FLB717
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NPA shoots across AirTran Bow
[font=arial,helvetica,geneva,sans-serif][size=+1]AirTran's next chapter[/size][/font]
[font=arial,helvetica]Angered by executives' pay, unions want a bigger slice of discount airline's success[/font]
[font=geneva,arial,helvetica,sans-serif][size=-2]Russell Grantham - Staff[/size][/font]
[font=geneva,arial,helvetica,sans-serif][size=-2]Wednesday, May 11, 2005[/size][/font]
[font=arial,helvetica,geneva,sans-serif][size=-1]AirTran Airways has built much of its success on a foundation of nimble, lean operations and a cooperative work force.
But there are signs of cracks in the discount carrier's labor relations.
It took more than two years of haggling for the airline to reach a recent tentative deal with its flight attendants union. Members voted down a previous deal in 2003.
And now AirTran's pilots --- who in the past have quickly and quietly granted concessions when management asked --- want to ditch their flexible contract for something that has more teeth.
Pilot leaders say they're also angry about fat pay raises for AirTran's top executives last year, disclosed shortly after the airline asked for concessions in the next pilot contract.
They say they've voted in extra dues to hire experts and bankroll what they expect to be protracted negotiations. They're also talking publicly, a marked departure from the past.
"We have a Southwest [Airlines]-style contract implemented by a Lorenzo-style management," complained union official Stephen James, likening AirTran's executives to former Texas Air chief Frank Lorenzo, who was reviled by labor leaders after taking over several big airlines in the 1970s and '80s and slashing costs and jobs.
Invoking Lorenzo is an indirect shot at AirTran Chief Executive Joe Leonard, one of Lorenzo's lieutenants in the mid-1980s. He was chief operating officer of now-defunct Eastern Airlines when it was part of Lorenzo's empire and was ripped apart by labor strife.
Such a comparison is off-base, said Klaus Goersch, AirTran's head of flight operations.
"I don't know why they said that," said Goersch. "I think we have a very good relationship with all our employees, and our goal is to maintain that going forward."
He said his goal in the new contract talks with pilots was to cut pilot costs by 12 percent through productivity increases alone. But he doesn't rule out pay cuts if jet fuel prices rise above recent record levels or if competitors keep cutting costs.
The new posturing between unions and management is a sign that AirTran is growing up, said aviation consultant Mike Boyd, of the Boyd Group.
"They're a mature airline now," said Boyd, with "the usual give-and-take" of adversarial negotiations. "Success brings this kind of thing."
Growth, profits
While Delta and other big network airlines have been losing billions, AirTran has grown 25 percent a year and remained generally profitable. More efficient operations and lower labor costs have helped AirTran, Southwest and other discounters capture more than 20 percent of the U.S. market by offering lower fares.
AirTran's pilot wages have long been below those at big airlines, although cutbacks at old, ailing carriers have narrowed the gap considerably. An AirTran captain now makes only about $10,000 a year less in base pay than a counterpart flying similar-sized jets for Delta, according to pilot career firm Air Inc.
But AirTran also enjoys lower costs because its offers 401(k)-style plans rather than traditional pensions, its pilots have less seniority than at older airlines, and it runs simpler operations. Its pilots belong to an in-house union, the National Pilots Association, rather than the huge Air Line Pilots Association.
After the 9/11 attacks, AirTran's pilots and mechanics --- the company's best-paid groups besides executives --- quickly agreed to cuts in pay or working hours in exchange for protection from layoffs. Pilots also agreed to other concessions in 2003 that allowed AirTran to contract with another carrier to fly to the West Coast to take on JetBlue Airways when it briefly served Atlanta.
Higher executive pay
Meanwhile, AirTran's growth has helped pump up its executives' paychecks.
AirTran's top five executives collected $8.3 million in cash and stock awards last year, more than the management teams at much bigger airlines --- including profitable Southwest. Leonard got a $5.7 million package, including a restricted stock award valued at $4.7 million.
"The timing was awful," said Matthew Pfaffly, secretary-treasurer of the NPA. "When you pick up the [Atlanta Journal-Constitution] and see that AirTran's executives are the highest-paid in the industry, concessions don't sit so well."
Angry flight attendants who hadn't had raises in years grilled Leonard over the pace of labor contract talks at last year's annual shareholders meeting in Atlanta. With the help of a federal mediator, the carrier and its flight attendants union reached a tentative agreement last month, setting up a second try at ratification. Voting on the deal ends this month.
Instead of holding its annual shareholders meeting as usual in Atlanta, where most of its 6,000 employees are based, AirTran is having the May 17 meeting near its Orlando headquarters, where it has relatively few employees.
Work rules sought
Pilots say they want the airline to remain profitable and that raising pay isn't their top priority. Pilot pay currently ranges from $38,000 for starting pilots to $153,000 for senior captains.
Union leaders say that they want tighter contract language to cut down on scheduling infractions, more reasonable trips, improved job protections and better benefits, possibly including profit-sharing.
"The company isn't abiding by the contract," said Allen Philpot, a Boeing 717 captain who is president of the pilots union. "We're going to try to fix that."
The pilots union leaders say they're angry about scheduling infractions that force pilots to fly longer days and take shorter rest periods than the contract stipulates. The union said 90 grievances are pending before mediators.
Goersch said AirTran believes its contract interpretations are correct, and that a "fair amount" of the grievances are on overlapping issues that could be lumped together.
For now, industry analysts say they aren't too concerned that AirTran's unions may cause the carrier to lose its low-cost edge. "It's hard to believe with all that's going on that they'll get too gluttonous," Calyon Securities analyst Ray Neidl said of the pilots. [/size][/font]COMPARING PILOT PAY
............Number....................Average work
Company....of pilots....Annual pay*... hours / month
AirTran........760.......$128,100..........75
Delta........8,240.......$138,132..........75
JetBlue........970.......$122,243..........81
Southwest....4,181.......$181,248..........85
* Captain's pay for smallest mainline aircraft, typically a Boeing 717 at AirTran or a Boeing 737 or Airbus A320 at other carriers.
Source: Air Inc.
</FONT>
[font=arial,helvetica,geneva,sans-serif][size=+1]AirTran's next chapter[/size][/font]
[font=arial,helvetica]Angered by executives' pay, unions want a bigger slice of discount airline's success[/font]
[font=geneva,arial,helvetica,sans-serif][size=-2]Russell Grantham - Staff[/size][/font]
[font=geneva,arial,helvetica,sans-serif][size=-2]Wednesday, May 11, 2005[/size][/font]
[font=arial,helvetica,geneva,sans-serif][size=-1]AirTran Airways has built much of its success on a foundation of nimble, lean operations and a cooperative work force.
But there are signs of cracks in the discount carrier's labor relations.
It took more than two years of haggling for the airline to reach a recent tentative deal with its flight attendants union. Members voted down a previous deal in 2003.
And now AirTran's pilots --- who in the past have quickly and quietly granted concessions when management asked --- want to ditch their flexible contract for something that has more teeth.
Pilot leaders say they're also angry about fat pay raises for AirTran's top executives last year, disclosed shortly after the airline asked for concessions in the next pilot contract.
They say they've voted in extra dues to hire experts and bankroll what they expect to be protracted negotiations. They're also talking publicly, a marked departure from the past.
"We have a Southwest [Airlines]-style contract implemented by a Lorenzo-style management," complained union official Stephen James, likening AirTran's executives to former Texas Air chief Frank Lorenzo, who was reviled by labor leaders after taking over several big airlines in the 1970s and '80s and slashing costs and jobs.
Invoking Lorenzo is an indirect shot at AirTran Chief Executive Joe Leonard, one of Lorenzo's lieutenants in the mid-1980s. He was chief operating officer of now-defunct Eastern Airlines when it was part of Lorenzo's empire and was ripped apart by labor strife.
Such a comparison is off-base, said Klaus Goersch, AirTran's head of flight operations.
"I don't know why they said that," said Goersch. "I think we have a very good relationship with all our employees, and our goal is to maintain that going forward."
He said his goal in the new contract talks with pilots was to cut pilot costs by 12 percent through productivity increases alone. But he doesn't rule out pay cuts if jet fuel prices rise above recent record levels or if competitors keep cutting costs.
The new posturing between unions and management is a sign that AirTran is growing up, said aviation consultant Mike Boyd, of the Boyd Group.
"They're a mature airline now," said Boyd, with "the usual give-and-take" of adversarial negotiations. "Success brings this kind of thing."
Growth, profits
While Delta and other big network airlines have been losing billions, AirTran has grown 25 percent a year and remained generally profitable. More efficient operations and lower labor costs have helped AirTran, Southwest and other discounters capture more than 20 percent of the U.S. market by offering lower fares.
AirTran's pilot wages have long been below those at big airlines, although cutbacks at old, ailing carriers have narrowed the gap considerably. An AirTran captain now makes only about $10,000 a year less in base pay than a counterpart flying similar-sized jets for Delta, according to pilot career firm Air Inc.
But AirTran also enjoys lower costs because its offers 401(k)-style plans rather than traditional pensions, its pilots have less seniority than at older airlines, and it runs simpler operations. Its pilots belong to an in-house union, the National Pilots Association, rather than the huge Air Line Pilots Association.
After the 9/11 attacks, AirTran's pilots and mechanics --- the company's best-paid groups besides executives --- quickly agreed to cuts in pay or working hours in exchange for protection from layoffs. Pilots also agreed to other concessions in 2003 that allowed AirTran to contract with another carrier to fly to the West Coast to take on JetBlue Airways when it briefly served Atlanta.
Higher executive pay
Meanwhile, AirTran's growth has helped pump up its executives' paychecks.
AirTran's top five executives collected $8.3 million in cash and stock awards last year, more than the management teams at much bigger airlines --- including profitable Southwest. Leonard got a $5.7 million package, including a restricted stock award valued at $4.7 million.
"The timing was awful," said Matthew Pfaffly, secretary-treasurer of the NPA. "When you pick up the [Atlanta Journal-Constitution] and see that AirTran's executives are the highest-paid in the industry, concessions don't sit so well."
Angry flight attendants who hadn't had raises in years grilled Leonard over the pace of labor contract talks at last year's annual shareholders meeting in Atlanta. With the help of a federal mediator, the carrier and its flight attendants union reached a tentative agreement last month, setting up a second try at ratification. Voting on the deal ends this month.
Instead of holding its annual shareholders meeting as usual in Atlanta, where most of its 6,000 employees are based, AirTran is having the May 17 meeting near its Orlando headquarters, where it has relatively few employees.
Work rules sought
Pilots say they want the airline to remain profitable and that raising pay isn't their top priority. Pilot pay currently ranges from $38,000 for starting pilots to $153,000 for senior captains.
Union leaders say that they want tighter contract language to cut down on scheduling infractions, more reasonable trips, improved job protections and better benefits, possibly including profit-sharing.
"The company isn't abiding by the contract," said Allen Philpot, a Boeing 717 captain who is president of the pilots union. "We're going to try to fix that."
The pilots union leaders say they're angry about scheduling infractions that force pilots to fly longer days and take shorter rest periods than the contract stipulates. The union said 90 grievances are pending before mediators.
Goersch said AirTran believes its contract interpretations are correct, and that a "fair amount" of the grievances are on overlapping issues that could be lumped together.
For now, industry analysts say they aren't too concerned that AirTran's unions may cause the carrier to lose its low-cost edge. "It's hard to believe with all that's going on that they'll get too gluttonous," Calyon Securities analyst Ray Neidl said of the pilots. [/size][/font]COMPARING PILOT PAY
............Number....................Average work
Company....of pilots....Annual pay*... hours / month
AirTran........760.......$128,100..........75
Delta........8,240.......$138,132..........75
JetBlue........970.......$122,243..........81
Southwest....4,181.......$181,248..........85
* Captain's pay for smallest mainline aircraft, typically a Boeing 717 at AirTran or a Boeing 737 or Airbus A320 at other carriers.
Source: Air Inc.
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