Mooner

Until recent developments at UAL and AA, I really haven’t given any thought to what my expectations might be for our future TA. The reason being I knew we didn’t have the leadership in place to facilitate a timely resolution to section 6 negotiations. Right or wrong for making that assumption nearly 3 years ago, I have been proven right in the sense that we are now approaching the the 3 year mark since our amendable date.

I thought back then that it would take 3 or 4 years of time value to walk back whatever table position we opened with to something within striking range of a position that represented sound fiscal governance from a corporate perspective. Clearly we are now in that window and developments at other airlines are indicating the same willingness of airline management to engage.

People are fond of drawing lines of support. I’m not a big fan myself, considering the myriad ways to allocate value in a contract as complex as a pilot contract. However, a very general and broad expectation can be useful as a starting point to bracket a reasonable result.

In my case, a reasonable expectation is to achieve, in the minimum, an inflation adjustment that preserves purchasing power during the duration of the contract. Worst case scenario, you preserve what you have already achieved. That sets my lower bracket. What about the higher bracket? Do we deserve an annual real increase above and beyond an inflation kicker? Our job doesn’t really change, but our productivity definitely increases over time. This is easy to see when looking a sequential changes of a number of contracts. So yes, more productivity warrants higher real compensation and establishes an expectation for a net increase in inflation adjusted compensation.

I have now established that I expect what the average American hasn’t seen in over 40 years, a real increase in compensation. That’s fine with me because I believe what we do is exceptional. The question is how much real increase is actually achievable from a corporate governance perspective?

I think it’s easier to approach the answer from the lower bracket of expectation. First nail down the imperative to counter inflation. This is easy to do for the nearly 3 years in the history book since our amendable date. Inflation for 2020 was 1.4%, 7% in 2021, and 8.6% in 2022 thus far. That equates to 17.8% compounded rate of inflation since the amendable date.

The process is not easy for future inflation because it’s unknowable. An estimate is required. I think a reasonable assumption is to assume the annual compounding rate of inflation over the last 3 years continues for the next 3 years. Prior to 2021, going back to 2009, this has been the case. Inflation essentially was unchanged during those years. So I calculate the future annual inflation rate to be 5.6%. While this is lower than 2 of the last 3 years, it’s considerably higher than the 1st year following the amendable date.

The lower bracket is now set for value over 5 years (assuming a 2 year contract and compensation for the 3 years to negotiate an agreement) at 31.4%. This amounts to an annual compounding rate of 5.6% over 5 years. This represents the status quo and does not compensate us for our increased productivity over those years.

Ok now for the really difficult and controversial part. What is the upper bracket for expectations? Remember that any increase in real value of our contract is counter to the what the rest of American workers have realized and is clearly counter to our history over many contracts. We have being going backwards for some time. Any real increase will be a victory. Corporate America is clearly not used to increasing real compensation. At a 5.6% annually compounded, we’re approaching limits than can be justified to stockholders.

At this point I would be willing to concede 3 years of negotiation as a period of joint responsibility between ALPA and the company. It takes two parties in the end to negotiate and come to an agreement. So I will forego real increases for those years as a cost of doing business. However, going forward I want 1.5% annually above and beyond inflation. This acknowledges that real increases are tough to get, yet are commensurate with idea that we work more efficiently over time. A little real increase goes a long way when it’s compounded over a career.

The total compounded compensation increase over 5 years now becomes 35.4%, or annual compounding rate of 6.2%.

Are these numbers achievable? I think the answer is yes. Whether they are achieved is another question altogether. I’m not particularly impressed with DALPA leadership going back to before the amendable date and it is definitely a negative when I consider the answer to the question. However, a positive is that we’re talking about total contract value, not necessarily annual pay rate increases. Value can be disguised in signing bonus, work rules, retirement, vacation, etc. We could have headline numbers that look significantly more reasonable to a Board of Directors, Wall St, and the media.

I believe I now have a reasonable place to start when analyzing anything potentially coming our way this year.

neodd

Some good thought behind this. It was a good read. TLDR it and send to the union!

DALFA

Haven't kept up with your Section 6 negotiations lately but...

How many sections have been agreed to so far? What sections are those?

What is the status of all the sections with real costs such as retirement, compensation etc?

PilotJ3

Supposedly 19 of 28 are closed (including scope).

Hardest one are still open: health insurance, retirement, scheduling, vacation, pay, deadhead…

I’m missing some, but I think its going to be at least 1 more yr. Summer is almost over, there’s not much incentive. Unless the hat thing really gets management on the table.

TED74

That deadhead is a “hard” section which has been sidelined by the mediator tells you all you need to know about management’s ability to negotiate with eyes wide open to the current landscape.

interceptorpilo

Ok now for the really difficult and controversial part. What is the upper bracket for expectations? Remember that any increase in real value of our contract is counter to the what the rest of American workers have realized and is clearly counter to our history over many contracts. We have being going backwards for some time. Any real increase will be a victory. Corporate America is clearly not used to increasing real compensation. At a 5.6% annually compounded, we’re approaching limits than can be justified to stockholders.

I disagree with your top compensation number and your bottom because: CEOs gained 18.9% in compensation from 2019 to 2020. The average worker can gain skills, education and knowledge and then move on to the next job that pays more on a yearly basis. Because of our skill set and our Union shop, we cannot. So basing our bottom number on inflation or comparing to other fields is flawed. That number should be higher. Additionally, the top number should be something like CEO increase and possibly better because they can make CEOs all day long, pilots take time and money.
https://www.epi.org/publication/ceo-pay-in-2020/

WhiskeyDog

I really like this level of logical thought, thanks for taking the time to put it into words. With such a logical starting point, it would be much easier to set emotions to the side, thereby increasing pilot unity doing the negotiation cycle. Any QOL/scheduling/etc change that doesn’t directly equate to dollars, could be expressed as a high / low bracket of value, then each pilot could assess where they would fall within that range.

Then you could take the medians of all those “brackets” and subtract from that baseline % pay increase. This would give everyone a true idea of the “value” and also help the BOD stomach our increase in compensation. I don’t believe a ~40% increase in compensation is going to happen, because optics alone, even if it is warranted. But ~20% direct increase, and then an average of ~20% indirect gains would be much more palatable?

3 green

Haven't the flight attendants received two 4% raises and the estimated 13% pay bump with boarding pay since our last raise? So how any pilot can say anything less than 21% DOS would be a surprise to me. My minimum pay raise DOS is 25% and at least 1-year full retro. Plus, a lot of other issuing need to be fixed for sure like reroutes. We cannot even determine when we receive an illegal reroute now. It's going to be a huge battle to even get a 10% raise DOS it looks like from what other carriers are putting out there.

interceptorpilo

Compounding that is a 22.2% increase for FAs.

DALFA

It's 1 raise of 4% (took place in May of this year). Also, I keep seeing this 13-15-20% increase in pay for boarding but...I just looked at my last 2 paychecks and it's under 6%.