Frontier pay cuts?

[Pilotbob3]

I can just hear the "senior" Captains "counseling" the FOs..... this is serious...We gotta save the airline!!!!

Dont give in fellas!

 

[FBN0223]

May 15, 2008

Dear Fellow Pilots:

Later this morning there will be a Letter Of Agreement (“LOA”) on the FAPA website for your consideration and vote. Ratification of this LOA will implement the terms of the Interim Restructuring Relief Agreement (“IRRA”) also posted on the website. Significant points of the IRRA include, from June 1, 2008 until September 30, 2008, reduction in Pilot rates of pay by 14.5% in years of service 2-15 and the suspension of the Company 401K match. There will also be a 1% reduction in rates of pay for first year FOs, All work rules remain in place including premium pay and trip rig.

In the face of harsh economic realities, the FAPA BOD unanimously endorses ratification of this LOA.

Given our industry leading productivity and already low Pilot block hour costs, the frustration at being asked to subsidize this operation is difficult to suppress. The reality of Frontier’s economic circumstances demands that we realistically assess our situation and quickly decide how to proceed. All the other work groups at Frontier and Lynx have been asked (or told if unrepresented) to take immediate cuts similar to this. After exhaustive scrutiny of Frontier’s financials, FAPA Leadership has verified the urgency and legitimacy of Management’s “ask.”

As fuel costs soar (increasing $20/bbl this month = $100m/year off our bottom line) Frontier must secure Debtor In Possession (DIP) financing to continue operating while in bankruptcy. We can increase the odds of getting DIP financing by making Frontier stand out favorably from the industry (ultra low CASM ex-fuel and a show of good Labor/Management relations.)

There is no guarantee that even with these cuts, as part of an aggressive CASM reduction plan, Frontier will be able to entice a lender to provide DIP financing.

The second line item of the Ballot Point vote is a FAPA dues “holiday” for the period from June 1, 2008 until September 30, 2008. If the LOA and this change are both approved, FAPA dues collection will be suspended for that period. This will offset 1.5% of the pay cut for dues paying members.

The third line item is to change the FAPA Constitution and Bylaws (“C&B”) Article II, Section 4.B.3 to allow future votes to amend the C&B to be by “Majority vote of the membership” (50% + 1 of the votes cast) rather than “Majority vote of the active members” (50% + 1 of all active members.) In the past low membership participation in non-essential votes has made modifying our C&B impossible.

The time frame for ratification of this LOA is short. You must via the BallotPoint website. Voting will be open from Thursday morning May15 until Monday, May 19 at 17:00. Please read the IRRA carefully and ask your questions of Frontier Management and the FAPA BOD directly at any of the daily meetings we are scheduling. The first full meeting that will include Frontier Management will be on Thursday afternoon, 14:00. All meetings are planned to be held at the Crowne Plaza Hotel on the corner of 40th and Chambers just down from CAE http://www.cpdenverairport.com/maps.aspx.

We had a meeting today where we expected to be able to share this information with everybody in attendance, but Management wanted to announce the cuts to all employee groups at once, and the IBT represented Mechanics had not reached an agreement. They still have not, but since there is an urgent need to secure DIP financing Management has decided to make the announcement, and allow us to begin the ratification process. Meetings are planned for Friday 5/16 @ 11:00, Saturday 5/17 @ 12:00, and Monday 5/19 @ a time to be determined.


Please come to the meetings and ask your questions directly to Management or forward them to your BOD, and we will get them answered.


Sincerely,


John Stemmler
President
Frontier Airline Pilots Association

 

[PCL_128]

Unfortunately, it sounds as though Frontier is hanging on the very edge, about to take the Chapter 7 dive. The only thing to be accomplished by approving concessions would be lower pay for the last few months. Hopefully a buyer will come along to save the jobs of all Frontier pilots. Good luck to all of you. We all could soon be facing the same situation with the current fuel costs.

 

[Green]

Good luck guys.. Sounds like a very tough decision. It's easy to say don't take paycuts when it's not your job on the line. But it would be helpful to consider what happened at US Airways, Ual, Delta, American, etc. You won't ever see that investment in the company. It will just be that much harder to make those gains in the future and you will be fighting just to get back to where you were years ago.

again best of luck to frontier pilots...

 

[waveflyer]

good lord- it's sad what is going on there=- good luck all- you deserve better- that being said- consider the pay cut- - the previous citings of UAL, DAL, AA, etc- they took 50% paycuts and lost pensions that were much more costly- meaning that they did subsidize the tough times a tremendous amount... I might be wrong- but at your payrates- i don't see how there's room in your contract to give Frontier anymore of a chance than they have w/o it. If it's symbolic, then ok- but i wouldn't get it in your head that the actual paycut will make the difference.

I feel awful for you- some of the best pilots i know are there.

 

[vetrider]

I have a little brother there, along with former co workers, and Denver is my hometown. I'm pulling for you guys. As far as the vote goes, your intellect and your gut will tell you what to do, no need to listen to anyone here. Course I'm sure thats preaching to the choir, you knew that.

 

[Fubijaakr]

agreed, I voted yes to 3 paycuts before receiving my furlough at ATA...my yes vote never helped, except maybe prolong the inevitable...

Exactly. Its one thing to have the BK court impose pay cuts. Its another thing to vote for them. No airline was ever saved by cutting the pilot payroll.

 

[FlyWolf]

401K company match??, you mean you guys get that? here at Midwest they stopped matching long time ago, right after 9/11.

Its only for three month, I think its a much better deal than the big "F" word. I wish we were given the choice between pay cuts for three month and furloughs.

 

[Bringupthebird]

When AWA got it's ATSB loans, there were strict limits on contractual increases in pay. With Frontier, it would be nice if the DIP lender was making the request for pay cuts as a condition of granting the loan. As it is, the voluntary cuts could open the door for additional mandated ones. Plus who knows if there is any DIP lender or if they would or wouldn't require pay cuts as a precondition to granting the loan?

I suppose there isn't the luxury of time in making these considerations. I do hope these dark times pass for Frontier and that they will make it through.

 

[USMC319]

WTF with posting FAPA union letters on Flightinfo.com.

BTW pilotbob3 why don't you come do a road show for all the F9 pilots and let them know how it really is because I think the company and the union and the consultants are full of $hit. And then pilotbob3, when F9 is gone maybe your company can stop its reduction in capacity and you can get off reserve. Brilliant.

Pilots that come on here and try to demand how another airline pilot group should vote for their own selfish reasons make me sick. Mind your own business because this old story is going to be playing in a theater near you soon. This is about to happen everywhere gents. Get ready.

PS. Citationultra, though I don't like the style of your postings, I have to say you were right on the BK deal. If FDC didn't pull the rug out from under F9 on APR 9, the fuel environment would have put them there by today anyway. Its either F9 gets DIP or they are gone by this fall unless the Creditor's Committee decides to do it sooner.

 

[FBN0223]

Its either F9 gets DIP or they are gone by this fall unless the Creditor's Committee decides to do it sooner.

Hopefully, Frontier will get the financing as others have succeeded in doing and this will just be a rough year or so for Denver's premier airline. Among the major airlines flying today, Frontier offers one of the best domestic products and would be a very hard one to see go.

Hang in there guys and gals. Best of luck to Frontier!!

 

[GuppyWN]

I think it's BS that Menke and the boys are looking to get 6 to 9 months pay as a golden parachute while asking you to take a big cut.

Get the financing in position as a CONDITION of a pay cut. Not take the paycut hoping it will make you look better to the bank.

I think it's a load of crap. Freaking crooks.

Gup

 

[T-Bags]

WTF with posting FAPA union letters on Flightinfo.com.

BTW pilotbob3 why don't you come do a road show for all the F9 pilots and let them know how it really is because I think the company and the union and the consultants are full of $hit. And then pilotbob3, when F9 is gone maybe your company can stop its reduction in capacity and you can get off reserve. Brilliant.

Pilots that come on here and try to demand how another airline pilot group should vote for their own selfish reasons make me sick. Mind your own business because this old story is going to be playing in a theater near you soon. This is about to happen everywhere gents. Get ready.

PS. Citationultra, though I don't like the style of your postings, I have to say you were right on the BK deal. If FDC didn't pull the rug out from under F9 on APR 9, the fuel environment would have put them there by today anyway. Its either F9 gets DIP or they are gone by this fall unless the Creditor's Committee decides to do it sooner.

Marine, I agree, we are all selfish, and we WILL see this come around to us again. You see, when UAL was BK, we HAD to match payrates like YOURS (and before you start talking smack about your payrates, compare apples to apples by adding the 16% defined contribution to UAL's). So when YOU take a healthy paycut to protect your company, my company will once again demand I accept your rates so we can "compete". The result is you still go out of business, and everyone gets less pay. Yippee!! Has your CEO gone to Exxon demanded they sell you gas cheaper? Has he demanded DIA give you cheaper landing fees and rent? Are the leasors going to give you a break on lease payments? Didn't think so.

 

[USMC319]

Tbags,
You are stating the obvious, and I agree. I know the old UAL pay scale well, but I didn't think it was appropriate for other airline pilots to get on these idiot boards and suggest we give up our pay and benefits then either. Maybe if UAL hadn't given up the industry leading contract of 2000 they would have been the one out of business and all the others could have kept their pay. You see, it is a never ending circle. Who's fault is it? The airline you don't work for of course. Just like there is too much capacity, other airline capacity that is.

 

[AnimalTale]

You are forgetting, SWA just announced $39 roundtrips with kids fly 4 free!I guess SWA is going to hammer the nails in our coffin.

Capitalism at its best. Borrow $600 million dollars to charge $39 fares. AND KIDS FLY FREE! I am booking tomorrow.

CYA

 

[Golden Falcon]

Paycuts never saved an airline, they only strengthen the golden parachutes of the very folks who put the airline into the mess in the first place!

 

[vetrider]

Paycuts never saved an airline, they only strengthen the golden parachutes of the very folks who put the airline into the mess in the first place!

What about American, United, USAirways, Northwest, and Delta? Those paragons of union toughness all took paycuts. They are all still around. Each case has its own variables.

 

[FBN0223]

Can't speak for the others, but at NWA our pay cuts went directly to the NWA executive management team. With 30% pay cuts and drastic work rule changes, we gave NWA 500 million and they shortly there after awarded themselves 400 million in the form of bonuses. I think the last 100 million went towards buying EMB175s for Compass.

 

[~~~^~~~]

FBN makes an excellent point. F9's managers already gave themselves a protected six month severance package.

I see a big difference between the cuts being a required condition of DIP financing and the scenario you are presented with. In your case they are promising nothing in exchange for your pay.

In the grand scheme of the airline's budget, the cuts are not even going to make a marginal difference. The fix for your problem is increased revenue. Raise the ticket prices, the other airlines will follow and F9 has a nice product.

Good luck with a tough decision.

 

[regionaltard]

Here's hoping that yours is the first airline ever saved from extinction by pilot concessions.

 

[ualdriver]

I'm not trying to tell you guys how to vote. I just want to let you know what happened in a few sentences pre, during, and post bankruptcy with executive compensation.......

Pre bankruptcy: management takes paycuts to prove that they are part of the "solution"

during bankruptcy: "key" management people are paid fat retention bonuses so that they don't leave during the bankrupty process. That was the last of any paycuts that most managment personnel saw.

post bankruptcy: When the company exits bankruptcy, various entities that are "owed" money (i.e. labor groups who took pay cuts, lessors, debtors, etc.) try to make grabs for equity (i.e. shares) in the newly formed post-bankruptcy company. Management will do everything they can to take a large percentage of the shares issued. For example, our managment team tried for a 15% grab of the newly created shares, even though their portion of what was "owed" to them was only a fraction of that. Under protest from ALPA (thanks!) and other members of the creditor's committee, it was cut in half, which was still WAY too much. Tilton all by himself got 1% of the value of the entire post bankruptcy UAL.

Keep in mind that they're asking for a few months of cuts now. They will ask for a permanent paycuts when the company is reorganized. Also keep the above in mind when they come to you for permanent pay cuts later.

 

[hawk996]

That internal memo reads just like the one we got at Independence Air. You can fly the planes for free and still go out of business. Say "NO", make a good pay check and start looking for a new job, Say "Yes", make a smaller pay check and still end up looking for a new job.

Yes is sucks guys/girls, been there done that and have the T-shirt. No one can really tell you what to do or how to vote, just understand that your pay is not what drove your company into CH.11 it was your over paid management team that does not know how to run an airline.

Indy Air management team walked away with millions in their pockets, we got nothing....

Good Luck.....

 

[waveflyer]

What about American, United, USAirways, Northwest, and Delta? Those paragons of union toughness all took paycuts. They are all still around. Each case has its own variables.

Again- there's a huge difference between getting 30-50% from groups of 5000+ pilots all making double what you are now in total compensation- and the 14% that F9's 770 pilots are being asked to make.

At some point we all have to ask ourselves why WN is still kicking our butts financially when they make so much more than all of us....?

 

[waveflyer]

based on the average pilot there at F9 making $100k-- you're looking at giving the company a little more than $2.5 million over the 3 months- ($10million if it lasts a year) -- in the airline financing world, is that really going to save the situation? Think about what that actually will buy frontier- it's not nothing, but it's close.

 

[Andy]

Good luck, F9. No advice one way or the other on concessions; it's a tough decision. I think that most of us are going to find ourselves in the same shoes in the not too distant future.

 

[CitationUltra]

WTF with posting FAPA union letters on Flightinfo.com.

BTW pilotbob3 why don't you come do a road show for all the F9 pilots and let them know how it really is because I think the company and the union and the consultants are full of $hit. And then pilotbob3, when F9 is gone maybe your company can stop its reduction in capacity and you can get off reserve. Brilliant.

Pilots that come on here and try to demand how another airline pilot group should vote for their own selfish reasons make me sick. Mind your own business because this old story is going to be playing in a theater near you soon. This is about to happen everywhere gents. Get ready.

PS. Citationultra, though I don't like the style of your postings, I have to say you were right on the BK deal. If FDC didn't pull the rug out from under F9 on APR 9, the fuel environment would have put them there by today anyway. Its either F9 gets DIP or they are gone by this fall unless the Creditor's Committee decides to do it sooner.

Well, for what it's worth, I don't think anyone wants to see what is happening to Frontier. Although I've been critical of Frontier's management in the past--and still am--I'm not sure that they could have avoided this "perfect storm" situation of competition, limited scope of operations, and fuel pricing, all happening at once. I have never wanted to see the airline fail out from under the line employees.

 

[maxblast72]

At some point we all have to ask ourselves why WN is still kicking our butts financially when they make so much more than all of us....?

For the rest of 2008 and 2009, it is pretty simple. Frontier burns about 200 million gallons of fuel a year but pays about between $1 to $1.25 a gallon more than Southwest. That equates to about a $250 million dollar a year advantage. Fuel costs are now about 50% of total costs whereas pilot labor cost are usually about 10% of total costs. That why fuel matters much more than labor.

Southwest airlines is a well managed airline. When you feel your competition is on the ropes, you go for the kill. They know their cost advantage is greatly reduced on Jan. 1, 2010, so they will try like hell to make sure United and Frontier don't see 2010. Southwest has a strong brand, so it usually doesn't take them long in new markets to grab a signicant amount of revenue.

 

[CitationUltra]

For the rest of 2008 and 2009, it is pretty simple. Frontier burns about 200 million gallons of fuel a year but pays about between $1 to $1.25 a gallon more than Southwest. That equates to about a $250 million dollar a year advantage. Fuel costs are now about 50% of total costs whereas pilot labor cost are usually about 10% of total costs. That why fuel matters much more than labor.

Southwest airlines is a well managed airline. When you feel your competition is on the ropes, you go for the kill. They know their cost advantage is greatly reduced on Jan. 1, 2010, so they will try like hell to make sure United and Frontier don't see 2010. Southwest has a strong brand, so it usually doesn't take them long in new markets to grab a signicant amount of revenue.

Sad for the employees and stockholders of the losers, but true--and unavoidable.

Frontier missed its chance to avoid this inexorable slide around two years ago. Management blunders made then and since have resulted in the current situation.

 

[Cardinal]

Frontier missed its chance to avoid this inexorable slide around two years ago. Management blunders made then and since have resulted in the current situation.

Heck, on Friday the COO (who was hired by Potter) said it's unfortunate Menke didn't get here sooner.

 

[Golden Falcon]

Wonder how big a dent the DHC ops put in their finances??