Zoro

TA Overview

Let’s take a look at this from a couple levels: “The big picture” and then in some detail.


The Big Picture:
Scope – The majority of the future growth at UPS is intra Asia and this TA allows UPS to outsource almost all of that growth. Flights that should or could be flown by a 727, 737 or partially full 757 AC can still be flown by the Chinese. This can also occur in other non-US theaters. The growth we expect & which was advertised has not been secured. Furthermore with the number of retirements scheduled, hiring is predominantly done to cover attrition. Even with UPS’ expected growth of 10% to 15% per year (compounding), we will be lucky to see over 3,200 pilots by 2013. That’s when the number of retirements is scheduled to swell to around 650 from today’s tally (that’s if the age 65 rule doesn’t pass). With only a conservative 10% growth factor, the pilot group should have grown to over 4,500 pilots (approximately) with the correct language (retirements accounted for). That difference is a huge savings to UPS. Did we gain enough in scheduling, pay and other areas to offset the lack of true growth? UPS gained a lot by not having to hire. What did we gain for the trade? Is the return on investment appropriate?

Scheduling – UPS’ network is changing & we are not privy to the details…yet. The number of gains in this TA is mitigated by the new and continued flexibilities won by UPS. Specifically, the increase in lines created by the new language is offset by the reduction of reserves needed and other language that chipped off a little here or there (Vacation relief given to UPS, ‘Conflict’ relief given to UPS, etc.). We won some nice gains on paper, but they are usually just that –gains on paper and not in the real world. The real gains are predominantly in line construction, but the core of the trip (where you are regularly exposed) has not really been protected. Most of the rules and philosophies behind the rules are good, but the limits themselves & what trigger the rules are not correct –too watered down to be truly beneficial. We should see a benefit initially, but after about two years, the majority of those benefits will disappear with network changes, the delivery of other aircraft & the reduction of reserve percentage as UPS becomes comfortable with their new reserve productivity. These rules will stay in affect until Dec 31 of 2013. Basically, UPS gets 10-yrs of stability. Does our return on this 10-yr investment sound good to you?

Pay – Initial captain salaries in this TA get us back to only a little more than what the dollar bought in 1998. We have roughly returned to 1998 buying power while giving more flexibility to UPS in addition to maintaining many of the flexibilities UPS enjoys today & will until 2013. Those flexibilities manifest themselves in increased productivity & slow or reduced upgrades. The annual raises merely keep wages in line with inflation. Moreover, they are less than those at FDX. What is also interesting is that CPT Miller on September 14, 2000 had a 17% raise & other issues targeted as the midterm correction for just correcting the MD11 situation (The McCabe letter sent to everyone). He was accused of having low expectations; yet six years later, this TA only increases pay 17.7%. Furthermore, the pseudo B-Scale that is hidden in the non-standard 767 captain’s pay slope is not corrected for immediately and is traded for a new pseudo B-scale called a 15-yr pay model. Last but no least, the missing part of a CPT’s 12th year Retro/Bonus is being used to pay for his raises during the life of the contract. Specifically, the raises from the date of signing (DOS) until the end of the contract equates roughly to $37,000, the missing retro is around $30,000. You are paying for your own raises with that $30,000. Is the return on investment appropriate?

Detail – Just a little more detail.



SCOPE

A quick overview connecting Scope and scheduling; we’ve been told that just about everything that the EB and NC gave away or didn’t attain has been advertised & rationalized as something they’ve given away to protect jobs. From the lack of serious hiring figures and the knowledge of a high number of retirements, much of the claimed IPA growth will really be due to attrition. What that means to those hired in 1994 and later is that upgrades and progression up the seniority list will be much slower than advertised. Those lucky enough to upgrade will be stuck in the lower 20% of seniority. The lower 20% to 40% of each seat will be the victims of flexibility gains the Company has secured. This group will get the worst schedules combined with stagnating advancement. Need proof? UPS isn’t hiring much more than what it needs to offset retirements. All the growth UPS has enjoyed over the last 5-years, including MENLO, has not done much for your seniority number; even more highlighted if comparing to FDX (UPS’ selling point to the IPA for a one-rate pay model was quick upgrades which is Scope related). As of the 2-1-06 seniority list, UPS only hired 276 pilots since 9/11 while having 248 scheduled to retire (are 59yrs old today). That’s only a net gain of 28-pilots before you count those on leave for medical & other reasons. FDX hired more than 1,200 pilots over the same time span. This appears to be what will occur in the future too; thus, the gains “advertised” by UPS really aren’t as significant as they would like them to appear. UPS has taken into account the NEW flexibility and productivity that the IPA has admitted to giving away and has adjusted their hiring and upgrades for it. In other words, expect no major growth at the IPA with the major expansion and increasing NET profit margins of UPS; a 4-billion dollars –and growing giant. The hiring will predominantly be for lack of hiring these last several years. To quote the IPA Highlight’s document (page 12):
“…[the scheduling article] still grants the Company enormous efficiencies and productivity…” (Similar statement in the 7-3-06 Flight Times.)


Let’s look at Scope (Article 1) to see if we got a good deal.
Art 1, page 9 (PDF p.9), 1-D.5(3) –and Art 2, page 2 (PDF p.16)
This is International flying. This could eliminate all 727 flying and future replacement airframes (i.e 737). The 757 carries 15-cans; do you think UPS would fly non-IPA 757s with roughly a 67% payload? Maybe even cheat a little when no one is looking deep in communist territories dead at night. Has UPS ever hid anything from us (MENLO)? The majority of our growth is in Asia. It is what will drive staffing & upgrades system-wide. Will UPS twist the language, its respective definitions and then apply it to domestic flying? Specifically, why have they redefined certain terms in relation to what we carry in back?

Art 1, page 9 (PDF p.9), 1-D.5(1)
UPS has the contractual right to outsource Int’l flying that touches US soil all year long in addition to Peak: Seven wet leases (i.e. 747s, A380s, etc). This reflects roughly a couple hundred jobs per today’s staffing levels and that’s NOT counting for UPS’ expected 15% per year compounding growth. Interestingly enough, it closely mimics what UPS is planning to do via MENLO, etc.

What about management pilots? Do you think having 335% more management pilots to manage 50% fewer pilots is normal (FDX comparison)? Did you know that all unionized airlines use their line/union pilots to double as management; including FDX?

Before we even consider future growth, the jobs diverted (lost) because of these loopholes and concessionary language is roughly several hundred jobs. That number increases as UPS grows over the next decade as we will hire & upgrade mainly to cover attrition. Loopholes & soft language directly impact staffing and upgrades in a negative way. Basically, the “bucket” of no longer needed pilots compound like interest in a 401K plan: Over time it becomes more significant. It will be at least December of 2013 before we sign another contract based on historical negotiating lengths at UPS.

Is this worth the trades in scheduling, pay & other areas? Is this industry leading and balanced to you?