertheless appear very reasonable to the NMB.

2. Bargaining will drag on for years as a result of the NMB considering the company's proposals reasonable, and the pilots unwilling to entertain them. No release will be available.

3. Wait until the market takes a downturn and profits inevitably dip, then threaten bankruptcy if the pilots don't accept the concessions. Pilots will get scared (I'm sure you'll say that they won't, but they will), and concessions will be agreed to.

This is a tried and true approach to labor negotiations under the RLA. It's not flashy, it's not new, but it works wonders. He doesn't want a lockout.

 

[amaineiac]

I do not agree.

Throw a rock into a bush....fifteen "qualified" pilots will jump out ready to take your job....and Hansell will give it to them when he locks us out.

You bring up some valid points in this thread, but I have to disagree with you.

In the current market, I have a hard time believing that it will be so easy to hire 1000+ pilots willing to cross a picket line and forever have their names on a scab list.

Our hiring department isn't exactly firing on all cylinders right now. We had a guy show up to class that was very well qualified, but didn't have an ATP, which is a requirement. I just read on another message board that some people's apps were deleted because we switched website vendors. The applicants didn't learn about this from NJA, but from someone posting on a message board.

I believe that in the contract with the owners, it states our pilots will have 2500 hrs minimum. So grabbing 300 hr guys fresh out of school that may not understand the ramifications of crossing a picket line are out.

TMC just unionized, so I doubt they'll be available for excess lift.

I'm not saying it's going to be easy to get a good contract with the current EMT, but I think we have a bit more leverage than you think.

 

[msculley6905]

Well, let's just connect some dots....I bet you can come up with others, but I can think of these right off the top of my head.

. Hansell is still the accidental CEO after two years. His only expertise is in labor law. There's been plenty of time to replace him since Sokol's departure, but he hasn't been replaced. It is reasonable to think that B-H wants his expertise in place.

. Hansell could have extended the present contract for virtually "no cost" and ensured a stable work force for several more years. He didn't. Not because he wanted to give us more, but because he wants us to have less

I really wish you guys and the union would stop talking about this point. It would only be a valid point if all you were asking for was to keep your current "sub-standard" contract, because clearly aome are not happy with it. Fighting for dramatic improvements in every area is hardly the status quo.

Disclaimer: i do not think asking for concessions are appropriate...in 2010, perhaps, but not now.

 

[Willy21]

I really wish you guys and the union would stop talking about this point. It would only be a valid point if all you were asking for was to keep your current "sub-standard" contract, because clearly aome are not happy with it. Fighting for dramatic improvements in every area is hardly the status quo.

Disclaimer: i do not think asking for concessions are appropriate...in 2010, perhaps, but not now.

The contract must have significant gains or pilots will go elsewhere. Even if we were to get everything we could dream of I am one phone call from being gone because my opportunities at NetJets pale in comparison to a legacy job. Management has their head in the sand. Attrition isn't a big issue today, but the day is coming when a lot of airplanes will be parked due to lack of crews.

 

[pilotyip]

the day is coming when a lot of airplanes will be parked due to lack of crews.

NJ is still interviewing and rejecting qualified pilots, they will fill those empty posts within the limitations of the training system, to absorb new pilots. NJ is still a much better job for many pilots.

 

[Diesel]

I really wish you guys and the union would stop talking about this point. It would only be a valid point if all you were asking for was to keep your current "sub-standard" contract, because clearly aome are not happy with it. Fighting for dramatic improvements in every area is hardly the status quo.

Disclaimer: i do not think asking for concessions are appropriate...in 2010, perhaps, but not now.

So we should just live on our knees? We're pilots we fight to the end. We're trained that there is no emeregency we can't tackle.

Look around you it's not some that aren't happy with it it's all of us that aren't happy with it.

Concessions was a joke in 2010. They took from the other non union groups and have they gotten that back after record profits? Nope. They never do.

 

[Diesel]

NJ is still interviewing and rejecting qualified pilots, they will fill those empty posts within the limitations of the training system, to absorb new pilots. NJ is still a much better job for many pilots.

And pilots are still not showing up for class, and initials are being cancelled.

 

[Diesel]

The contract must have significant gains or pilots will go elsewhere. Even if we were to get everything we could dream of I am one phone call from being gone because my opportunities at NetJets pale in comparison to a legacy job. Management has their head in the sand. Attrition isn't a big issue today, but the day is coming when a lot of airplanes will be parked due to lack of crews.

You know it's bad when 15 to 20 year crews have their info out there.

 

[BlueNose]

You're over thinking this. I'm sure his strategy is really quite simple, and one used frequently in RLA bargaining:

1. Make demands for concessions that he knows the pilots won't agree to, but will nevertheless appear very reasonable to the NMB.

2. Bargaining will drag on for years as a result of the NMB considering the company's proposals reasonable, and the pilots unwilling to entertain them. No release will be available.

3. Wait until the market takes a downturn and profits inevitably dip, then threaten bankruptcy if the pilots don't accept the concessions. Pilots will get scared (I'm sure you'll say that they won't, but they will), and concessions will be agreed to.

This is a tried and true approach to labor negotiations under the RLA. It's not flashy, it's not new, but it works wonders. He doesn't want a lockout.

In your airline world this makes perfect sense, but not here. NJ is not an airline, it's a Frac, and your #3 bullet is not a viable business strategy in the Frax market. First off, they're a Berkshire subsidiary, and the cost to the BRK stock due to loss of confidence if one of their companies declared bankruptcy would outweigh any labor savings. Secondly, any Frac that declares bankruptcy would be toast in the market, which is all about confidence from their customers. The customers own most of the assets, and they need confidence that they won't be screwed when they buy a multi-million dollar share of an airplane. A Frac can't win back customers by offering $99 fares to Orlando. Customer service does matter here, and I can think of 2 good examples of CEO's who've almost ruined a company by trying to run it like an airline. Options had the first, now it looks like NJ has another.