crxpilot

ALGT letter to shareholders...........form 8k may 16 2006:

Labor Situation
Last year at this time we reported difficulties with the International Brotherhood of Teamsters (the IBT), the bargaining agent for our pilots. At that time, the
IBT leadership called for a strike, embarking on a path away from the traditional negotiation environment under the auspices of the National Mediation
Board (NMB). Through court actions we were able to prevent this effort. This marked a low point in our negotiations with our pilots.
This is the first contract with our pilots. It is well known that initial contracts take longer (years) to negotiate. Since last spring, working through the NMB
process, we believe we have made good progress in negotiating the necessary elements of a contract. Both the pilots and the Company recognize the need to
work collectively to put an acceptable agreement together that recognizes the interests of both groups. Our goal is to complete an agreement and have it
ratified by our pilots this year.
On another front, the industry is facing a strong demand for pilots. The combination of near term industry expansion due to record profits from reduced fuel
expense, and upcoming retirements of as many as 50 percent of the crew members from the big 3 - Delta, American, and United - in the next ten years has
created this demand. The source of pilots for the majors has been (and will continue to be) from less mature carriers, including carriers such as ourselves and
regional carriers. We sit in the middle of the pilot flow and, while we hire our needed crews from regionals as well, we are also losing crew members to larger
carriers. A component of these resignations is frustration with our lack of an agreement and the contentious nature of our negotiations. It is our belief that a
completed agreement will take away this uncertainty and frustration.
Regional carriers have historically hired younger, first time, commercial pilots and introduced them to the U.S. air traffic system. As these crews gain
experience, including pilot in command time, they become eligible for the minimum standards of most larger carriers, including those at Allegiant. But a
recent rule change passed by Congress has substantially raised the minimum requirements for new entrant crew members. Regional carriers are facing a
shortage due to the inability to attract sufficient new hire crew members to offset experienced pilots leaving for other industry opportunities.
At present, we have been able to fill our pilot needs; however, we may have to become more aggressive in our recruitment efforts in the coming months and
years to fill our needs.