Nwa Ta

[JamesD]

Any word on the NWA TA? Did they give up anything on scope?

Thanks

 

[Daddy]

I read that mainline pilots will now start flying the 70 seat RJ's, but no details...sounds interesting...anyone else have any info?

Here's the article...the NWA part is at the very end if you don't feel like reading the whole thing...

Jet order books suffer knock-on effects
Thursday October 21, 2:46 pm ET
By Kevin Done


The woes of the US airline industry are cutting a swathe through the order books and production plans of the world's leading regional jet makers Canada's Bombardier and Embraer of Brazil.

The world's number three and four civil aircraft makers have been hit especially hard by the collapse for the second time in two years of US Airways into Chapter 11 bankruptcy protection, but their order books are also being hurt by the financial difficulties of both Delta Air Lines and American Airlines.

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The Brazilian aircraft maker cut its deliveries forecast for this year from 160 to 145 and for 2005 from 170 to 145.

US Airways signed a contract in May 2003 for the purchase of 85 Embraer 170 aircraft. By mid-September this year Embraer had delivered 22, when the US carrier collapsed back into bankruptcy.

"Deliveries have been temporarily suspended," Embraer said on Wednesday, "until the airline's situation becomes clear."

With 63 aircraft still to be delivered US Airways is the second largest carrier in the Embraer order backlog and accounts for 53 per cent of the firm orders outstanding for Embraer's 70-seat ERJ 170, the mainstay of its new 170/190 family of regional jets.

Embraer's problems have been compounded by American Airlines' decision to slow planned capacity increases at American Eagle.

The leading US carrier said this week that its regional affiliate had reached agreement with Embraer to cancel delivery of the last 18 ERJ 145 regional jets due under its present order, which were scheduled for delivery between July 2005 and February 2006.

American Eagle was the biggest buyer of ERJ 145s left in the Embraer backlog with 48 still to be delivered. This has now been cut to only 30 with 10 still to be delivered this year and 20 in the first half next year. American is saving itself capital expenditure of $330m at the expense of Embraer by cancelling the final 18.

Future troubles could also be stored up for Embraer, as American said that it had an unspecified number of "put rights" to return some already delivered aircraft back to Embraer, if they became surplus to requirements.

Embraer had been aiming to climb to a record output next year of 170 aircraft beating the previous peak of l61 set in 2001, but its hopes have again been dashed.

At the nadir of the recent recession it fell to only 101 deliveries in 2003.

Many of the leading North American airlines have looked to regional jets as a tool for helping them to emerge from their financial crises. Offering 40 to 90 seats, the aircraft have been seen as a way of cutting capacity, that would allow them to maintain a market presence on routes that had been loss-making for bigger jets.

But some of their plans are proving over-ambitious given their dangerously crimped finances.

The cut in forecast deliveries by Embraer comes only two weeks after its bigger rival Bombardier was forced to take drastic actions to cut jobs and reduce planned output of its regional jets.

It is cutting 2,000 jobs at its aerospace plants in Montreal and Belfast, Northern Ireland. A further 1,200 jobs are also under threat, if Delta Air Lines, the world's biggest operator of regional jets which is currently struggling to avoid falling into bankruptcy protection, fails to take delivery of planes that it has ordered.

Delta and US Airways accounted for 37 per cent or 87 aircraft of Bombardier's total order backlog of 234 regional jets at the end of August.

Bombardier is cutting deliveries of its 50-seat CRJ200 model by 31 per cent from 98 this year to 68 in the financial year to January 31, 2006.

Plans to step up production of the 70-seat CRJ 700 and 86-seat CRJ900 models have also been shelved and deliveries are forecast to fall marginally from 78 this year to 77 in 2005.

One more optimistic development could come from a tentative agreement reached this week by Northwest Airlines with its pilots, who have agreed to operate larger regional jets with 70 seats for the first time, if the deal is ratified.

 

[General Lee]

Hmmmmmmm. Interesting.....I know we haven't finished our negotiating yet. But, I don't think Dalpa would do that....?



Bye Bye--General Lee

 

[G4G5]

Any flying 70 seats and above belongs to the AA pilots and IMHO this is the reason why AA currently does not operate any 70 jets (other then the pre existing 30 CRJ70 at Eagle)


When mgt does decide to purchase something between the 50 seat ERJ's and the 118 Seat MD80's according to todays cpntract the AA pilots will fly it (as of this week)

 

[Schwanker]

Any flying 70 seats and above belongs to the AA pilots and IMHO this is the reason why AA currently does not operate any 70 jets (other then the pre existing 30 CRJ70 at Eagle)


When mgt does decide to purchase something between the 50 seat ERJ's and the 118 Seat MD80's according to todays cpntract the AA pilots will fly it (as of this week)

TA Pay - Basically 15% of W2
TA Scope - Allow a few more 44 seat CRJs to be converted to 50 seat

That about sums up the TA

With respect to the 70 seat aircraft, NWA mainline pilots own this flying. Period. Nothings changed except that the flying may come to fruition.

My guess is NWA is going to find a way to fly 70 seat aircraft with mainline pilots although it may not be at mainline to save other costs associated with the operation. Maybe a third feeder (on top of Mesaba and Pinnacle) which only operates 70 seat-class aircraft. This could keep FA and maintenance costs down while complying with the right for mainline pilots to operate the equipment. If you listen to Doug Steenland's earning's call, he'll address some of this. Also, the new TA has some verbage which will allow this. There is still a floor on mainline narrowbody flying which will prevent erosion of mainline flying to this operation.


From the Minneapolis Star Tribune today with respect to the earnings call:

"Currently, Northwest's pilots contract restricts the number of 50-seat Canadair Regional Jets (CRJs) that can be flown by Northwest's regional partner, Pinnacle Airlines.

If the tentative agreement is ratified next month by Northwest pilots, the airline can add six seats to several of the 44-seat CRJs already in its fleet. Also, Steenland said, "We got the right to bring in, under certain circumstances, additional 50-seat regional jets."

In another major development, Steenland said that Northwest management and the Air Line Pilots Association (ALPA) could SOON OPEN NEGOTIATIONS ON THE CONTROVERSIAL TOPIC OF 70-SEAT REGIONAL JETS. Northwest ALPA wants its pilots to fly those jets, and union negotiators proposed that Northwest pilots fly them at labor rates that are competitive with rates at regional carriers. NORTHWEST AGREED TO A SEPARATE NEGOTIATION ON THAT TOPIC IF THE PILOTS RATIFY THE TWO-YEAR COST-CUTTING PACT.

"The pilots and the company recognize that it is in each of our interests that the airline have access to the 70-seat niche," Steenland said. Based on his responses to questions Wednesday, it appears that Steenland is considering the operation of the 70-seat jets outside of Northwest's current operations, but looking at ways to fly them with Northwest pilots.""

 

[Schwanker]

Hmmmmmmm. Interesting.....I know we haven't finished our negotiating yet. But, I don't think Dalpa would do that....?



Bye Bye--General Lee

Do What? Instead of allowing NWA to outsource this flying, NWA pilots would do it. This would likely be a new hire position in the future. Would Dalpa prefer that someone else did the flying Dalpa owns? Guess I don't understand.

 

[NuGuy]

Hey,

The TA allows for some of the 44 seat RJs to be converted to 50 seaters, and allows for more total 50 seaters, but the minimum floor/ratio for mainline narrowbody aircraft was also raised. It also allowed for a limited number of 50 seaters from outside PCL/MSA (no NWA capital expenditure), but this is also tied the number of mainline narrowbodies.

Seperately, NWA managment and ALPA are committed by the TA to negotiate a 70 seat agreement where the 70 seaters are flown by mainline pilots.
Nu

 

[Schwanker]

It also allowed for a limited number of 50 seaters from outside PCL/MSA (no NWA capital expenditure), but this is also tied the number of mainline narrowbodies.


Don't have time to look back at the TA, but I think the "outside PCL/MSA" portion is where the 70 seaters will fall being flown by NWA mainline seniority list.

 

[Boeingman]

Would someone form NWA please explain why you guys are agreeing to concessions when management refuses to go along with fare raises?

 

[furloughed dude]

Boeingman,

It sounds as if you think we have a choice. The TA cuts executive rates 15% as well, but since Richard Anderson left, many execs move up one rung and haven't settled their pay packages. Of course they will be at least 15% higher than originally planned, so that when they are cut 15%, they will be what they think they deserve.

I think the TA is pretty good under the circumstances. Since 9/11, NWA pilots have received a 10% raise. They will be cut 15%, so they are only 5% lower than they were pre 9/11. That might not sound too good that pay is 5% lower than it was 4 years ago, but just ask the United, US Airways, or American pilots how the new rates sound. Their pay rates will still be second highest, next to Delta, who will most likely get cut pretty far from where they are now.

Also, we aren't giving up much in terms of work rules or scope. NWA's scope is still the best in the business (legacy carriers) and it did cap the total amount of sick leave you can aquire. Really this TA is much better than I thought it would be...

 

[Boeingman]

Boeingman,

It sounds as if you think we have a choice. The TA cuts executive rates 15% as well, but since Richard Anderson left, many execs move up one rung and haven't settled their pay packages. Of course they will be at least 15% higher than originally planned, so that when they are cut 15%, they will be what they think they deserve.

I think the TA is pretty good under the circumstances. Since 9/11, NWA pilots have received a 10% raise. They will be cut 15%, so they are only 5% lower than they were pre 9/11. That might not sound too good that pay is 5% lower than it was 4 years ago, but just ask the United, US Airways, or American pilots how the new rates sound. Their pay rates will still be second highest, next to Delta, who will most likely get cut pretty far from where they are now.

Also, we aren't giving up much in terms of work rules or scope. NWA's scope is still the best in the business (legacy carriers) and it did cap the total amount of sick leave you can aquire. Really this TA is much better than I thought it would be...

Thanks for the explanation, but you still didn't answer the question. Given the fact that NWA may need concessions, did ALPA address the fact that NWA always nixes industry fare hikes by not participating? Would this TA even be needed if the revenue picture improved with fare hikes?

My point is why should the employees give up anything when management is refusing to address the revenue side of the equation (by not going along with fare hikes) first? In this case it would seem in essance, the company is making the pilots subsidize cheaper fares. I know that is a bit of a stretch, but on the surface is the crux of the problem.

I have read that Northwest has shot down 7 attempts at fare hikes in the last 11 months by their refusal to match attempts by other carriers to raise fares. Now, granted, the other airlines could of and should of ignored it, but they didn't.

 

[furloughed dude]

Part of the TA is to cut management compensation by 15%. This applies to top execs as well, but since Anderson left, there has been alot of upward movement. Their compensation packages will be cut 15% as well, but we all know that they will increase the original pay package, then take the 15% cut. I guess it's great being in charge...

As far as nixing rate increases, I don't know. My guess is that they feel that they are doing better than most carriers and are putting the heat on them. They say that they will actually lose revenue by making these fare hikes due to decreased demand. I find that hard to believe, but I will say that even after the TA, NWA keeps most of their work rules and only takes a 15% pay cut. Remember in 2002 and 2003 that the pilots received raises. Sure, a 5% decrease from 2000 to 2004 sounds bad, but just compare it to United, American, US Airways. Pay will still be the second highest in the industry, behind Delta.

I also think that NWA management has done a good job throughout all this. The TA is much better than I thought it would be. I am not sure who you work for Boeingman, but NWA will most likely come out pretty good after the dust settles. I don't know if I can say that about many other carriers. There are no drastic transformation plans, no airline within an airline concept.

 

[MD80PILOT]

Just to point it out. Not that this really matters, however.

$ 100,000 + 5% = $105,000
$ 105,000 + 5% = $110,250

$ 110,250 -15% = $ 93,715

Pyacut from 2000: more like 6,3 %

Like I said, "Do I think it matters?" NO. Just wanted to put the # straight.

 

[charley varrick]

The NWA ALPA negotiators did a phenomenal job under the circumstances. But, this TA is merely a band aid to help NWA convince their creditors that it is on its way to getting its labor costs under control without having to resort to Ch. 11. Now it is time for the other labor unions at NWA to step up to the plate and face the uncomfortable reality of bargaining in an unfavorable economic environment. Unfortunately, they are in denial--at least their rhetoric seems to indicate that they are in denial.

NWA's "business plan" calls for $950 million in labor savings, of which they wanted $465 million from the pilots. The pilots just gave them $250 million. They need A LOT more, according to their "plan." Of course, their plan also has oil being at less than $50 a barrel. Not good.

This TA merely gives the pilots some more breathing room. Unless the industry starts a rapid recovery, I think you can count on further concessions being given by the NWA pilots in the future. And those concessions will be much uglier.

 

[canyonblue]

Now it is time for the other labor unions at NWA to step up to the plate and face the uncomfortable reality of bargaining in an unfavorable economic environment. Unfortunately, they are in denial--at least their rhetoric seems to indicate that they are in denial.

Unless you were employed there from '93-'96 you would not understand the reasons behind the other groups not playing ball with NWA. The pilots saw the pensions at other airlines being raped and decided to work with the company. The other groups won't scare as easy and will not be as easy to deal with as the pilots were. NWA will have their hands full with them.

 

[JamesD]

How many additional 50 seaters?

 

[charley varrick]

The other groups won't scare as easy and will not be as easy to deal with as the pilots were. NWA will have their hands full with them.

So true, so true. And so sad.

NWA ALPA had two independent finacial analyst groups run NWA's raw data numbers. Both came to similar conclusions: the banks have NWA well and truly by the short hairs.

If the other labor groups don't play, NWA ALPA won't give more. If that happens, Ch. 11 will be filed in '05, and the pilots', as well as other labor groups', contracts will be eviscerated by the bang of a judge's gavel.

 

[AnimalTale]

Thanks for the explanation, but you still didn't answer the question. Given the fact that NWA may need concessions, did ALPA address the fact that NWA always nixes industry fare hikes by not participating? Would this TA even be needed if the revenue picture improved with fare hikes?

My point is why should the employees give up anything when management is refusing to address the revenue side of the equation (by not going along with fare hikes) first? In this case it would seem in essance, the company is making the pilots subsidize cheaper fares. I know that is a bit of a stretch, but on the surface is the crux of the problem.

I have read that Northwest has shot down 7 attempts at fare hikes in the last 11 months by their refusal to match attempts by other carriers to raise fares. Now, granted, the other airlines could of and should of ignored it, but they didn't.

Ill try to answer your question...From what I see, if Nwa raised prices; Carriers like SWA, F9, AWA, Airtran etc...will not raise their fares. In fact, in todays economy pax dont care about the Airline as much as they shop for the fare.. MArket share is what NWA is protecting , hence no fare hikes..

Boeingman, if you guaranteed every single airline raise their fares (includeing the LCC) then I am sure NWA will too.

Thanks

 

[charley varrick]

How many additional 50 seaters?

They can convert up to 60 44-seat RJs to 50 seaters.

In addition, they can obtain an additional 40 50 seaters which must be owned, or leased, and operated by someone other than NWA.

 

[dondk]

They can convert up to 60 44-seat RJs to 50 seaters.

In addition, they can obtain an additional 40 50 seaters which must be owned, or leased, and operated by someone other than NWA.

9E doesn't have 60 "converatable" 44 seaters either on the property OR in remaining orders.

The additional 40 though.. does this mean they are shopping around for another airlink or are they still keeping the furloughee's from flying 50 seaters?