A very solid post about not letting our expectations be managed downwards, especially by ourselves.

And clearly, no pilot group ever gets
----------------------------------> this much,
without asking for, and believing it deserves
------------------------------------------------------------>this much.

Now, considering that the gains we got last time have shown not to be sustainable in bad economic times, and considering we're above the bottom, but probably not back at the peak, then it seems to me that whatever we end up being able to negotiate will be less than C2K. Now, I know it's almost a crime in these parts to talk about contract negotiations without using the term RESTORATION (capitalized), and I agree that the term "raise" is disgusting and sticks in the throat when trying to describe what we want and deserve... but I wonder whether you think it's possible to be more militant than what you describe, but still be pragmatic enough to think that what we get isn't going to be a full restoration. Maybe it'll look different, and maybe it'll capture gains in areas where we haven't made gains in a while, but I don't see that we're going to go forward to our past.

What I've never seen quantified, is how we can measure our contract objectives against operating margins that chocke the goose, but don't quite finish it off. It might be encouraging, or it might be scary. I honestly don't know. But I'd be awful curious to know where the sweet-spot is, and I'd certainly be agreeable to set the opener 25% above that point, and sleep well at night if we got to the target. The thing that's weird here is that we all talk about restoration, and what's good enough, but noone ever seems to have a logical way to explain where the target is.

Food for thought.

Sink;
Great post, and as I have stated, where that point is today is not where it will be when we craft our opener, therefore there is no point in it. We have had two good quarters. Not quite a streak but we are on our way. If we close 2011 with at least two more good quarters (Q 2 and 3) and two OK quarters (Q 1 and 4) we will be set up nicely to get some significant gains even if the other airlines do not get their houses in order. Problem is there are way to many dynamic events that need to transpire between now and then that we need to live before we can make an educated opener.

One methodology - coming from me, a guy who has employees that earn ME money, is that pay raises should be based on what we bring in for the company - to a degree. I think this is probably where: "The bigger airplanes pay more" pay structure came from.

One thing that you learn rather quickly as an employer is that employees get paid what they get paid - you, as the business owner, get their share of the profit. Conversely, in bad times, you eat their share of the loss. If that loss goes on too long, you shrink, through layoffs.

I think it is premature to try to boil down payraise negotiations to every possible permutation, both positive and negative. There is of course the arguement that "we lose money on Hawaii" so those pilots should pay for the opportunity to come to work (this would be the bottom end arguement). The top end arguement would be that we get a dumptruckload of $100 bills everytime we go to Lagos.

I personally think that since we lost the DB retirement, there is a whole order of magnitude less cost in employing one pilot. Some of that should be recoup-able in payrates either toward the 415C limit or in straight pay.

DAL seems, in many cases, to sell the tickets at cost plus a little. Part of this is due to wanting to be on the front page of priceline or one of the other services. The profit gravy is, to a degree, derived from extra fees. We are embarking on a program to de-list from the ticket mills - this is good. Being able to own our pricing power cannot be a bad thing.

It gets debated about once a year about how much additional ticket price we would have to charge to cover X% raises. In reality, for those that have been on the property for a while, I really don't have to care how they fund the raise. Management really doesn't want our input on any phase of operational improvements. Why would my opinion of how they fund my pay be important.

If they can afford to pay greenslip pay to get a 4 pilot trip to take off, after the first crew times out, I cannot see how restoration of C2K plus interest is out of the question. After all, greenslip pay today is just yesterday's straight pay.

Part of negotiation should be a little bit of the unreasonable. If you don't ask, you don't get.

We need the company to be profitable, but otherwise since we don't set the ticket prices, we decide what our services are worth and let the 80lb heads with Ivy League MBAs worry about the pricing to make it happen.

We should also not concern ourselves with the other employee groups. Let them handle their own negotiations, with the possible exception of the mechanics and dispatchers, the company can replace the other groups is they aren't happy with what they can negotiate. Frankly, letting a large portion of the cat ranchers go has some serious upside, just look how many applications they had for their recent hiring announcement!

You create a dichotomy with your first and second paragraphs.

How would Scambo the employer fund a raise that puts your employee costs substantially above their peer group? What would the result be for Scambo's business (and ultimately the employees) if Scambo's competition didn't match the increased labor costs? Remember C2K and the incomplete pattern bargaining? I remember AAA getting crushed in bankruptcy and APA voluntarily giving away the store to avoid Ch11. NWA signed on for about 80% of DAL rates in a very smart deal for the time. UAL followed in court soon after, and Delta was left alone.

Personally, I didn't like the results which that method of not caring produced. I thought that maybe a few folks had learned something from it.

Oh, the operational disruptions of which you speak will occur with pay at C2K or LOA 51 levels. I don't think that's applicable to the discussion I think you're trying to have.

Slow;

I wasn't proposing a foodfight, just being honest. If you would like to be on the other side of the table from me during this discussion, that is your choice.

As an employer, I have a standard starting payrate. If I have an exceptionally good (productive) employee, he/she gets raises ahead of peers. If I have a lousy one, they get the door. It is a little different than the seniority system.

Bottom line, I have never had an employee bail me out. If I did, I would be beholden to him or her.

No foodfight intended. I'm not on the other side of the table. I thought we were sitting at the table together discussing ideas.

I think we have to find a way to mitigate risk. Having costs way above your peers in a business that returns less than 10% margin per year in its best years is a recipe for disaster (like we've just experienced). We need to reap a disproportionate share of the cash flow we generate, especially on the upside. We need to have a sustainable wage structure for the downtimes, and not (as you highlighted in your own business) transfer all the risk to our junior employees.

I think we need to find a different way to get paid, one that pays more consistently to protect both the employee and the employer.

Oh, would you call it an employee bailout if you returned your employee compensation to industry average from a position that was substantially above that? You're confusing me with your management/owner to labor transitions.

As to the arguement of pay being substantially higher than the competition - it is apples to oranges to a point. Quality work will and should always cost more. I pay overtime frequently to stay on schedule. It hasn't sunk me yet. I dont begrudge paying overtime because my word is my contract. It is also factored in to my bids on jobs. I often work people 7 days in a row. Its not the same business as an airline. I also have savings plans an home ownership assistance.

At DAL, I think we have slashed to the point that morale is so low, it is tough to get the employees to be fully cheerful when doing the job. In other words, its tough to guarantee the quality product. Forget about the outsourcing part, thats a whole other discussion.

Operational disruptions are surely expensive in the airline business. However, if they aren't factored in, we need new managers.

Sorry if I am confusing you. I am not Ronald Reagan the Great Communicator.

Exactly. And the fact that management has not lifted one finger to even try to make it right speaks volumes about the true "relationship" we have.

The other point you are making that I think is really key...

There are many intangible benefits to taking good care of your employees. SWA understands this. As a business owner, you obviously understand it. In the past, the really successful businesses have understood this and have considered paying more for better/happier/more productive employees to be a competitive advantage. In today's world where the bean counter mentality seems to dominate much of American business... not so much. One of the main flaws I see with LM's proactive engagement approach is that it has allowed our management to make this critical mistake without most of the normal consequences. Ultimately, I think this is bad for Delta and it is certainly bad for all of our careers.

The problem is that you're equating a release to a strike. That's not how the NMB looks at it. To them, a release is a tool to be used in an attempt to get to a deal, not to a strike. They use the tool of the release to apply pressure in an attempt to reach a consensual agreement. That's why there is a 30-day cooling off period prior to self help. If the NMB believes that a release, even for a 12,000 pilot airline, is likely to lead to a TA being reached, then they'll provide the release. On the other hand, if they believe that the pilots are being completely unreasonable, and a release won't lead to a deal, then they won't provide the release. It's all about whether the release will likely lead to a deal or not.

Really? Have you looked at the proposals and AMR's financials?

ALPA's Economics & Financial Analysis (E&FA) Department conducts a detailed analysis of the company and determines what can truly be afforded. This information is typically presented to the MEC so they can make a determination about what to submit as a contract opener.

Now that's funny.