UAL Concession Details

[goldentrout]

Jim

That's because those of who are new to the industry over the last few years have gotten a decade's worth of education in the last months.

We all heard about this ALPA "brotherhood" thing...one for all, all for one...especially us former military guys...you know, take care of your own.

But what I've seen since 9/11 is the major airline pilot groups eat their own and spit them out, all in the name of "preserving the profession."

What responsible union signs contracts that it knows can only be paid in the best of times? The only explanation for that is that the senior guys figure when things slow down, the company will furlough...but hey, they're protected way up on the list...max pay to the last day...pump up that mult-imillion retirement fund. If that means 500 guys...or 1000 guys...or 1500...or 2000 of their ALPA "brothers" get the axe for a few years...them's is the breaks of the game.

Contrast this with AirTran/Frontier. They voted by an overwhelming majority to take a 10% pay cut after 9/11. Then, when things stabilized (for them, because they have a reasonable cost structure), they got their 10% back, plus back pay. That's a brotherhood.

The UAL MEC has been heard to say "furlough is a right of passage."

I'm all for making as much money as possible...provided the company can still turn somewhat of a profit, put some money away for a rainy day, and at lest cover their bills during the down times.

The major airline contract negotiations seem to be about one thing...as Mr. Becket emphasized above "show me the money now."

That kind of attitude from him and his type have earned him 2 failed carriers, and a furlough.

How arrogant is it to bite the hand that feeds you, and then be surprised when the hand is no longer there?

 

[FlyDeltasJets]

What do you suppose airtran and the others would do if we lowered our cost structure to match their "reasonable" one? Why do you assume that giving concessions would only be limited to the highest paid pilot groups? I would assume that most pilots would applaud any efforts to maintain some sort of standard. Apparently I am mistaken.

Jim,

Good point. However, this is not the first time our industry has been under strain. It will recover, and the same people now bashing the majors will once again be trying desperately to join them.

 

[SDF2BUF2MCO]

What are you worth?

For those of you who advocate concessions, how low do you go before you say enough? I understand in principle where you're coming from - and there are companies out there in deep poop - but when do you draw the line in the sand and say I'm worth this or that amount? The folks in the ivory tower sure don't offer their salaries as a sacrifice. Granted, there a fewer of those jobs so the impact would not be as great as 10,000 people taking a cut. There are other jobs out there that pay better and you don't need all the qualifications.
Giving concessions is a tough thing to do. In a similar manner, you don't see politicians offering to pay more taxes.

 

[goldentrout]

If people think "give it a few years, and things will be back to normal"...I'd bet big bucks they are wrong.

The last big downturn (1990-1993), there was only one really viable low cost carrier, SWA. Additionally, RJs were barely only a speck on the aviation screen.

Now, RJs and Frontier/SWA/AirTran/JetBlue/ATA are gaining more and more market share every year, as people begin to understand that they are safe, and tickets are generally much cheaper.

Business travel deaprtments and individuals via Orbitz and the like have a much wider range of choices today than DAL/AMR/NWA/USA in 1991.

DEN/DFW leaving 4 Apr and returning 5 Apr, no stops. Today's rate on Orbitz for Frontier/UAL/US Air/AMR/DAL is $218. Why? Because Frontier can do it for $218 dollars and make a profit.

Can you imagine this flight in 1991? No Sat night stay, 3 days in advance. It would have been probably $1000 or more. But in 2003, with Frontier airlines to compete with, $218 is what the market will bear for that route.

As for concessions...I don't know how far to go...but UAL just took a 30% pay cut, with pretty all their scope gone, and a gutting of their work rules. Other than liquidation, It souldn't have been much worse.

What if after 9/11 the UAL MEC as well as the FA and mechanic union leaders had gone to management and said, "hey, this is going to be rough for a few years...we'll take a 10-15% pay, for awhile, cahnge some work rules, you can have whatever size jets you want, but we want UAL pilot's flying them. Bring all the feeder operation in house from Skywest and ACA, and let's start a low cast in-house carrier. Let's come up with a plan to get us thorugh this?"

Certainly would have been better than bankruptcy and a 30% paycut and a gutting of their work rules and 2000 pilots on the street.

Instead, their "max pay to the last day" attitude prevailed until they had no choice (and no leverage) left, and they basically had the contract imposed upon them...which was a GOd send for management, as the bankruptcy pretty much gave them carte blanche to void the employee contracts and impose their terms.

Dumb, dumb, dumb. dumb. dumb!

I predicated this two years ago on this very board...when I had only about 6 months time in the industry.

Am I so smart? No, but basic economic laws of supply and demand apply whether you're selling widgets or airline tickets. Also, the US auto industry and steel industry are prime historical examples of unions spending their companies into bankruptcy or at least dire financial straits.

SWA FO's currently get a min guarantee of about $8000/month after 6 years of seniority. Add to that profit sharing, and they make well over $100,000/year, while working what, 15-16 days a month? Capts top out around 13,000/month after 12 years of service. That's over $150,000/year, plus at that rate, a $21,000 profit share check in 1999.

Ain't that enough?

That's the formula. Take today's histroically low passenger numbers (or maybe even a little less to be conservative), figure out what the company can afford to pay its employees and still pays its bills. Set that as the base pay rate, and then use profit sharing to let the employees join in the benefits during the good times.

That makes so much sense that someone out to try it out and see if they can consistently make money, have low turnover, and have relatively happy employees...oh yea, someone is doing that at SWA, and it has been consistently working for over a quarter of a century!

It doesn't take a genius...it does take a leadership/paradigm shift at ALPA to get rid of the "max pay to the last day" dogma.

 

[70Cuda]

Goldentrout,

Although I don't agree with everything you mentioned you pointed out some valid and inevitable realities which will be hard for many of the senior pilots to swallow, hence the old saying "you can't teach an old dog........"

UAL, DAL, et-al (including ALPA) are anachronisms, as well as the attitudes of many of the senior mainline pilots and management. Time changes most things in this World except, unfortunately, the minds of the aging.

A few obvious inevitabilities:

1. American FA's getting fatter.
2. Continued RJ growth.
3. Shrinking mainline.
4. Old timers fighting to maintain the old ways.
5. PFT
6. Basic economic principles.
7. Over paid airline execs.
8. Etc, etc,.........blah, blah, blah,......

I certainly can sympathize with the old timers, but at the same time feel sorry for them. They are locked into such a linear way of thinking and no amount of logic or reasoning will alter their out-dated ideologies. Why they keep trying to manipulate the "natural laws of economics" with rediculous methodologies such as "Scope" and "J4J w/super seniority" is beyond my simple ability to comprehend. There are many more effective and resonable ways to protect their jobs and benifits.

"The Truth Must Always Reveal Itself."

 

[FlyDeltasJets]

Goldentrout,

You didn't answer my question. The lcc's largest cost savings (by far) comes from lower employee wages and benefits. This is not a speculation, it is a fact, backed up by SEC filings. Suppose we were to lower our costs to match theirs. How do you think that they would react. Do you think that they could compete with the major carrier's route structure, ff programs, schedule, international destinations, alliances, etc. if the costs were the same?

You advocate lower wages and criticize those who choose to protect what those who came before us have earned. What you fail to realize is the only reason the lcc's have - according to you - "reasonable" salaries is that they are based on a standard set by the very people you criticize, using the attitude that you lament.

Should we protect our investment and give help if it is need? Sure. If it is needed. But I for one hope that we are very careful about what we concede. For I, unlike you it seems, know that if pilot groups don't fight for what they deserve, every pilot's career will erode. Even the guys at Southwest.

Once we allow mgt to compete by paying us less than the competition, it will only a matter of time until we are all paid like the bus drivers some seem to think that we are. That doesn't seem to bother many pilots on this board. While I don't propose to know everthing, I think the writing on the wall is pretty clear. Unfortunately, many don't want to read it, because right now they are doing well. They should be a lot worried about tomorrow. I don't know why they feel that they are impervious to the forces that are currently attacking the major contracts.


P.S.
Golden, I like your idea about bringing rj's onto mainline property to be flown by Delta pilots. I believe (and hope) that my MEC is fighting for that as we speak. I know you were speaking of UAL, but I assume you would feel the same about doing it at Delta.

 

[Blue Dude]

The lcc's largest cost savings (by far) comes from lower employee wages and benefits. This is not a speculation, it is a fact, backed up by SEC filings. Suppose we were to lower our costs to match theirs. How do you think that they would react. Do you think that they could compete with the major carrier's route structure, ff programs, schedule, international destinations, alliances, etc. if the costs were the same?

Of course they could compete. AirTran's product works as it is, at these cost levels. It's a good one. It doesn't depend on Delta not making money in order for it to succeed. It's just another choice for consumers. What you don't seem to understand is that successful carriers don't much care about how much money the other guys are making or not making. If Delta somehow lowered their costs to AirTran levels, Delta would be making a lot of money. So would AirTran. How would this force AirTran to cut pay for their pilots?

One possible scenario is if Delta gets really greedy. The real problem here is the behavior of Delta management, not AirTran. If somehow (for the sake of argument, not gonna happen) Delta got its costs down to AirTran levels, they may not just bank all that cash and leave well enough alone. They would want the whole enchilada and then try to put AirTran out of business. Assume here that the DOJ is asleep and doesn't take any action (also unlikely). That might force AirTran to cut pay in a desperation move, but the fault wouldn't lie at the pilots' feet. Not hardly. It would lie at the feet of a management, Delta's, that won't stand for anything less than a monopoly. Other than this far-fetched scenario, try to come up with a reason why you think the slope is so slippery in regards to pilot pay.

 

[goldentrout]

FlyDeltaJets

While I hear your position

"Should we protect our investment and give help if it is need? Sure. If it is needed. But I for one hope that we are very careful about what we concede. For I, unlike you it seems, know that if pilot groups don't fight for what they deserve, every pilot's career will erode. Even the guys at Southwest. "

It is difficult to support your position after watching the MECs at allow UAL/US Air go into bankruptcy and have their pay/work rules gutted...and now AMR is looking at a 25% pay cut with a furlough of 2500 pilots.

At least APA at AMR has finally learned the lesson that it's better to bargain with some leverage, than to have a contract imposed while in bankruptcy.

How can you defend a union that strategy has been partially responsible for allowing two major airline bankruptcies, thousands of furloughs, while at the same time exceptional growth and outsourcing of their flying at subsidy/contract carriers?

1. If we were on one list on 9/11 by DOH (with some fences...that's a given), I wouldn't have a job, and most probably none of your guys would be on furlough. They'd be flying RJs, but hey, that's better than the street.

2. If your MEC agreed now to one list now by DOH (with some fences), the 300 or so pilots Comair is hiring this year could all be Delta furloughees...and they could bid with thier DOH, which would put them senior to me already holding a line. Many could hold 70 seat FO or 50 seat Capt.

3. After 9/11, your MEC could've asked for all the 70 seaters to be at mainline. He could've offered to drop all scope clauses if his furloughees could fly the planes...or bring them on the property at mainline. He could have told the company to buy as many 70/90 seaters as they need...jets which are perfectly suited to certain markets, rather than maddogs or 737s or 727s. Did he? I don't know for sure, but my bet is no...because once he let those "little" jets on the property, then there would be no going back..you know, "preserve the profession." Tell that to your new 200 guys on the street as of 1 May.

Now...your MEC has very little leverage. Other than getting his scope back by allowing the code share, what leverage does he have left?

Now that ASA and Comair have 70 seat planes/pilots/maintenance/training systems...what does it benefit mainline to negotiate a whole new deal for bigger RJs at mainline...when ASA/Comair are getting the job done, and making a profit?

At first I thought it was bizarre that the mainline MECs were doing nothing to stop the impending train wreck. I thought, well maybe they're working deals behind the scenes.

But after seeing US Air and UAL go down, and watching it take 18 months for APA at AMR to get its act together, I realized that what it's really about at ALPA is "max pay to the last day, and to heck with the junior guys and the financial viability of the company."

By allowing the situation to deteriorate to the current situation, the MECs have played right into management's hands. By being in bankruptcy or threatening the same, management has the leverage to demand huge concessions.

What if the MECs had taken action in Oct 2001 as I've outlined above? Guess we'll never know the answer to that...but we can see the horrible results of sitting around and doing nothing...30% pay cuts...1/5 of the seniority list on the street...gutting of work rules...huge growth at the wholy owned/contract companies, while more mainline guys go on the street every month.

Your concern about "concessions" in other circumstances would be valid. However, in todays environment, it seems very obvious that its better to negotiate while you still have some leverage left, rather than have circumstances let management dictate what it wants...as they've pretty much done at UAL/US Air/AMR.

My prediciton is that it's only a matter of time at NWA/DAL before management comes knocking at the concession door. The question is will your MEC negotiate a palatable deal now, or wait until the company is so financially weak, that management imposes a settlement?

 

[FlyDeltasJets]

Blue,

Read any airline study. People choose tickets for price first, then schedule, then ff progams and other perks. If the prices were equal, the very vast majority of the people would be choosing the majors for their schedule, alliances, ff programs, international routes, etc. Evidence of this can be found in the multitude of low fare airlines who have gone out of business when directly competing with a major. IF the lcc's lose their cost advantage, they will die, or come to their employees to help them recapture it.

 

[FlyDeltasJets]

FlyDeltaJets

While I hear your position

"Should we protect our investment and give help if it is need? Sure. If it is needed. But I for one hope that we are very careful about what we concede. For I, unlike you it seems, know that if pilot groups don't fight for what they deserve, every pilot's career will erode. Even the guys at Southwest. "

It is difficult to support your position after watching the MECs at allow UAL/US Air go into bankruptcy and have their pay/work rules gutted...and now AMR is looking at a 25% pay cut with a furlough of 2500 pilots.

I think that you will find that both U and UAL agreed to concessions before bankruptcy. It didn't help.




At least APA at AMR has finally learned the lesson that it's better to bargain with some leverage, than to have a contract imposed while in bankruptcy.

See above. I fear the even with their concessions, mgt will ask them for more in BK, a la U/UAL


How can you defend a union that strategy has been partially responsible for allowing two major airline bankruptcies, thousands of furloughs, while at the same time exceptional growth and outsourcing of their flying at subsidy/contract carriers?


I don't accept the notion that ALPA has been responsible for ANY bankruptcies, ever. I also have never defended ALPA's scope policy, I have always said that it needs to be MUCH stronger.



1. If we were on one list on 9/11 by DOH (with some fences...that's a given), I wouldn't have a job, and most probably none of your guys would be on furlough. They'd be flying RJs, but hey, that's better than the street.


You keep getting me with that DOH thing! You really are a kidder! However, we have had 1260 furloughs and DCI has hired 800 (IIRC). There would have been furloughs, but fewer of them. I agree that onelist would help all of us. However, and I have explained this before, you neglect the fact that onelist is not our decision to make. It is mgt's, and they have stated many times (to me personally in fact) that they would spin off DCI before surrendering their massive cost advantage by agreeing to onelist. We simply cannot compel them to do this. We do not have the leverage. To continue to fight for that pie in the sky would mean neglecting more achievable and realistic solutions.


2. If your MEC agreed now to one list now by DOH (with some fences), the 300 or so pilots Comair is hiring this year could all be Delta furloughees...and they could bid with thier DOH, which would put them senior to me already holding a line. Many could hold 70 seat FO or 50 seat Capt.


Again, for those who missed it the first 500 times I have said it: If my MEC had agreed to onelist, ABSOLUTELY NOTHING WOULD BE DIFFERENT. See above. P.S. Stop it already with that DOH thing...I can hardly breath, and my milk just came out of my nose!


3. After 9/11, your MEC could've asked for all the 70 seaters to be at mainline. He could've offered to drop all scope clauses if his furloughees could fly the planes...or bring them on the property at mainline. He could have told the company to buy as many 70/90 seaters as they need...jets which are perfectly suited to certain markets, rather than maddogs or 737s or 727s. Did he? I don't know for sure, but my bet is no...because once he let those "little" jets on the property, then there would be no going back..you know, "preserve the profession." Tell that to your new 200 guys on the street as of 1 May.

Once again, Delta already has the right to buy as many rjs as they like. There are NO limits to the amount of any airplane that DAL can buy. In fact, the rj is the least restricted airplane out there, for it is one of the few that we allow mgt to outsource. However, once they hit the limit, they have to be flown by mainline pilots. Also, you are incorrect that the MEC has not tried to get rjs at Delta. We proposed it during our last negotiations, and were told to pound sand. I have been told that we are again proposing it. P.S. Those little jets should never have been let off the property. They are simply newer dc-9's, and we have allowed mgt to alter our perceptions. Every 70 seater that we let mgt outsource hurts us all, except of course the guys who claim that they "want" to work for less money their entire careers.


Now...your MEC has very little leverage. Other than getting his scope back by allowing the code share, what leverage does he have left?


I'm not sure that I understand. I first responded because I got the impression that you felt we were forcing our airlines into BK. Now you tell me that we have no leverage?

I agree that our leverage is extremely limited. However, if we are to give concessions, I expect some things in return. One is 70 seaters at mainline. I hope that my reps feel as strongly about this as I do.


Now that ASA and Comair have 70 seat planes/pilots/maintenance/training systems...what does it benefit mainline to negotiate a whole new deal for bigger RJs at mainline...when ASA/Comair are getting the job done, and making a profit?

Two reasons. 1: our contract only allows them to outsource 57 of them. If they want more, they know who has to fly them, and 2: Because they want concessions from us. We expect some things in return.



At first I thought it was bizarre that the mainline MECs were doing nothing to stop the impending train wreck. I thought, well maybe they're working deals behind the scenes.

They were.



But after seeing US Air and UAL go down, and watching it take 18 months for APA at AMR to get its act together, I realized that what it's really about at ALPA is "max pay to the last day, and to heck with the junior guys and the financial viability of the company."

You assessment is incorrect. There is no employee group who's fortunes are more closely tied to the success of an airline than the pilots. I can assure you that the financial viability of the airline is foremost in all of our minds. However, protecting our careers in other ways is equally important. If we worked free for the rest of the decade, that would certainly help Delta. Would it help us? Heck no. There is a balance, and I assure you it won't be found by our discussion today, or by running to the company with out wallets out at the first sign of trouble. It will be found through careful study and negotiation, which is going on as we speak.



By allowing the situation to deteriorate to the current situation, the MECs have played right into management's hands. By being in bankruptcy or threatening the same, management has the leverage to demand huge concessions.

See above. I cannot speak for U or UAL, but I assure you that these steps are being taken at Delta.



What if the MECs had taken action in Oct 2001 as I've outlined above? Guess we'll never know the answer to that...but we can see the horrible results of sitting around and doing nothing...30% pay cuts...1/5 of the seniority list on the street...gutting of work rules...huge growth at the wholy owned/contract companies, while more mainline guys go on the street every month.

Your concern about "concessions" in other circumstances would be valid. However, in todays environment, it seems very obvious that its better to negotiate while you still have some leverage left, rather than have circumstances let management dictate what it wants...as they've pretty much done at UAL/US Air/AMR.

Again, I cannot speak for other airlines. Delta, however, is not on the verge of bankruptcy. While it is not out of the question, it is not imminent, either. We have time, and some leverage.



My prediciton is that it's only a matter of time at NWA/DAL before management comes knocking at the concession door. The question is will your MEC negotiate a palatable deal now, or wait until the company is so financially weak, that management imposes a settlement?

That's a bold prediction. Let me try. I predict that my beloved Yankees will beat the Blue Jays 8-4 and 10-1 the first two games this year, and Derek Jeter will hurt his shoulder in the first game. How did I do?

Your prediction occured some time ago. Both mgts have already asked for concessions. I don't know about NWA, but DALPA is currently undertaking the financial analysis with ALPAs experts, and will meet with the company shortly. While it may be necessary, I am under no delusions that the results will be anything but harmful to all of us, although it might take a little longer for some to feel the results.