USAir Regional Consolidation
 

From the May 28 CLT crew news:

(First, thanks to the guy asking these excellent questions)
Q: Why do we own two commuter airlines? We have two sets of administration, why don't you combine them into one?
Kirby: "We own two [psa & pdt], its an artifact of history. There's not big savings in combining just those two ... To be honest with you what we would like to do ultimately is consolidate more than just those two regionals"
Q: They have two seperate headquarters, all the extra administration, if you just saved $100 would it be worth it?
Kirby: "We'd have two seperate operations anyway ...There are savings, we've looked at it, but the savings are in the $2 million range, and its a lot of work and a lot of headache to get $2 million a year and to combine operating certificates and it just hasn't been the priority. There may be opportunities to roll those airlines together hypothetically with an ARW ... or Mesa comin out of bankruptcy. So to go through all the work, expense, and brain damage[:rolleyes:] of trying to consolidate just to get $2 million worth of savings hasn't been worth it yet and hasn't been a priority yet. "


My take: $2 Million a year is not worth the effort? Wow. How much do these guys get paid again? Senior mgmt says "Meh, we don't get paid enough to work that hard" ??? What a joke. It's the same excuse the rampers use for why they aren't out there to marshall us in. The same reason the gate agents don't promptly greet the express flights. The same reason my dispatcher sends me directly through a line of thunderstorms instead of around it. I think that corporate culture starts at the top, and this seems to be ours;

USAirways: "Not worth the effort"

I've been talking about this since 04 my friend. I think we will consolidate however, right now there are two contracts that are amendable. It would be silly to consolidate us and get a united front against them in negotiations. You see how it irks them so much when PDT and PSA are invited to each others negotiations. I think that they want to stall the PDT talks as much as possible until a deal is worked out with the PSA group. It will most likely be less than a new deal at PDT would be and they would still have all the neat little MGT cookies like hot reserve etc intact. Furthermore, it would make the 70 seat scope clause all but irrelevant and allow more effecient aircraft to be bought for PSA with a pilot group from PDT ready to fly them.Once PSA has a deal, look for the consolidation talks to move forward.

Management protecting managements jobs!

In another funny side note, seems at least somebody thinks Mesa will be around post-bankruptcy. Hints at a renewed Airways contract maybe?

That's part of it.

But something not worth $2million? C'mon!!??! Most companies will spend a million to save $10K! They keep them separate because they don't want a large (read strong and consolidated) pilot group in the regionals. A combined PSA and PDT would be much stronger and a much larger headache than two separate and smaller and weaker ones.

Remember - Divide and Conquer.

Exactly!! DAL has made a conscious decision to keep multiple DCI's in a state of flux to keep costs down with whipsaw and avoid another Comair-type strike.

So what did Kirby mean by consolidate? Does he mean USAirways buy AWAC and or MESA then consolidate? Or could he mean sell PDT/PSA to AWAC and have them consolidate and just contract us? You'd think they would want to keep at least one wholly owned because hopefully someday the regional pilots will be paid a respectable wage and mainline is going to need someone to force flying on when contracts won't take pay cuts. That's where a wholly owned is benifical.

Mesa and AWAC better go to the bottom if they were to merge with the wholly owneds. It would not go over well if, especially with Mesa guys getting seniority over PDT and PSA. I think a merge between PSA and PDT would be good but I do not think it should involve the contractors.

Whipsaw still works with owned vs. contracted. If they aren't willing to consolidate two carriers, why would they consolidate three or four? I think he was just throwing the ARW/Mesa ideas out there to create a secondary excuse for why he and his mgmt counterparts aren't 'creating synergies'. Fact is they are completely capable of saving the company "$2M/yr" (probably more than that) and they simply are not willing to do it. It would cause them 'brain damage'.

Awesome work ethic.

I don't think that management hopes we will ever be paid a respectable wage, after all we're just "part timers". You are correct that the biggest benefit of having wholly owned(s) is that there is no limit on capacity reductions in down times, which acts as a hedge against risk that the contract carriers can not provide. For that reason I don't think you would see Airways without a certain percentage of their regional lift in the wholly owned department. Doesn't mean they wouldnt sell PSA/PDT for a cash infusion and eventually start up a new one though.

Awesome thread guys. Question though. How do the PSA and PDT pilots feel about the two coming together? Just curious on the opinions cause I love the idea and have been saying it for years

We'll I'm a PDT guy and I can't speak for all of us, but I feel that most would like the merger. PSA guys would most likely prefer separate opps, because PDT isn't bringing anything to the table that they want.

That is just my opinion though.

At least the PDT guys would get the chance to fly the jets they were suppose to get.

Don't be so sure, have you seen our flight attendants?

What our old ladies who have been here for 20+ years, or the fat ones who have been here for 10+ years, or the really hot 20 year olds who are furloughed right now?

I do not see PSA/PDT merging.... It may be cheaper to merge and save money via less management. But you are looking at all the senior CA's at PDT now making roughly $30 plus more per hour..... Seeing that all of them are very senior this comes down to money... The 2 million does not seem to include the fact that now you have PDT Senior CA's making over $30 more an hour to fly the jet (if allowed through a merger).

Now PSA being sold to Airwisky??? Or Airwisky buying the leftovers of Mesa??? Or even Mesa just renewing the 900's for a CHEAP rate??? Now those seem more likely then PDT/PSA.....

It may be painful for me to admit this, but I do agree with you here. Those may be the more likely scenarios especially seeing how they aren't willing to go through the effort of consolidating that which they own. The seniority thing however could be affected by the rumored 'early retirement program' which may or may not hit PDT later this year.

But I do think its BS that a guy compensated in the MILLIONS of dollars per year can say with a straight face, "Yea we could do that, and save the company some real money, but well gosh darn it thats just too much stinkin work"

Why should AWAC or MESA be stapled? Should we all follow ALPA policy?

Yeah, I can just see that happening with the AWAC guys. Nice attitude though.

dashtrash300,

Hypothetically, what if Piedmont or PSA were sold? How should that seniority integration be handled?

winglet

Why would you not want all the regionals that independent that fly for airways (AWAC PDT PSA) to try to merge and create a larger, more powerful voice to be herd? Divide and conquer doesn't work my friend.

Divide and conquer works for union busting. It works for whipsawing during contract time. From our perspective it sucks, but like crew scheduling always says, "its legal".

If PDT or PSA were sold to a contract regional that would be different but if Airways decided to hire all the Mesa guys, then they should go to the bottom because they would be coming into a wholly owned instead of joining with a contract carrier. Kind of a sweet deal for Mesa guys to start getting super seniority and a great pay raise just because their airline got bought by a "better" one.

I don't think that a contract carrier should have the same rights that a wholly owned should have. The only reason any contract carriers have gotten US Airways business is because they undercut what a wholly owned could do.

I'm pretty sure part of the "undercut" is having the capability to get/add aircraft. PSA doesn't have a profit margin, and is carried as a direct expense on the LCC books. However, for PSA to add aircraft and people, it takes money and the financial strength to shoulder the risk. There are no contractual minimums. When things slow down (08-09) the AWAC, RAH, etc are drawn to down to the mins and the w/o's are there is the cuts have to go deeper. The w/o's furloughed and went to under utilizing the aircraft and people. When things ramp-up they can respond by increasing the utilization while maintaining a higher margin. At some point, they have to give flying back to the other Express carriers because the w/o's are maxed out. To give the w/o's more flying means that LCC is on the hook for more training and labor costs, whereas they can tell the others, "Here are 1000 more block hours" and all they have to do is pay the bill. They don't have to worry about the cost until the flights are completed.

Think of the w/o's as shock absorbers -- they are the flexible option when the flying is increasing and or decreasing.

Somehow I thought you'd say that. ;)

dashtrash300,

If you follow that logic then I can paraphrase your own statement;

The only reason any wholly owned carriers have gotten US Airways business is because they undercut what mainline could do. You see? Blame can be shared by all.

I suggest you begin thinking outside the box and stop being a pawn to the whipsaw. Why spend our time looking for someone to blame like the major airline pilots for relieving their scope, the wholly-owned pilots for creating a B-Scale, the contracted outsourced pilots for working for the lowest bidder? What have you accomplished? The list goes on and on. Meanwhile airline industry managements laugh all the way to the bank while promoting an unsustainable business model.

The rules of the game are currently being controlled by major airline managements and nowhere is it written who the designated rule maker will be. This is a free country and it's time we take our jobs back. Instead of buying into the management sponsored blame game, try being a little constructive and begin looking for a path for all pilots to be hired into a company that isn't designed from the start to undercut.

winglet

the ego is strong with this one.

or is it a case of SJS?

PSA and PDT are very different from other contract airlines. We can only fly for US Airways and we don't have the job security of being able to fly for Delta/United/American. If US Airways goes bust then we do to. What should we get in return for the greater risk? I can't think of any benefit of working for a w/o. US Airways will not buy Mesa's 900's. AWAC might. So it doesn't really matter what people think about a merger with PSA/MESA/AWAC/PDT cause it isn't going to happen.

All I am saying is that PSA and PDT are wholly owneds which should entitle them over Mesa or AWAC. Just because Mesa is going down doesnt mean their pilots should get my job. Harsh I know, but it is the truth. I have already be furloughed once and believe we should get all the pilots from PDT and PSA back before we start picking up the people floating in the water.

Actually, my friend, it is kind of written that way...... Legal precedent being what it is in this country over the past 20-30 years has created an uneven playing field. Think of Ch. 11 bankruptcy protection. Most majors went Ch. 11 after 9/11 and totally shredded contracts. Managements walked away with millions in bonuses and compensation. Huge arbitrations went in favor of companies, etc.

There is very little that can be done right now. The courts are not labor friendly, to say the least. Neither has any administration in well over 20 years been even remotely labor friendly.

The best hope pilots have is the fact that there is something of period of lean pilot hiring (I am loathe to use the word 'shortage') coming over the next 5 years. Everyone knows pilot retirements will be large in number. And there are very few student pilots at the moment. The laws of supply and demand work here.

But to another subject, I can't believe someone said that 'divide and conquer' doesn't work. The situation we are currently in is exactly the result of 'divide and conquer'. Look at Comair. They were big and powerful. Then they struck. The regionals have never been the same since.

The case to watch right now is Spirit. Very, very, very important case for pilots all over the nation right now. They need all our support.

I wonder if you would have felt the same way if RAH and AWAC didn't bail out Airways with a truckload of cash post bankruptcy and Piedmont had been dissolved or sold off to some other carrier.

I could not agree more. This could set the stage for future pilot contract negotiations.

If Airways woulda gone ch.7 in 2003, over half of the WO pilots would have never been hired in the first place. So while we all agree that the cash infusions provided by contract carriers were vital to Airways survival, that does not mean that the pilots of the Airways WOs are indebted to the companies that provided that capital.

That said I dont think anybody really expects a staple if a WO&Contract merger were to take place. Even with a bankrupt Mesa. The staple discussion is far-fetched and silly at best.

Speaking for myself I'd like to know why PDT mgmt is asking for further concessions from our pilot group while Mr. Kirby is not willing to operate a profitable airline. If I was a shareholder in Airways and I heard the whining about how difficult it is to run a profitable company, I'd demand a change in mgmt.

Heck, I'd do Kirby's job for half the price! That's right, I'm undercutting him folks!
USAirways: Hire me at HALF that Kirby's salary AND that $2m/yr consolidation will be done in a month.

Who want's Parker's job? LoL..

After the mess hes made, Tilton didnt even want it lol

Saab2000,

I agree except for the "very little that can be done" part. Each of us individually has to keep the conversation going amongst our own pilot groups and educate the "newcomers". We can put pressure on our labor leaders to focus on the real issues affecting the industry and encourage them to concentrate on a two pronged attack: Reversing the scope relief at the majors and work on preventing the whipsaw and "undercutting" amongst the outsourced and b-scale airlines.

The Spirit pilots have the baton and are taking us all to school right now. Let's all support them in their struggle and do our small part to take control of the game. We can begin by stopping the self-pity, grovelling, and blaming, and instead, challenge each other to be a participant in the "race to the top".

winglet

Haha got news for you. They did not do that as a favor to Airways. If they had not and Airways went into Chap 11 both would have been lost in either Chap 7 or lost hours if they had emerged if not been pulled to save cost... Parker does not want the 50 seat jet and AWAC would have had to find work real fast or fold. Plus RAH would have had as hard of a time for those E145/170/175s with scope at UAL/DAL... So please do not kid yourself.

I don't recall saying that they did it as a favor. Of course they didn't, it was a business decision which worked out very well for those two companies. I'm only trying to point out that these ideas of a staple work both ways. Nobody wants to be stapled when they are the one being acquired, but everybody yells for the stapler when it's the other way around. Being wholly owned doesn't exclude you from this. Don't kid yourself. :rolleyes:

It was just another form of "Pay for Training" but instead of pilots paying $25k for a job it's management at AWAC/Republic paying 25 million for a piece of the pie.
US Airways didn't need the 25million from AWAC last time but what CEO is going to turn it down? Then 5 years later that same CEO is complaining about too many 50 seater RJ's.:confused:

Who said I had any part of a staple talk??? There are ALPA guidelines for such mergers and acquisitions. However if you are speaking of a liquidated company the pilots do not go... Look no farther then ATA... Fedex did not take their pilots with the 757s now did they???

I'm not a fan of the staple talk. SWAPA had to be smoking something when they proposed that with F9... But a company that goes Chapter 7 has no pilots, no mainline contracts, and simply no say... But neither does acquiring their assests mean you gain their flying... Hopefully if this happens the Mainline operators will regain the flying... :) wild thought eh?

I don't know where the talk of stapling comes from when there is no talk of mergers, except by pilots with overactive imaginations.

It's all hypothetical.

Settle down.