TL;DR version:
-up to 25k bonus for new hires that will be paid on the company's schedule, not to exceed 18 months from DOH. I can see this easily going to 25k within a month or two as summer looms.
-Additional tuition reimbursements for college kids
-First, second, and third year FO pay $40, $46, $47
-4.2 minimum daily credit on the Q400 (jet will have no rig)
-company and union must agree on hotel accommodations (big win)
-15k bonus for current pilots
While I believe we can easily hold out for more, there's no reason to turn this down because the company will be begging to make another give back LOA down the road in 5-6 months when they probably aren't getting the numbers they want, and this is okay. Let the company realize how short sighted they are and we will make them pay us again each time they force us to negotiate with them.
--Full text---
Fellow Horizon Air Pilots,
Late last week, after several months of negotiation, your elected union representatives reached a tentative agreement with the management of Horizon to amend your collective bargaining agreement (CBA). If ratified by you, this Letter of Agreement (LOA) would alter several important aspects of your collective bargaining agreement (CBA). The terms of this LOA are appended to this communication, in full, for your review and consideration. To help you understand the LOA (click here to view the LOA), this communication to you contains a brief description of the LOA, an explanation of the Q400 rig, and a summary economic analysis of the LOA (click here to view this communication as a PDF).
Brief Description of the LOA
Throughout this negotiation, your Union EXCO sought changes to the CBA which would provide the company with a strong basis for future growth while satisfying the concerns of our member pilots. Specifically, we sought to:
· Come to an agreement with Company about how to offer new hire bonuses
· Gain union participation and review rights associated with pilot development programs
· Capture part of the increase in cost within the pay scales
· Make the system transparent to assist in recruiting
· Capture value for existing pilots
· Make improvements to rigs and hotel standards
With hard work and perseverance, the goals outlined above have been achieved. Accordingly, the LOA would amend the following portions of the CBA:
· First Officer Pay Scales. If ratified, the LOA would substantially increase First Officer pay scales. First year starting FO pay would jump to $40 per hour immediately after ratification, while year two FO pay would jump to $46 per hour. All FO pay rates would increase by 1.5% in December of 2017, 2019, 2020, 2021, 2022, and 2023. FO pay would “top out” in December 2023 with $56.86 per hour for FOs in their eighth year of service. For reference, a revised FO pay table is included in Appendix A of the full LOA.
· New Hire Bonus Payments. If ratified, the LOA would permit the Company to compensate new hire pilots with bonus payments not to exceed $25,000 per individual. The Company would be permitted to offer new hire bonuses at its discretion, as long as all such payments are made within 18 months of a new hire’s date of hire. The LOA also permits the Company to continue pilot development programs with colleges and flight schools. However, the LOA prohibits the company from “obligating” a pilot for any term greater than two years after the pilot’s date of hire. Importantly, the union has also obtained the right to audit and review all new hire bonus payments and pilot development programs.
· Q400 Rig. The LOA includes new language which provides a hard daily rig on the Q400. Please refer to a more complete explanation of this rig elsewhere within this communication.
· Ratification Bonus Payments. If ratified, most pilots at Horizon would receive a one-time bonus payment of $15,000 in the first paycheck following ratification. There are two exceptions: 1) pilots in their first year of service would receive $10,000 immediately after ratification and $5,000 in January 2018; 2) any pilot who received a new-hire bonus unilaterally implemented by the company in early 2017 would only receive a ratification bonus of $5,000, payable in January of 2018.
· Layover Hotel Standards. If ratified, the LOA would set in motion a process to reevaluate and redefine hotel standards and hotel selection.
Summary Economic Analysis
If the LOA is ratified, pilot compensation will improve. However, the LOA grants the Company substantial latitude in how, when, and whether to implement New Hire Bonus Payments. For those reasons, it is impossible to accurately predict the exact increase in costs that would result from a ratified LOA. As shown in the illustration below, changes to the First Officer scale would result in a cost increase of roughly $2 million per year. Although the ratification bonus would be paid largely in the first year of the amended contract, the total amount of the bonus divided over the contract duration would result in increased compensation of roughly $1.1 million annually. Similarly, the Q400 rig would produce an annual cost increase of roughly $1.1 million, depending on future fleet changes. Assuming full utilization of the $25,000 hiring bonus, and based on recent hiring trends, the company is likely to incur costs of $3 million per year in new hire bonus payments. Accordingly, the range of likely annual cost impacts runs from $4.2 million on the low end to roughly $7.2 million on the high end. Based on recent pilot costs reported by Horizon to the Department of Transportation, the LOA would increase pilot costs between 8% and 13%.
If ratified, the LOA will amend the CBA and alter hourly rates of pay for First Officers. As your EXCO asserted throughout this negotiation, Horizon must offer a compelling and transparent compensation structure to successfully recruit new hire pilots. To that effect, the LOA places First Officer pay rates at or above the prevailing wage rates in the industry, as shown in the illustration below.
Of course, the market continues to evolve and hourly rates are no longer the exclusive economic point of comparison. A substantial number of Horizon’s peers in the industry offer new hire bonus payments and retention bonus payments to first officers in their second and third year of service. (keep in mind that most of the “bonus programs” can be stopped, unilaterally, by offering carriers) When fully factored as hourly rates, these bonus payments represent a different picture. The LOA includes variable bonus amounts to be employed at the Company’s discretion. The Company may elect to pay all, none, or a portion of the $25,000 bonus in the first year or in the second year of service (within 18 months of a new hire’s start date). Accordingly, the equivalent hourly rates -- factoring in the bonus amounts -- may vary, as shown in the following two illustrations.
With the supply of pilots constrained as never before, many new hire pilots are looking beyond pay rates and bonuses to other considerations, including upgrade time. The LOA provides Horizon with the ability to offer five-year compensation roughly equivalent to several other wholly-owned regional airlines. (See illustration below.)
The LOA, if ratified, will provide substantial ratification bonus payments to pilots currently at Horizon. In comparison to peers in the industry, Horizon’s ratification payments will generally be paid immediately after ratification. This was a hard-fought win from your EXCO. Generally, other ratification bonus payments in the regional industry have been for less money (typically $10,000 or less) and spread over many months or years.
Explanation of Q400 Rig
The LOA, if ratified, would create a minimum daily guarantee for pilots in the Q400 fleet. The Minimum Daily Guarantee of 4.2 SCH per Calendar Day insures that a pilot will never be scheduled or paid for less than 4.2 hours a day. The result is more days off for a given number of credit hours or more pay in a given number of work days. In general terms, line holders will see an increase of 20 minutes of pay per day. This is an increase of 58 hours per year based on 16 work days per month. Reserve pilots will reach minimum guarantee quicker. Below are three examples from previous bid packets that illustrate the benefit of this rig.
Example 1:
20:08 Credit Hours block driven 4 day trip. Day 1 - 7:03 Block
Day 2 – 3:56 Block
Day 3 – 3:21 Block
Day 4 – 5:48 Block
21:15 Credit Hours with 4.2 Minimum Daily Credit
Day 1 - 7:03 Block Day 2 – 4:12 Credit Day 3 – 4:12 Credit Day 4 – 5:48 Block
Example 2:
3:54 TAFB Driven 2 day trip (15:37 TAFB) Day 1 – 1:20 Block
Day 2 – 1:00 DH
8:24 credit hours with 4.2 Minimum Daily Credit
Day 1 – 4.2 Credit
Day 2 – 4.2 Credit
Example 3:
12:44 Block Driven 3 day trip
Day 1 - 3:30 Block Day 2 – 5:15 Block Day 3 – 3:59 Block
13:39 credit hours with 4.2 Minimum Daily Credit
Day 1 – 4:12 Credit Day 2 – 5:15 Credit Day 3 – 4:12 Credit
The Executive Council fully endorses this agreement and supports a “yes” vote. We are available to discuss personally.
Fraternally,
Horizon Exco