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ABX furlough problem

Old 12-01-2012, 06:49 AM
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Default ABX furlough problem

ABX has informed the pilot group they need to furlough 20 pilots this month. Management is more reluctant than normal to go through with the furlough because THEY have created a situation that has extra disincentives to furlough. There is a large group of pilots who are on the recall list (maybe anywhere from 80 to 160) that are more senior than the bottom 20. That means if they have to do a recall, they will have a different group returning which means more training costs and other problems.


It seems that management and the union have been working on plans to prevent the need to furlough. Some of the plans include pilot work rule concessions, which have to be approved by the pilot group.


The problem with this is, while good for management and the pilots who are on the furlough list, it blocks other pilots from getting a shot at a recall in the future. I don't think the union is intentionally favoring one group over another, but, that seems to be a possible outcome.


Last year, when ABX was recalling and ATI was starting to furlough, a 1224 lawyer wrote a letter to management chastising them for meddling with the furlough and recall process and warned management of possible consequences. In part, the letter said “...It would be inherently unfair to the Crewmembers remaining on the seniority List for the Company to delay their recall in expectation of a potential furlough at ATI, and it would be an error for the Company to disregard their conditional recall responses. Our position is guided by our sense of fairness to the Crewmembers remaining on the Seniority List, and our certainty that the appearance of meddling with the order and process of recall will result in further action neither side wishes to be bogged down in...”


The union needs to take another look at this and consider their role in this process. Let management worry about figuring out how to unpaint themselves from this corner. The union is there to protect employees and treat them fairly.


I will vote NO on any changes to the CBA in accordance with advise from the APA1224 attorney. “...the appearance of meddling with the order and process of recall will result in further action neither side wishes to be bogged down in...”
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Old 12-04-2012, 11:42 AM
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More reasons why the LOA is a bad idea. Not that we really need more.

When management makes a decision about furloughing pilots, they have to consider their predictions about how long the furlough will last. Of course, they have much more information about that than us (with the possible exception of the quatrains of Nostranitefr8adogmus).

When management makes that decision, they have to compare the cost of furloughing to the potential savings. The savings come from reduced pay and benefits which are probably easy to calculate. The cost side of the equation is probably more complicated. There are administrative costs for things like sending out certified letters and record keeping requirements. There are potential costs from legal challenges if they execute the furlough or recall incorrectly like what happened earlier this year. They probably pay higher rates to the government for unemployment taxes in the future.

Then there are costs related to the pilots and the CBA. There can be retraining/requalification costs. In our case, there is additional pay and insurance past the last day of work. There are intangible pilot costs related to loss of goodwill.

All businesses need some flexibility to deal with changes in labor needs. The items on the cost side of the equation provide us with some stability in life. If it didn't cost anything to furlough or recall a pilot, we'd probably be like day laborers showing up at Home Depot every morning hoping to get some work today.

As much as we hate the system, it does provide a fairly efficient way to meet the needs of both side by providing the corporation with the flexibility to adjust labor when needed while providing a damper to protect the pilots from becoming day labor.

For the corporation, the savings (mostly pay and benefits) are fairly linear but many of the costs are front loaded. That means there is a break even point. If the corporation thinks the need to furlough is going to be a short period of time, the costs will be greater than the savings and they will lose money. We don't know what that break even point is. Maybe it's 3 months or maybe it's nine months. That is for management to figure out.

So, when the corporation decides to furlough, we don't see what they see in terms of future business prospects (with the possible exception of Nostranitefr8adogmus, just kidding buddy) but we can assume that it must be a sufficiently long period of time. The one possible exception to this rule is the possibility that the corporation is bluffing. The managers can announce a furlough that doesn't make financial sense, based on what they know about future prospects, hoping the pilots will give something up to prevent execution of the furlough. If the pilots call their bluff, they can just cancel the furlough right before the effective date and it doesn't really cost anything to have tried, but if it does work, then the corporation get something for nothing. That's kind of a dirty trick but they are playing to win and they'll do what they can to take away from us. Of course, we have our own plays that we can use to keep them honest. We can call their bluff.

This LOA is a mistake because it reduces the protection we have and moves us a step closer to the day labor position. If management has really determined that the future looks so bleak that they have to furlough, I guarantee they will eventually furlough anyway and probably more than 5 or 7 or 11 or 18 or whatever the real number is. If this LOA passes, it does not save jobs. It is just free money for the corporation that they get without even making any effort.

Management needs to figure out how to solve these problems without expecting the pilots to buy their way out of it. If we do it this time, they'll expect us to do it every time. The LOA does not save jobs. It only weakens our position and moves us closer to showing up at Home Depot to see if we can get some work for a day.
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Old 12-04-2012, 01:18 PM
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And you plublished this on APC why?.....Instead of the 1224 fourm board. Maybe the FDX or UPS crews can talk to the company and change their minds....
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Old 12-04-2012, 02:34 PM
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fr8dog you are correct in that this really should be on the 1224 board. No doubt it really needs discussing by the group.

3raser is spot on in his assessment of the situation.
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Old 12-05-2012, 04:00 AM
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Originally Posted by nitefr8dog View Post
And you plublished this on APC why?.....Instead of the 1224 fourm board. Maybe the FDX or UPS crews can talk to the company and change their minds....
After all, this board is only for UPS and FedEx pilots to air dirty laundry on union issues, scheduling, etc., because they don't have their own internal boards.
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Old 12-05-2012, 06:34 AM
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Many businesses offer lower prices to customers that commit to buy on a larger scale. For example, hotels charge airlines less because they bring a steady amount of business on a regular basis. That's how it works for us too. The portion of the business that is long-term and steady has a smaller profit margin.

I'm pretty sure if a customer comes along and asks what it will cost to have a 767 on a route for a 3 month period, the price is going to be higher than what DHL pays on a 5 year contract.

ABX has a large portion of resources committed to a long-term contract with DHL. The remaining resources generate revenue from shorter duration agreements. During peak demand periods, the corporation has higher than average profits. Those higher than average profits have to be enough to carry them through the leaner periods to cover fixed costs like depreciation, insurance, staff, administrative overhead,

Do you remember the last time the corporation said “we did a $hitload of charters last month and made a buttload of extra money so we want to give the pilots a little extra beyond what's called for in the CBA?” Of course, that doesn't happen and it probably shouldn't happen because that extra profit from those shorter-term agreements should be used to help carry through the months when there is less of that type of business.

This is a capitalist society so, let's look at this from the point of view of the corporation and the shareholders. What if those extra profits from the shorter-term work didn't have to be saved for getting through those leaner times? That money could be used instead to increase earnings per share.

According to a Nov 10, 2012 article:

“Air Transport Services Group reported earnings on Nov. 8. Here are the numbers you need to know.

The 10-second takeaway
For the quarter ended Sep. 30 (Q3), Air Transport Services Group missed estimates on revenues and beat expectations on earnings per share (EPS). Compared to the prior-year quarter, revenue shrank significantly and GAAP earnings per share expanded. Margins expanded across the board.

Revenue details
Air Transport Services Group tallied revenue of $153.8 million. The five analysts polled by S&P Capital IQ hoped for a top line of $160.0 million on the same basis. GAAP reported sales were 21% lower than the prior-year quarter's $195.5 million.

EPS details
EPS came in at $0.18. The five earnings estimates compiled by S&P Capital IQ anticipated $0.17 per share. GAAP EPS were $0.18 for Q3 against -$0.08 per share for the prior-year quarter.

Margin details
For the quarter, gross margin was 37.9%, 240 basis points better than the prior-year quarter. Operating margin was 14.5%, 140 basis points better than the prior-year quarter. Net margin was 7.4%, 990 basis points better than the prior-year quarter.

Looking ahead
Next quarter's average estimate for revenue is $167.0 million. On the bottom line, the average EPS estimate is $0.21. Next year's average estimate for revenue is $626.0 million. The average EPS estimate is $0.65”
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Old 12-06-2012, 01:05 AM
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When are they going to send out the LOA and start the voting? How can they have it done before January 1st?
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Old 12-06-2012, 03:22 PM
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Originally Posted by 3raser View Post
Many businesses offer lower prices to customers that commit to buy on a larger scale. For example, hotels charge airlines less because they bring a steady amount of business on a regular basis. That's how it works for us too. The portion of the business that is long-term and steady has a smaller profit margin.

I'm pretty sure if a customer comes along and asks what it will cost to have a 767 on a route for a 3 month period, the price is going to be higher than what DHL pays on a 5 year contract.

ABX has a large portion of resources committed to a long-term contract with DHL. The remaining resources generate revenue from shorter duration agreements. During peak demand periods, the corporation has higher than average profits. Those higher than average profits have to be enough to carry them through the leaner periods to cover fixed costs like depreciation, insurance, staff, administrative overhead,

Do you remember the last time the corporation said “we did a $hitload of charters last month and made a buttload of extra money so we want to give the pilots a little extra beyond what's called for in the CBA?” Of course, that doesn't happen and it probably shouldn't happen because that extra profit from those shorter-term agreements should be used to help carry through the months when there is less of that type of business.

This is a capitalist society so, let's look at this from the point of view of the corporation and the shareholders. What if those extra profits from the shorter-term work didn't have to be saved for getting through those leaner times? That money could be used instead to increase earnings per share.

According to a Nov 10, 2012 article:

“Air Transport Services Group reported earnings on Nov. 8. Here are the numbers you need to know.

The 10-second takeaway
For the quarter ended Sep. 30 (Q3), Air Transport Services Group missed estimates on revenues and beat expectations on earnings per share (EPS). Compared to the prior-year quarter, revenue shrank significantly and GAAP earnings per share expanded. Margins expanded across the board.

Revenue details
Air Transport Services Group tallied revenue of $153.8 million. The five analysts polled by S&P Capital IQ hoped for a top line of $160.0 million on the same basis. GAAP reported sales were 21% lower than the prior-year quarter's $195.5 million.

EPS details
EPS came in at $0.18. The five earnings estimates compiled by S&P Capital IQ anticipated $0.17 per share. GAAP EPS were $0.18 for Q3 against -$0.08 per share for the prior-year quarter.

Margin details
For the quarter, gross margin was 37.9%, 240 basis points better than the prior-year quarter. Operating margin was 14.5%, 140 basis points better than the prior-year quarter. Net margin was 7.4%, 990 basis points better than the prior-year quarter.

Looking ahead
Next quarter's average estimate for revenue is $167.0 million. On the bottom line, the average EPS estimate is $0.21. Next year's average estimate for revenue is $626.0 million. The average EPS estimate is $0.65”
Ok...........
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Old 12-07-2012, 06:57 AM
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With the transfer of routes from Capital 727s to ABX 767s, I assume the furlough will be canceled.

The rest of the ABX pilots that were at ATI will be furloughed. Maybe another 20 on top of the 9 that hit the street this earlier this week. I think that brings the total up to about 80. Are these 80 any different from the 20 at ABX who are scheduled for furlough by ABX at the end of this month?

Will 1224 still try to get the LOA passed to save jobs for the furloughed ABX pilots if the december 2012 ABX furlough 20 gets canceled?
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Old 12-07-2012, 02:14 PM
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Originally Posted by 3raser View Post
With the transfer of routes from Capital 727s to ABX 767s, I assume the furlough will be canceled.

The rest of the ABX pilots that were at ATI will be furloughed. Maybe another 20 on top of the 9 that hit the street this earlier this week. I think that brings the total up to about 80. Are these 80 any different from the 20 at ABX who are scheduled for furlough by ABX at the end of this month?

Will 1224 still try to get the LOA passed to save jobs for the furloughed ABX pilots if the december 2012 ABX furlough 20 gets canceled?
You should be asking 1224 all these open ended questions....they have a crystal ball......
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