JoeMerchant
ASA pilot
- Joined
- Mar 31, 2005
- Posts
- 6,353
ALPA's assesment of the situation:
Dear Fellow Pilots,
With our Spring MEC Meeting behind us, and with two new officers at the helm, this seems like a great time to evaluate where we have been, where we are and where we are going, as a company, and as a Union. Although we would like to be able to address the pilot group with good news and information about our company and its future, we have to be very honest and let everyone know about how difficult and challenging the situation is here at Mesa Air Group.
The intent of this letter is to let everyone know as much information possible about the events that are going on here and around the industry. We need to take these very seriously and want everyone to know that it is our desire to see MAG succeed and become a better company and a better place to work. We will start out with some of the facts and then finish with some discussion.
The State of Mesa Air Group:
• Today, MAG Management announced, via press release and SEC filing, that Delta Airlines has served MAG with a Notice of Termination Due to Breach with regard to the 35 fifty-seat ERJ operated by MAG as Delta Connection. MAG management has indicated they intend to contest this alleged breach via court if necessary, although apparently the parties are in negotiations on a resolution. MAG’s CRJ-900 flying for Delta is not affected by this Notice of Termination, although those aircraft are actually owned or leased by Delta (not MAG). When more details related to this Notice become available we will communicate them with the pilot group.
• Several weeks ago, MAG reported its seventh consecutive quarter of declining earnings. MAG Management also used the occasion of the first quarter 2008 (Oct/Nov/Dec 2007) earnings call to announce the planned removal of a total of approximately 30 50-seat aircraft by mid-year, to be replaced by approximately 8 larger-gauge aircraft (for a net reduction of 22 aircraft). They also reiterated their plan to shut down the money-losing Air Midwest Beech 1900 operation by September 30 of this year. All key measurements, available seat miles, revenue seat miles, and load factor, continue to decline. On Friday, March 7, MAG announced that Jan/Feb 2008 revenue seat miles declined a stunning 12.5 percent from the 2007 numbers.
• MAG has $38 million in convertible bonds coming due June 2008; another $110 million in convertible bonds are payable February 1, 2009.
• MAG has posted a $90 million cash appeal bond in connection with its appeal of the Hawaiian Airlines judgment. Unless a settlement is reached by the parties, it is unlikely a decision will be forthcoming from the Ninth Circuit Court of Appeals before Summer 2009. There is no doubt that this cash bond has severely impacted MAG’s cash position.
• Aloha Airlines has also filed a suit against MAG, alleging predatory pricing and related anti-trust violations. That suit is scheduled for trial in October 2008.
• Meanwhile, MAG’s go! airlines operation (as well as its competitors) continues to lose money in the Hawaii market. Just yesterday MAG announced that it will increase the number of flights conducted in Hawaii significantly because of the Aloha situation. This may turn things around in the go! operation but we need to remember that there are still other issues that need to be resolved.
• MAG management concedes that the China joint venture with Schenzen Airlines has proven “challenging." The new carrier, named “Kunpeng Airlines," has ordered 50 regional jets from Embraer and another 50 from a Chinese manufacturer. It is probable to speculate that these aircraft orders indicate that MAG will not be able to place our excess 50 seat RJ’s in China. Although management has indicated publicly that they are striving to find “homes” for the 50-seaters as they are removed from the United Express system it is clear that the company is facing a difficult challenge.
• MAG has no new business on the horizon, although United continues to seek replacements of the 50-seat aircraft with larger gauge airplanes, typically at a 3 (50-seater) for one (70-seater) ratio.
• From a pilot perspective it appears that the “solution” to our staffing shortage so far has focused on reduction in aircraft/flying, with a corresponding direct impact on our top-line revenue.
• Our Company’s financial and operational challenges are publicly known, and are likely to continue for the foreseeable future. There is no way to “sugar-coat” this reality. Every MAG pilot should be aware of MAG’s looming cash crisis, and the financial challenges this company faces.
The State of Our Union:
• The “Strategic Plan” adopted by the MAG MEC in the Fall of 2006, and distributed to the pilot group thereafter, clearly anticipated the impact pilot attrition would have on MAG’s operational performance. At the same time, it also predicted, quite accurately, that the pilot attrition would also impact our leadership group. The MAG MEC committed nearly two years to developing and maintaining a “leadership pipeline” of pilot volunteers, so that all of the various ALPA committees would remain constantly viable and fully-staffed, even as pilot union volunteers left MAG for careers elsewhere.
Our Scheduling Committee continues to review bid schedules and work with management to improve pilot schedules. The Scheduling Committee volunteers also assist individual pilots in resolving scheduling issues, improper assignments, and Flight Time/Duty Time issues. Scheduling Committee Chairman Captain Darrell Cox serves on the ALPA National Flight Time/Duty Time Committee which is currently tasked with working to revise the FAR’s related to Flight Time/Duty Time.
• The MAG MEC Central Air Safety Committee continues to perform a great service to all MAG pilots, working with management to improve the safety of MAG’s flight operations. Safety Committee volunteers also assist and advise individual pilots in safety-related investigations, and provide assistance to our ALPA attorneys in defending individual pilots in flight operations investigations and FAA proceedings.
• Our Grievance Committee continues to process a steady stream of Grievance Investigation Reports (GIR's) from MAG pilots. To the usual mix of grievance issues have included payroll discrepancies, failure to notify of delays, “hold backs," junior assignments, reassignments, and the Grievance volunteers have been inundated this past year with large numbers of GIR’s from recently-resigned pilots who did not receive vacation and final paycheck payments. The Grievance Committee volunteers must devote large amounts of time to each of these payroll cases, and have been successful in resolving virtually all of them. Currently, eight grievance arbitrations are scheduled over the next nine months, and our Grievance Committee volunteers will be working with our ALPA attorneys to present the scheduled cases.
• The pilots of MAG also benefit from the tremendous resources of ALPA’s National organization. In addition to the services of ALPA’s Aeromedical Office, and legal assistance for grievances and FAA matters, ALPA National has assigned a number of experienced pilots from other carriers to assist with key MAG projects.
The State of Contract Negotiations
• Faced with the reality of MAG’s deteriorating operational and financial condition, the MAG MEC made a strategic decision last fall. The MEC elected to approach management about embarking upon an “expedited” negotiation process, with meeting two weeks each month, aimed at achieving a new contract “sooner rather than later."
• The MEC, with the advice of our professional advisors, concluded that this expedited process offered the best chance for immediate, substantive contract improvements for our long-suffering pilots. An expeditious resolution of our negotiations would also give both parties the opportunity to benefit from an enhanced contract and allow us to face the challenges in our industry working as a team. MAG Management and the MEC executed a “protocol agreement” for these expedited negotiations. The MEC’s directions to the Negotiating Committee were to secure a short-term contract, with immediate substantive improvements addressing the key quality of life issues noted by MAG pilots in our polling.
• Your Negotiating Committee prepared a suitable proposal, which was reviewed and approved by the MEC. It was then presented to Management December 21, 2007. All MAG pilots may rest assured that the proposal submitted by our Negotiating Committee reflects the many comments and survey results from our pilots. There is nothing in our proposal that is not already being done by our major competitors. There is no doubt that our proposal will cost the company money. We cannot address the key issues and resolve the areas that are deficient without their being a cost associate with it. MAG Management has enjoyed the benefits of a below-standard pilot contract for four-plus years.
• The parties have met two weeks per month since, with several conference calls as well. While a final agreement has not yet been reached as we write this letter, the Negotiating Committee has reported that significant progress has been made and they remain cautiously optimistic. The parties are meeting again this week, and the Negotiating Committee will issue an update at the end of the week (or earlier if developments warrant).
Dear Fellow Pilots,
With our Spring MEC Meeting behind us, and with two new officers at the helm, this seems like a great time to evaluate where we have been, where we are and where we are going, as a company, and as a Union. Although we would like to be able to address the pilot group with good news and information about our company and its future, we have to be very honest and let everyone know about how difficult and challenging the situation is here at Mesa Air Group.
The intent of this letter is to let everyone know as much information possible about the events that are going on here and around the industry. We need to take these very seriously and want everyone to know that it is our desire to see MAG succeed and become a better company and a better place to work. We will start out with some of the facts and then finish with some discussion.
The State of Mesa Air Group:
• Today, MAG Management announced, via press release and SEC filing, that Delta Airlines has served MAG with a Notice of Termination Due to Breach with regard to the 35 fifty-seat ERJ operated by MAG as Delta Connection. MAG management has indicated they intend to contest this alleged breach via court if necessary, although apparently the parties are in negotiations on a resolution. MAG’s CRJ-900 flying for Delta is not affected by this Notice of Termination, although those aircraft are actually owned or leased by Delta (not MAG). When more details related to this Notice become available we will communicate them with the pilot group.
• Several weeks ago, MAG reported its seventh consecutive quarter of declining earnings. MAG Management also used the occasion of the first quarter 2008 (Oct/Nov/Dec 2007) earnings call to announce the planned removal of a total of approximately 30 50-seat aircraft by mid-year, to be replaced by approximately 8 larger-gauge aircraft (for a net reduction of 22 aircraft). They also reiterated their plan to shut down the money-losing Air Midwest Beech 1900 operation by September 30 of this year. All key measurements, available seat miles, revenue seat miles, and load factor, continue to decline. On Friday, March 7, MAG announced that Jan/Feb 2008 revenue seat miles declined a stunning 12.5 percent from the 2007 numbers.
• MAG has $38 million in convertible bonds coming due June 2008; another $110 million in convertible bonds are payable February 1, 2009.
• MAG has posted a $90 million cash appeal bond in connection with its appeal of the Hawaiian Airlines judgment. Unless a settlement is reached by the parties, it is unlikely a decision will be forthcoming from the Ninth Circuit Court of Appeals before Summer 2009. There is no doubt that this cash bond has severely impacted MAG’s cash position.
• Aloha Airlines has also filed a suit against MAG, alleging predatory pricing and related anti-trust violations. That suit is scheduled for trial in October 2008.
• Meanwhile, MAG’s go! airlines operation (as well as its competitors) continues to lose money in the Hawaii market. Just yesterday MAG announced that it will increase the number of flights conducted in Hawaii significantly because of the Aloha situation. This may turn things around in the go! operation but we need to remember that there are still other issues that need to be resolved.
• MAG management concedes that the China joint venture with Schenzen Airlines has proven “challenging." The new carrier, named “Kunpeng Airlines," has ordered 50 regional jets from Embraer and another 50 from a Chinese manufacturer. It is probable to speculate that these aircraft orders indicate that MAG will not be able to place our excess 50 seat RJ’s in China. Although management has indicated publicly that they are striving to find “homes” for the 50-seaters as they are removed from the United Express system it is clear that the company is facing a difficult challenge.
• MAG has no new business on the horizon, although United continues to seek replacements of the 50-seat aircraft with larger gauge airplanes, typically at a 3 (50-seater) for one (70-seater) ratio.
• From a pilot perspective it appears that the “solution” to our staffing shortage so far has focused on reduction in aircraft/flying, with a corresponding direct impact on our top-line revenue.
• Our Company’s financial and operational challenges are publicly known, and are likely to continue for the foreseeable future. There is no way to “sugar-coat” this reality. Every MAG pilot should be aware of MAG’s looming cash crisis, and the financial challenges this company faces.
The State of Our Union:
• The “Strategic Plan” adopted by the MAG MEC in the Fall of 2006, and distributed to the pilot group thereafter, clearly anticipated the impact pilot attrition would have on MAG’s operational performance. At the same time, it also predicted, quite accurately, that the pilot attrition would also impact our leadership group. The MAG MEC committed nearly two years to developing and maintaining a “leadership pipeline” of pilot volunteers, so that all of the various ALPA committees would remain constantly viable and fully-staffed, even as pilot union volunteers left MAG for careers elsewhere.
Our Scheduling Committee continues to review bid schedules and work with management to improve pilot schedules. The Scheduling Committee volunteers also assist individual pilots in resolving scheduling issues, improper assignments, and Flight Time/Duty Time issues. Scheduling Committee Chairman Captain Darrell Cox serves on the ALPA National Flight Time/Duty Time Committee which is currently tasked with working to revise the FAR’s related to Flight Time/Duty Time.
• The MAG MEC Central Air Safety Committee continues to perform a great service to all MAG pilots, working with management to improve the safety of MAG’s flight operations. Safety Committee volunteers also assist and advise individual pilots in safety-related investigations, and provide assistance to our ALPA attorneys in defending individual pilots in flight operations investigations and FAA proceedings.
• Our Grievance Committee continues to process a steady stream of Grievance Investigation Reports (GIR's) from MAG pilots. To the usual mix of grievance issues have included payroll discrepancies, failure to notify of delays, “hold backs," junior assignments, reassignments, and the Grievance volunteers have been inundated this past year with large numbers of GIR’s from recently-resigned pilots who did not receive vacation and final paycheck payments. The Grievance Committee volunteers must devote large amounts of time to each of these payroll cases, and have been successful in resolving virtually all of them. Currently, eight grievance arbitrations are scheduled over the next nine months, and our Grievance Committee volunteers will be working with our ALPA attorneys to present the scheduled cases.
• The pilots of MAG also benefit from the tremendous resources of ALPA’s National organization. In addition to the services of ALPA’s Aeromedical Office, and legal assistance for grievances and FAA matters, ALPA National has assigned a number of experienced pilots from other carriers to assist with key MAG projects.
The State of Contract Negotiations
• Faced with the reality of MAG’s deteriorating operational and financial condition, the MAG MEC made a strategic decision last fall. The MEC elected to approach management about embarking upon an “expedited” negotiation process, with meeting two weeks each month, aimed at achieving a new contract “sooner rather than later."
• The MEC, with the advice of our professional advisors, concluded that this expedited process offered the best chance for immediate, substantive contract improvements for our long-suffering pilots. An expeditious resolution of our negotiations would also give both parties the opportunity to benefit from an enhanced contract and allow us to face the challenges in our industry working as a team. MAG Management and the MEC executed a “protocol agreement” for these expedited negotiations. The MEC’s directions to the Negotiating Committee were to secure a short-term contract, with immediate substantive improvements addressing the key quality of life issues noted by MAG pilots in our polling.
• Your Negotiating Committee prepared a suitable proposal, which was reviewed and approved by the MEC. It was then presented to Management December 21, 2007. All MAG pilots may rest assured that the proposal submitted by our Negotiating Committee reflects the many comments and survey results from our pilots. There is nothing in our proposal that is not already being done by our major competitors. There is no doubt that our proposal will cost the company money. We cannot address the key issues and resolve the areas that are deficient without their being a cost associate with it. MAG Management has enjoyed the benefits of a below-standard pilot contract for four-plus years.
• The parties have met two weeks per month since, with several conference calls as well. While a final agreement has not yet been reached as we write this letter, the Negotiating Committee has reported that significant progress has been made and they remain cautiously optimistic. The parties are meeting again this week, and the Negotiating Committee will issue an update at the end of the week (or earlier if developments warrant).
