Rottweiller
Well-known member
- Joined
- Nov 26, 2001
- Posts
- 429
A senior United pilot who declines to be identified says he earned more than $260,000 last year -- that was before the pilots recently agreed to a 29% pay cut -- and flies fewer than 40 hours a month. But he is paid, under contract terms, for 75 hours. He legally parlayed five vacation days last month into 25 days off with full pay because United's contract forces the company to release a pilot from any scheduled flight that overlaps with one of his vacation days.
At Continental, a pilot of similar seniority flying a Boeing 767 earns $216,000 annually and flies an average of 56 hours a month. He usually gets paid only for the hours he's scheduled to fly, and he can't game the system for more paid time off.
Capt. Paul Whiteford, head of the Air Line Pilots Association at United, says pilot productivity has been hurt because the carrier in late 2001 retired two types of aircraft that were old, inefficient and not needed after United cut capacity. The move left as many as 1,000 pilots a month not working but getting paid while they awaited training on different models.
Although three-quarters of United's pilots are scheduled to fly 75 to 81 hours a month, the average comes down when nonflying activities -- vacation, sick leave, training and special assignments -- are added in.
Fighting 'Rigs'
United also is fighting the tradition of "rigs," contractual formulas that pay pilots and flight attendants for the time they spend sitting at airports or in hotel rooms. At United, ALPA and the Association of Flight Attendants contend that the rigs protect workers and help the carrier build more efficiency into its scheduling. Continental essentially did away with them in its 1983 bankruptcy.
Continental also did away with monthly caps on hours flown by pilots. At many airlines, a pilot's paid hours, including hours paid under rigs, was limited, restricting the flying a pilot can do to well under the federal limit and forcing the company to hire more aviators. United wants to raise its monthly cap to 92 hours from the current 81 or 85 hours. It also wants to cut the monthly guaranteed minimum pay to 60 hours a month from the current 75.
All told, United is seeking more than $600 million a year in productivity enhancements and work-rule changes from its entire work force. Privately, people familiar with union rules concede there is plenty of fat that can be cut. "There are lots of ways to achieve $150 million to $175 million in permanent productivity savings in the pilot contract," says an individual on the labor side who is familiar with that document. Adds another labor-side individual who knows the ins and outs of the flight-attendant agreement: "There is so much money slopping around in the vacation area. This contract is 30 years old."
The main difference in pilot contracts is that Continental's are cleaner and simpler, yielding a more efficient, cheaper operation. "Scheduling is basically a linear mathematical exercise, and the more constraints you put on it, the less-optimal the results are going to be," says Deborah McCoy, senior vice president of flight operations, who is also a Continental captain. "When I'm flying, I want to fly the most I can so my days off are at home, not at some 36-hour layover somewhere. That's what works best for the company, and the pilot."
Continental's management says that its pilots are protected, without rigs and rules, because the company must pay each pilot for scheduled hours, or actual hours, whichever is greater. Continental pilots average 15 days off a month, compared with United's 18-day average, but their total earnings aren't that different. It's just that Continental pilots have to fly more to earn the same paycheck.
While Continental outsources much of its heavy maintenance, at considerable savings, United does most of its in-house. It is limited by its contract with the machinists union to spend no more than 20% of its maintenance budget on outside contractors.
Continental has another lesson for United: how hard it is to become lean and productive in bankruptcy court. After Continental filed for Chapter 11 in 1983, then-Chief Executive Frank Lorenzo dissolved the carrier's labor contracts and laid off 65% of its workers. Many of the remaining employees, shorn of union representation, struck. Although the airline quickly got back into the sky with a skeleton staff, that break with labor led to years of abysmal service, a second trip through bankruptcy court in 1990 and a near brush with a third in 1994.
Years of cost-cutting ravaged Continental's service. In the decade between its first bankruptcy filing and its emergence from bankruptcy the second time in 1993, Continental recorded annual profits only three times. In the 1980s, it tallied cumulative losses of $1.6 billion, then piled on a further $173.3 million in losses between 1990 and 1994.
But with lower pay and flexible work practices, the payoff for Continental, now the world's seventh-largest carrier, finally came in the mid-1990s under Chief Executive Gordon Bethune. Mr. Bethune repaired notoriously poor labor relations and reinvigorated the work force without layering on a lot of extra pay and perks. Today, despite continuing losses and a heavy debt load, Continental is one of the best performers among the major airlines and is expected to be one of the first to return to profitability.
Continental pilots have regained union representation and won some contract provisions thrown out in the past bankruptcies. And they say they still need more, especially now that the company has reduced its flying, limiting promotions and putting longer layovers into schedules. "We're not satisfied with where we are today," says Capt. John Prater, chairman of the ALPA unit at Continental. "But we aren't looking for featherbedding either."
Meanwhile, some United employees still are shocked by the smorgasbord of changes their company is seeking. Randy Canale, a machinists-union leader and UAL director, said the union continues to hear from members "who are obviously in denial regarding United's precarious bankruptcy status."
In a confidential presentation to its creditors committee last month, United said its goal by 2005 is to reduce the labor unit cost of its mainline business to 3.26 cents a seat-mile, down from 4.77 cents. Continental's unit cost for labor now is 3.69 cents a seat-mile. Unit costs are measured as costs spread over available seat-miles. A seat-mile, the industry's standard unit of capacity, is one seat flown one mile. On top of the productivity savings United is seeking, it hopes to save $430 million a year by reducing benefits, and it wants to cut union wages by $1.23 billion annually.
The unions have been critical of the breadth of the changes United is seeking, set out in "term sheets" in December. Capt. Whiteford, United's ALPA chief and a UAL director, calls the one directed at his 8,600 members a wish list. "It goes from areas that probably should be addressed to those that are silly," he says.
Much of the union ire is focused on United's plans to reduce pension benefits and start the low-fare subsidiary, something Continental tried unsuccessfully in the early 1990s. Unions also are concerned that the higher productivity the company seeks would lead to fewer jobs.
With only a few weeks left before United could start the legal process to undo the contracts, fitful negotiations are picking up pace and union rhetoric is diminishing. The flight attendants on Saturday agreed to give the carrier a counteroffer this week. The machinists union, which represents the most workers and normally is the most militant, is making rapid progress and hopes to have a deal to offer its members before mid-March.
Write to Susan Carey at [email protected]1 and Scott McCartney2 at [email protected]3
Copyright 2003 Dow Jones & Company, Inc. All Rights Reserved
At Continental, a pilot of similar seniority flying a Boeing 767 earns $216,000 annually and flies an average of 56 hours a month. He usually gets paid only for the hours he's scheduled to fly, and he can't game the system for more paid time off.
Capt. Paul Whiteford, head of the Air Line Pilots Association at United, says pilot productivity has been hurt because the carrier in late 2001 retired two types of aircraft that were old, inefficient and not needed after United cut capacity. The move left as many as 1,000 pilots a month not working but getting paid while they awaited training on different models.
Although three-quarters of United's pilots are scheduled to fly 75 to 81 hours a month, the average comes down when nonflying activities -- vacation, sick leave, training and special assignments -- are added in.
Fighting 'Rigs'
United also is fighting the tradition of "rigs," contractual formulas that pay pilots and flight attendants for the time they spend sitting at airports or in hotel rooms. At United, ALPA and the Association of Flight Attendants contend that the rigs protect workers and help the carrier build more efficiency into its scheduling. Continental essentially did away with them in its 1983 bankruptcy.
Continental also did away with monthly caps on hours flown by pilots. At many airlines, a pilot's paid hours, including hours paid under rigs, was limited, restricting the flying a pilot can do to well under the federal limit and forcing the company to hire more aviators. United wants to raise its monthly cap to 92 hours from the current 81 or 85 hours. It also wants to cut the monthly guaranteed minimum pay to 60 hours a month from the current 75.
All told, United is seeking more than $600 million a year in productivity enhancements and work-rule changes from its entire work force. Privately, people familiar with union rules concede there is plenty of fat that can be cut. "There are lots of ways to achieve $150 million to $175 million in permanent productivity savings in the pilot contract," says an individual on the labor side who is familiar with that document. Adds another labor-side individual who knows the ins and outs of the flight-attendant agreement: "There is so much money slopping around in the vacation area. This contract is 30 years old."
The main difference in pilot contracts is that Continental's are cleaner and simpler, yielding a more efficient, cheaper operation. "Scheduling is basically a linear mathematical exercise, and the more constraints you put on it, the less-optimal the results are going to be," says Deborah McCoy, senior vice president of flight operations, who is also a Continental captain. "When I'm flying, I want to fly the most I can so my days off are at home, not at some 36-hour layover somewhere. That's what works best for the company, and the pilot."
Continental's management says that its pilots are protected, without rigs and rules, because the company must pay each pilot for scheduled hours, or actual hours, whichever is greater. Continental pilots average 15 days off a month, compared with United's 18-day average, but their total earnings aren't that different. It's just that Continental pilots have to fly more to earn the same paycheck.
While Continental outsources much of its heavy maintenance, at considerable savings, United does most of its in-house. It is limited by its contract with the machinists union to spend no more than 20% of its maintenance budget on outside contractors.
Continental has another lesson for United: how hard it is to become lean and productive in bankruptcy court. After Continental filed for Chapter 11 in 1983, then-Chief Executive Frank Lorenzo dissolved the carrier's labor contracts and laid off 65% of its workers. Many of the remaining employees, shorn of union representation, struck. Although the airline quickly got back into the sky with a skeleton staff, that break with labor led to years of abysmal service, a second trip through bankruptcy court in 1990 and a near brush with a third in 1994.
Years of cost-cutting ravaged Continental's service. In the decade between its first bankruptcy filing and its emergence from bankruptcy the second time in 1993, Continental recorded annual profits only three times. In the 1980s, it tallied cumulative losses of $1.6 billion, then piled on a further $173.3 million in losses between 1990 and 1994.
But with lower pay and flexible work practices, the payoff for Continental, now the world's seventh-largest carrier, finally came in the mid-1990s under Chief Executive Gordon Bethune. Mr. Bethune repaired notoriously poor labor relations and reinvigorated the work force without layering on a lot of extra pay and perks. Today, despite continuing losses and a heavy debt load, Continental is one of the best performers among the major airlines and is expected to be one of the first to return to profitability.
Continental pilots have regained union representation and won some contract provisions thrown out in the past bankruptcies. And they say they still need more, especially now that the company has reduced its flying, limiting promotions and putting longer layovers into schedules. "We're not satisfied with where we are today," says Capt. John Prater, chairman of the ALPA unit at Continental. "But we aren't looking for featherbedding either."
Meanwhile, some United employees still are shocked by the smorgasbord of changes their company is seeking. Randy Canale, a machinists-union leader and UAL director, said the union continues to hear from members "who are obviously in denial regarding United's precarious bankruptcy status."
In a confidential presentation to its creditors committee last month, United said its goal by 2005 is to reduce the labor unit cost of its mainline business to 3.26 cents a seat-mile, down from 4.77 cents. Continental's unit cost for labor now is 3.69 cents a seat-mile. Unit costs are measured as costs spread over available seat-miles. A seat-mile, the industry's standard unit of capacity, is one seat flown one mile. On top of the productivity savings United is seeking, it hopes to save $430 million a year by reducing benefits, and it wants to cut union wages by $1.23 billion annually.
The unions have been critical of the breadth of the changes United is seeking, set out in "term sheets" in December. Capt. Whiteford, United's ALPA chief and a UAL director, calls the one directed at his 8,600 members a wish list. "It goes from areas that probably should be addressed to those that are silly," he says.
Much of the union ire is focused on United's plans to reduce pension benefits and start the low-fare subsidiary, something Continental tried unsuccessfully in the early 1990s. Unions also are concerned that the higher productivity the company seeks would lead to fewer jobs.
With only a few weeks left before United could start the legal process to undo the contracts, fitful negotiations are picking up pace and union rhetoric is diminishing. The flight attendants on Saturday agreed to give the carrier a counteroffer this week. The machinists union, which represents the most workers and normally is the most militant, is making rapid progress and hopes to have a deal to offer its members before mid-March.
Write to Susan Carey at [email protected]1 and Scott McCartney2 at [email protected]3
Copyright 2003 Dow Jones & Company, Inc. All Rights Reserved
