Originally Posted by Bill Lumberg

Pinnacle Airlines halts labor negotiations to focus on larger planes
Memphis Business Journal by Andy Ashby, Staff writer
Friday, June 22, 2012

Pinnacle Airlines Corp. is pausing labor union negotiations as it reformulates its business plan to focus on operating larger airplanes.

President and CEO John Spanjers wrote a letter to employees Friday, filed with the U.S. Securities and Exchange Commission , that said the company is focusing on larger aircraft in the face of increased competition among regional carriers for fewer flights.

A large part of Pinnacle’s Chapter 11 bankruptcy reorganization is focused on renegotiating labor contracts.

Recent discussions with Delta Air Lines Inc. officials have led to the delay, according to Spanjers.

Delta recently reached a tentative agreement with the Air Line Pilots Association International union, which would require a reduction in the number of 50-seat CRJ-200 and ERJ-145 planes in the company’s network.

After it emerges from bankruptcy protection, 140 of Pinnacle’s 181 aircraft will be CRJ-200s. The remaining 41 would be CRJ-900s, which have 76 seats as configured.

The same agreement allows Delta to expand its 76-seat regional jets by 70 as it adds additional mainline aircraft to its fleet.

“As you can see, this agreement — if ratified by Delta pilots — presents both a challenge and an opportunity for this organization,” Spanjers wrote. “Clearly our business plan will need to be reformulated in response.”

Pinnacle leases its CRJ-200s from Delta. Pinnacle owns 16 CRJ-900s and plans to sell those aircraft. The company leases the remaining 41 CRJ-900s from Delta.

The airline industry has been favoring larger planes, especially as fuel prices have risen.

Delta has received bids from other regional carriers which were below what they pay for Pinnacle’s CRJ-900 flights. Pinnacle representatives have said the company would fly exclusively for Delta once it emerges from bankruptcy protection.

“It’s clear that we are competing with carriers that have significant cost and pilot seniority advantages over Pinnacle,” Spanjers wrote.

The company plans to replace CRJ-200 aircraft with more 76-seat aircraft, which means Pinnacle must reduce its cost structure even more than originally planned in order to be competitive, according to Spanjers.

“It’s safe to assume that if competing regional airlines in the Delta network are more cost-effective than Pinnacle, they’re also in a better position to go after future flying contracts with United, US Airways or any of the other mainline carriers,” Spanjers wrote. “Our ability to reduce costs is ultimately about our future. Every mainline carrier has made it clear that the ever-shrinking pie of new flying contracts will be awarded based on which regional provider can offer the most competitive costs.”

Spanjers pointed to Delta’s recent awarding of aircraft growth to GoJet and Compass, two Pinnacle competitors.

“From our discussions with Delta, we now know that our current 76-seat cost structure would not allow us to effectively compete with GoJet or Compass for future growth opportunities,” he wrote.






Who else thinks we at mainline can compete with these guys and their lower costs for the 76 seaters???

Originally Posted by Carl Spackler

I know I'm probably talking to a cubicle resident here, but here goes anyway. We are negotiating with management. Being able to accurately predict what management is actually doing is critical to any negotiations. It's like wanting to buy a house, then stating: "why are you concerned about what the seller is doing?"

If you were a real pilot who gave up ~50% of your pay and lost or frozen pensions, you'd know the answer to that question. Getting "ours" is nothing more than the repayment of a loan without which Delta would be liquidated right now.

Nobody is interested in sabotaging management. We're only interested in being partially repaid for our investment that prevented liquidation. Nothing more.

Again, if you were really a Delta pilot, you would know the answer to that question. There's not a single Delta pilot (except Moak and the MEC admins) who don't understand we made a dreadful mistake caving in to the fear of that time. Many of us are making the exact same mistake again.

This really is the final proof that you're not a Delta pilot. This website is only for active airline pilots. This statement reeks of the standard pressure tactics used by management to use hapless cubicle types lilke yourself to shame pilots into wanting a partial repayment of their loan.

You need to do a lot more listening before you'll ever be paid any serious attention here bud.

Carl

Originally Posted by gloopy

Exactly. Which really calls into question the wisdom of negotiating negatives for gains elsewhere in an already significantly concessionary book. If the gains can vaporize but the negatives will stay and even be added to, are we really starting from a stronger position if/when things get bad?

Typically the hardest things to get back ever, even in good times, are work rules and scope. We are giving up 100Klbs jets to non union, won't hire DL pilots on furlough DPJ (for no reason and for no gain...we JUST won the grievance over that!) so those will be gone forever. If "its only 5" is OK during record profits, in a concessionary environment then another 5 or 20 must also be OK too, right? The 325 large RJ's will always be more than 255. While they will never even want a max all coach 90 seats in them, if we're really giving them even more jets that would be more efficient and profitable configed to 78, 80 or 82, and they have 223 of them already, imagine how hard it will be to keep that in a heavy concessionary environment. Parking 50's by allowing more 90's absolutely makes DCI leaner, meaner and much more viable.

Typically artificial restrictions on allowable outsourcing are among the first things to go in concessionary bargaining. One of the strengths of the TA is "closing the republic loophole" [except for republic?!?!?!] which theoretically does have some good value in it. Take for example egotistical SkyWest, who 100% will try to play with the big boys eventually one day, and there are some rumblings that day will be sooner than many would like to admit. The TA fixes that, right?

But how do we enforce it? Maybe in record profits we could force the company to eat contracts like that (not that we would, right?) but what about under heavy concessionary pressure? Are we really going to pursue, much less win, that grievance? If we do win, like DPJ, won't we just gift it right back to them to show how constructive we are or to get a "bargaining credit" to apply to reduce concessions elsewhere?

You're absolutely right, we don't know what's around the corner in this industry, and it could be really bad. That's exactly why giving up significant things which will be gone forever to get the level of gains in the TA that would be rolled back the instant a true crisis hits is being called into question.

Originally Posted by Waves

You seem to be assuming we are in a great economic environment providing leverage to strong arm the company. I don't share that position and neither do any of my friends and relatives. Many on here seem to ignore world events. We've only been out of BK for a few years. How quickly everyone forgets. Does anyone here look at the actual jobs numbers, the housing market, the geometrically increasing national debt, etc? Just yesterday 15 global banks including 5 US banks were downgraded. Some of which were downgraded two or three positions. If this TA gets shot down and we go back to the table and get significant gains, I will gladly eat crow. I'm not worried though. Don't get me wrong, I don't think this TA is the cat's meow, I just don't beleive many gains will be attained by a TA do-over. I could be wrong.

P.S. Some posters indicate that yes voters are caving and voting yes out of fear. Maybe some are, but many yes voters are using logic, not fear. Additionally, many no voters are one issue voters.

Originally Posted by Waves

You seem to be assuming we are in a great economic environment providing leverage to strong arm the company. I don't share that position and neither do any of my friends and relatives. Many on here seem to ignore world events. We've only been out of BK for a few years. How quickly everyone forgets. Does anyone here look at the actual jobs numbers, the housing market, the geometrically increasing national debt, etc? Just yesterday 15 global banks including 5 US banks were downgraded. Some of which were downgraded two or three positions. If this TA gets shot down and we go back to the table and get significant gains, I will gladly eat crow. I'm not worried though. Don't get me wrong, I don't think this TA is the cat's meow, I just don't beleive many gains will be attained by a TA do-over. I could be wrong.

P.S. Some posters indicate that yes voters are caving and voting yes out of fear. Maybe some are, but many yes voters are using logic, not fear. Additionally, many no voters are one issue voters.

Originally Posted by formerdal

The company is profitable to the tune of in excess of a billion a year and forecast to be profitable to the tune of multiple billions per year. The rest does not matter if the companies profitability holds true.

Originally Posted by SailorJerry

FYI Carl - I am a Delta line pilot. In a former life I was an ALPA guy, and in-between stints as an ALPA guy, I was a cubicle jockey. I did analysis of the exact subject matter that we're debating. It can be your facts vs. my facts though. That's fine. I don't need you to pay attention to me. And the company doesn't owe you anything. It's business. Always has been, always will be. If you want to repay yourself your 50% and your lost pension, the only way to get it is going to be as a management guy - which I don't think I will ever do again. Will you? I don't need to listen to you either. Nor does anyone else, nor would anyone else in "real life" where the rest of us live. All of us have valid arguments for our position but yours is honestly a statistical outlier and the sooner the outliers are contained the sooner we can get this group unified.

Originally Posted by SailorJerry

You're just being greedy and not acting in the best interest of your Delta "family".

Originally Posted by formerdal

The company is profitable to the tune of in excess of a billion a year and forecast to be profitable to the tune of multiple billions per year. The rest does not matter if the companies profitability holds true.

Originally Posted by DeadHead

Gonna have to disagree with you on that one Jerr,

I don't consider Carl to be a "Outlier" in the least, he may get a little carried away on here from time to time, but I think most of us are guilty of that.

Group unification occurs when all of our interests are aligned as one, and not when the entire group is being patronized by irrational threats and unrealistic worst case scenario timelines. The importance of making a well-informed, educated vote that is not based on rumor or conjecture has been conveyed from DALPA and many of the TA supporters time and time again, but then that sentiment is followed by what will happen to the group if the TA is voted down.

We shouldn't be asking what will happen if we vote "NO", we should be asking is this TA worthy of a "YES" vote?
The outcome will find it's way in history and those of us who are smart enough to not dwell on the past or throw the "I told you so's" back in other peoples' faces will be all the happier in the end.

You seem to think that group unification exists when the the "outliers" are silenced, I disagree, I think group unification occurs when each of us, outliers included, have a representational body that echoes the sentiment, cares, and concerns of the majority.