Latest from CAL and UAL MECs regarding Joint Contract negotiations

[johnsonrod]

Mr. Smisek: Your actions have infuriated and galvanized this pilot group to a level of solidarity never seen before. We will be successful in negotiating an industry leading JCBA that includes an industry redefining Scope/Outsourcing Section.

Today is Tuesday, December 14, 2010 and we have 9 items for your review.
Item 1: CAL and UAL Pilots Have Endured a 25.1 to 43.5 % Hourly Pay Rate Cut Since 2000
Ten years ago today, in 2000, a 12th year UAL 777 CA under C'00 was making $265 per hour and a CAL 777 CA under C'97 was making $203 per hour. Adjusted for inflation, these rates would equal $336 and $258 in year 2010 dollars, respectively. Current pay rates are $190 at UAL and $193 at CAL, which, based on the calculations above, represents a 43.5 % pay cut for a UAL 777 CA and a 25.1 % pay cut for a CAL 777 CA. Looking at it in reverse is perhaps even more discouraging: current max UAL and CAL CA pay of $190 and $193 per hour in 2010 dollars is equivalent to just $149 and $152 in much stronger 2000 dollars.


2000 Rate
ADJ for Inflation
Current 2010 Rates
2010 in 2000 $
UAL 777 12 yr
265
336
190
149 (- 43.5 %)
CAL 777 12 yr
203
258
193
152 (- 25.1 %)


Most discouraging of all are the percentage raises required to return to 2000 pay, and to have those rate adjusted for inflation. To return a 12th year UAL 777 CA to $336 would require a 77 % increase over their current rate. Even to return a 12th year CAL 777 CA to CAL's much lower 2000 inflation-adjusted rate of $258 would require a 34 % increase.
As pathetic as the destruction of our purchasing power as measured by hourly rates is, it does not even begin to address the loss of our retirement, work rules, and other contractual provisions. Each and every Continental and United pilot has cumulatively lost many hundreds of thousands of dollars of pay and benefits as a result of concessions. Meanwhile, our airlines just earned their highest profit margins since 1978, the last year our industry remained regulated by the CAB.
[But LM says we're making the same as in '05.]

Item 2: Then and Now - Revenue per Pilot in 2005 vs. 2010
[notice the lack of "we're making the SAME MONEY as we did in '05"]

In the first quarter of 2005, the quarter in which concessionary Contract '02 was ratified, CAL's total revenue was $2.505 Billion, with 348 mainline jets listed in that quarter's report. By contrast, in the third quarter of 2010, the quarter just ended, CAL's revenue was $3.953 Billion, with 348 mainline jets also listed in that quarter's report. Where did our pilot seniority list stand during the two periods? The January 1, 2005 list includes 4437 pilots. The July 7, 2010 CAL pilot seniority list includes 4787 pilots. 147 pilots were furloughed during the most recent quarter, resulting in a reduction from the seniority list total to 4,640. Assuming that approximately 5 % of pilots were on various types of leaves and in management during both periods, we can determine the following:

Quarter
CAL Revenue
Active CAL Pilots
Revenue per Pilot
1st Quarter 2005
2.505 Billion
4215
$594,306.00
3rd Quarter 2010
3.953 Billion
4408
$896,779.00


The percentage increase in revenue per active CAL pilot from the quarter in which Contract '02 was ratified to the most recent quarter was 51 %! Over the same period, the percentage increase in total CAL revenue was 58 %!
Each active CAL pilot is generating an average of $3,587,116 of revenue per year based on the most recent quarter's results. Do you believe you are receiving YOUR fair share of this revenue?
Item 3: The Cost of a Strike to United Continental Management and Shareholders
Management has shown a great reluctance to acknowledge the fact that most of us have no intention of working under a permanently concessionary contract, especially as we watch our company earn its highest profit margin since 1978.
The economic cost of a strike to each and every one of us requires diligence and preparation on our part, but can easily be managed. What of the cost of a strike to our now huge airline?
As an example, even much smaller Northwest claimed that its 1998 pilot strike, a strike that lasted just 18 days cost it $630 million. They cited the cost of the 30 day cooling off period, 18 day strike itself, and 7 day “recovery period” afterward.

Now consider our much larger airline, circa 2010. The 3rd quarter report press release contains the following statements:

"The strong revenue performance of the two carriers reflects the commitment of our co-workers to provide industry leading-products and service to our customers," said Jim Compton, executive vice president and chief revenue officer. "As we integrate the two networks and create the world's leading airline, we will provide even more value to our customers."
Indeed:
Standalone United Airlines Third Quarter Revenue - For the third quarter of 2010, United's total revenue was $5.4 billion, an increase of 21.7 percent compared to the same period in 2009. Consolidated passenger revenue for the third quarter rose 21.4 percent, or $878 million, compared to the same period in 2009.
Standalone Continental Airlines Third Quarter Revenue - Continental's total revenue for the third quarter of 2010 was $4.0 billion, an increase of 19.2 percent compared to the same period in 2009. Consolidated passenger revenue for the third quarter of 2010 increased 20.6 percent, or $608 million, compared to the same period in 2009.

Combined, United and Continental saw 3rd quarter 2010 revenues of $9.4 billion. In just 3 months. This comes out to an average of $102.2 million per day. An 18 day strike, without accounting for the cost of the preceding 30 day cooling off period and a recovery period, would cost management and the shareholders $1.84 billion. That is, $1,840,000,000.00.
Consider just how little you must save to take 18 days off on strike by comparison!
Item 4: Rumor Control
Rumors spread just like the children’s game of telephone, in which a group of children sit in a circle, and the first child whispers a made up statement to the child sitting right next to them. Then the second child in turn passes on what they believe they heard to the child sitting right next to them. By the time the original statement goes full circle and comes back to the original child, the message usually in no way resembles the initial statement.
Unlike the game of telephone, rumors can be a damaging tool that management or others can use to create uncertainty and disunity within a work group. During this merger timeline, everyone is hungry for information and at the same time, everyone can be somewhat anxious and apprehensive about our futures. There seems to always be an information void, some can and will take advantage of this window of opportunity to create an atmosphere conducive to divide and conquer tactics.
Rumor - Regarding scope, our MEC has been very quiet lately, and the CAL MEC has given up and isn’t doing anything to defend our Scope from the egregious actions of Mr. Smisek.
Answer - Wow, where have you been the past few weeks? This one seems really hard to believe from any active Continental pilot with a pulse; however, this one was called in to your LEC Chairman very recently, who was told that, apparently, many pilots actually believe this rumor.
Reality? Within the past few weeks, we completed three extremely successful informational picketing events attended by several hundred Continental and United pilots at each event, in Newark, Houston and the new MECCA United headquarters in downtown Chicago. We have and will continue to send the message to Wall Street, the news media (national print media coverage of our picketing events) and United management that the abrogation of Continental’s scope section will not be tolerated, and most importantly the JCBA for the new United pilots will have industry redefining Scope/Outsourcing language.
As this Magenta Line is being written, CAL MEC Chairman Jay Pierce, all of ALPA’s scope experts, including the scope guru AKA the “scope pope,” Mr. Mike Abram, have been in Los Angeles defending our Scope during an expedited arbitration hearing. The arbitration award will be released before the end of the month and before Continental is scheduled to place their code on the first 70 seat outsourced jet flight.

 

[johnsonrod]

Rumor - Regarding the JNC pay proposal there are two rumors. The first is that CAL JNC Lead Mark Adams told a pilot in an e-mail that there is no substantive change in the JCBA pay proposal from the CAL MEC Section Six Contract 08 opener. The second, is that it is common knowledge that the JNC asked for six percent over the CAL Section Six Contract 08 opener.
Answer - Both rumors are completely false. As CAL MEC Chairman Jay Pierce stated in a recent MEC Update, the differences between the CAL and UAL MEC’s over the pay proposal have been successfully resolved. The JNC has agreed on a pay proposal and both MEC’s have approved the proposal. This proposal is tentatively scheduled to be given to United management on or about December 15th. Because the company has not yet even seen our proposal, it would be inappropriate to comment on the proposal other then saying the following:
The entire CAL MEC (Three MEC Officers and Nine MEC Representatives) plus all of the LEC Secretary/Treasurers have been briefed and the Nine MEC Representatives approved the pay proposal, and we believe this pay proposal is in line with our JCBA contractual objectives.
Rumor - The CAL MEC has not been provided with the actual language of the JCBA Scope proposal.
Answer - False Before we answer this rumor, let us clarify a common misconception. All contract sections, with the exception of Scope, are first negotiated by term sheets, which are essentially very much like bullet points. Once the term sheets are completed for all sections of the JCBA, then contractual language is written from those term sheets. The Scope section is the only section, due to its complexity, for which actual contract language is a part of all proposals.
The entire CAL MEC has now been briefed twice, line by line, on our Scope proposal by Scope guru and lead JNC Scope professional negotiator Mr. Mike Abram. The first time was last spring, as a part of the CAL Section Six proposal. Last month, Mr. Abram again briefed the entire CAL MEC, plus all the LEC Secretary/Treasurers on the entire JCBA Scope proposal. The proposal met or exceeded the expectations of the entire CAL MEC.
Rumor – Since the legal merger is now completed, management can move the flying wherever they want and we will lose flying as scheduled with UAL crews to begin flying IAH/LIM. There is no incentive for United Management to negotiate a timely JCBA.
Answer – While it is true that the company does have increased flexibility to move some flying since the legal merger the second part is also true. Per our Scope section, and further codified in the Transition and Process Agreement, the CAL pilots have 100% or better block hour protection and the UAL pilots have 90% protection. This means all CAL block hours replaced on a specific route must be reallocated to another route with at least the same equipment or higher.
Additionally, until management achieves a JCBA, integrated seniority list and a single FAA operating certificate, that is, until they can allocate the equipment, flying and staffing to an appropriate crew base, they will not achieve full synergies and there will be increased crew costs with the associated move of flying. There will also be increased cost due to duplication in many areas and departments until we become a single carrier.

 

[doh]

Hang tough on the scope!

 

[General Lee]

"As this Magenta Line is being written, CAL MEC Chairman Jay Pierce, all of ALPA’s scope experts, including the scope guru AKA the “scope pope,” Mr. Mike Abram, have been in Los Angeles defending our Scope during an expedited arbitration hearing. The arbitration award will be released before the end of the month and before Continental is scheduled to place their code on the first 70 seat outsourced jet flight."


Come on Guys! Stay strong and keep it going!


Bye Bye--General Lee

 

[JUNK YARD DOG]

I'm going to post this again, only because I saw scope busted at my last company by an arbitrator. A scope clause of which ALPA national said was, "rock solid"...

I want our scope defended to the end and yes I would strike over this issue!!!!

I hope I'm wrong but I feel the arbitrator will play it down the middle...
Give the company the scope relief mgmt desires, with the stipulation no CAL pilots will lose there jobs over the issue.. Then reduce the pilot group through retirements.. The outcome 5-10 years later, the airline is half the size with 70-100 seat RJ's being operated by the lowest bidder...

See you on the Picket line!

 

[AA717driver]

Never rely on an arbitrator to defend your contract. They will protect the company to the detriment of the employees every time.

TC

 

[Sumo14]

I'm going to post this again, only because I saw scope busted at my last company by an arbitrator. A scope clause of which ALPA national said was, "rock solid"...

I want our scope defended to the end and yes I would strike over this issue!!!!

I hope I'm wrong but I feel the arbitrator will play it down the middle...
Give the company the scope relief mgmt desires, with the stipulation no CAL pilots will lose there jobs over the issue.. Just the same as my last situation. The outcome there, 5 years later, the airline is half the size and half the guys or on the street. With a large majority of the flying done by an alliance agreed airline...

See you on the Picket line!

I agree with your prediction Junk Yard, they're already painting the lines for the E-170 in IAH. I will also add my prediction that even if the arbtrator finds in our favor, the company will just give us the finger and fight it out in court. Welcome to the largest corporation of lawyers with a fleet of aircraft. See you on the line.

 

[bluefin]

So, why fight for new scope or even a new contract if all it takes is the company to go to court and get the judge to change all to their favor? This is another way to look at it, seriously if you can steam roll over one provision in a contract, then why not roll over all of them. We(not really outside looking in), go on strike, company gives us what we want and a few months after the ink is dry take it to court to change the contract in their favor.

 

[acbarney]

So, why fight for new scope or even a new contract if all it takes is the company to go to court and get the judge to change all to their favor? This is another way to look at it, seriously if you can steam roll over one provision in a contract, then why not roll over all of them. We(not really outside looking in), go on strike, company gives us what we want and a few months after the ink is dry take it to court to change the contract in their favor.

Welcome to Continental.

 

[JUNK YARD DOG]

Why can't the pilot group stage a series of 1-3 day strikes... Oh yeah it's against the RLA..
That's the problem, the company can continuously violate our contract, laugh in our faces, and even kick the dog on the way by... And we can do nothing. It will not be until the BOD feels the pinch via Wall Street, that they will reign in Jeff Lorenzo and make him play nice. That is until he's gone, since he's simply a hired gun