Originally Posted by mountaingoat

Hello Mr. Campbell,

It was with great anticipation that I was looking forward to the conclusion of your meeting with the Horizon Pilot’s EXCO and our CEO of Alaska Air Group, Brad Tilden. I am currently a Captain and have been with the company almost 18 years. I have been a loyal, hardworking employee throughout that time believing that Alaska and Horizon are sister companies working for the betterment of Air Group as a whole. Due to our current staffing problems, I was personally called and asked if I would help and become a check airman. I stepped up and am doing everything possible to help Horizon succeed. The results of that meeting shattered my perceptions. I am left with feelings of disappointment and betrayal.

Throughout these 18 years, the airline industry has faced numerous challenges, 9/11, corporate bankruptcies, skyrocketing oil prices, etc. Horizon and Alaska has not been exempt from these market forces. During these 15 years, the company has been forced to make many hard choices to remain viable and profitable. It has closed and opened 7 bases, become a CPA business model, transferred the CRJ to SkyWest and transition to a Q400 single fleet, cut 401k matching benefits from 10% to 6%, increased employee healthcare contributions, and made many other hard choices that has not been popular with the pilot group or other employees as a whole.

Throughout that time, most of us have told ourselves, that these decisions have been necessary for the health of not only Horizon and Alaska, but ultimately the benefit of the employees as well. The results of these decisions while not popular, have been financially successful. According to my friend on the Scheduling Committee, Horizon’s pilot’s productivity has never been higher. Pilot pay as a function of soft time or duty rigs for the last 4 bids is below 2% of all pay hours for scheduled trips (In 2010 it was between 10-14%). During Alaska Air Group’s investor conference call on 10/23/14, Brad Tilden said this:

“Horizon you've seen a massive turnaround of that company as we move from maybe 3 fleet types a few years ago to 1 now, and it's gone from basically a breakeven operation to producing $100 million a year of pretax income.”

I personally felt proud when I heard that, because any way you calculate it, Horizon’s Return on Invested Capital (The preferred metric Air Group Senior Management) is well above 10%. The method I use (I had my accountant verify it) states it at 13.2%. I remember thinking finally, we have turned the corner and all our hard work is paying off. We are meeting the goals Brad Tilden himself, said were necessary to grow Horizon.

Mr. Campbell, the above conference call was one month after you came here. I remember a conversation you had with me in one of our crew rooms, shortly after this. You were full of vibrancy, positive energy, you talked about the future of Horizon being 100 Seat jets. You told me about your interview process, and that you came here not to conduct a funeral, you are here to grow Horizon and that’s why you were hired. I cannot tell you how much hope and pride that instilled in me and verified our collective efforts and sacrifices.

The message of the May 5 meeting has completely undone many of my perceptions about whether Air Group shares your vision. I am left depressed and questioning many of my own assumptions about mutual benefits of game theory and the intentions of Alaska Senior Management:

1. Does “I am Alaska” really apply to us? Or are we just another race to bottom sub-contractor?
2. If 13.2% return on invested capital (especially in a zero interest rate environment) is not good enough to warrant investment in Horizon, what is enough? Why the need for further sacrifices at a time of record profitability when every other Air Group stakeholder whether they be investor or employee is receiving increased dividends/share repurchases, increased compensation (raises) or investment in aircraft?
3. 100 seat Jet’s costs per available seat mile is much lower, and the profit potential is much higher than a 76 seats. This translates in 10-20 million dollars of additional profit potential above a 76 seat aircraft, per aircraft per year. Why would Air Group invest in this inferior business model?
4. Why does one employee group (Alaska Pilots) get to dictate to Air Group’s senior management what Horizon’s and hence Air Group’s business model is?

I do not trust myself anymore, my large emotional swings during the last week is proof that I have become irrational and that my trust has been misplaced. I have only myself to blame. One of the tenants of Game Theory is that it requires each participate to act in good faith. If one participant defects from Game Theory, the usual outcome is every participant acting in their own best interest. This is usually to the detriment of the entire group as everyone cares only for themselves. Is this the future of Horizon Air?

Market forces dictated large sacrifices at Horizon Air and as Brad Tilden informed investors in October, we have responded and met the very metrics Senior Leadership identified as necessary to invest at Horizon. We are currently exceeding those ROIC goals. If Senior Air Group leadership fails to invest at Horizon because of the Alaska Mainline Pilots, the only logical conclusion is that they have defected from game theory and the negotiations with the EXCO have been in bad faith.

I am good friends with a line supervisor in maintenance. He has informed me that the decision has already been made. The first 15 Q400s will be returned after the leases have run out. They are compiling lease return task schedules next year, since some of the airframes will cycle out before their leases expire. Without a fleet plan in place, it is becoming readily apparent that the future of Horizon is to shrink by almost 30%.

In our most recent class of new hires, 50% either washed out or quit before the end of simulator training. Is shrinking 30% the company’s strategy for dealing with the pilot shortage? Everyone knows that you cannot shrink an airline to profitability as overhead and longevity curves become cost prohibitive.

I am thankful for what Horizon has given me during these last 18 years. I will continue to do a professional job while at work because that is who I am, however my heart is not in it. I cannot see myself working as hard as I have before. I have to think of myself now. Furthermore I will not be recommending new pilots apply at Horizon. It is not in their best interests. SkyWest and Compass both have Seattle domiciles and a rapidly plummeting upgrade time (8 months at Compass) while ours appears destined to go up (presently 6 years).

When the news first broke that Alaska Air Group was considering 100 seat jets here, I thought everything was looking better and I might make this a carrier destination. I guess I will need get my resume ready.