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http://online.wsj.com/article/BT-CO-...27-706936.html

Continental, United Pilots Seek To End Outsourcing To Regional Airlines

By Doug Cameron

Of DOW JONES NEWSWIRES


HOUSTON (Dow Jones)-Pilots at Continental Airlines Inc. (CAL) and UAL Corp.'s (UAUA) United Airlines want to end outsourcing of flying to regional partners following their planned merger, a move likely to shake up the industry's already turbulent labor relations.

The companies' pilots aim to finalize a new joint contract by the end of the year, and this week proposed bringing all flying in-house over a period of years following a merger that would create the world's largest airline by revenue.

U.S. network airlines have outsourced large parts of their domestic networks to an array of regional airlines over the past 20 years in a bid to cut costs, though the amount is capped by "scope" clauses in their pilots' collective bargaining agreements.

Jay Pierce, head of Continental's pilots' union, expects the proposal to receive a cool reception from management, but said mainline company pilots can fly regional jets just as cheaply following years of contract concessions.

"We put it on the table [on Wednesday]," said Pierce in an interview at the union's Houston office. "It's a proposition we believe will not be readily acceptable [to management]."

Continental Airlines has one of the industry's most restrictive scope clauses. Only mainline pilots can fly jets with more than 50 seats, and the airline contracts ExpressJet Holdings Inc. (XJT) to fly more than 200 smaller Embraer aircraft on its behalf.

United has more flexible work practices that enable it to fly more than 150 70-seat regional jets. Rising fuel costs have made 50-seat jets less economic, while the emergence of new aircraft in the 70 to 130-seat range have made airlines look to loosen the restrictions of existing scope clauses.

The proposal from the Continental and United pilots includes an initial cap on outsourcing, then a move away from the practice over what Pierce described as "multiple years".

Continental declined comment.

Management throughout the industry has become stuck in a mindset where they feel they have to subcontract more flying, said Pierce.

U.S. network airlines have already carved out almost all of their regional flying units. AMR Corp. (AMR) is working on plans that could lead to a sale or spin-off of its American Eagle business, and Delta Air Lines Inc. (DAL) recently sold two of its three remaining regional operations.

Pierce said he is confident a new pilots' deal can be hammered out with Continental and United by year-end, in line with the airlines' merger schedule, though a decision will be taken Oct. 12 whether enough progress has been made to continue the current fast pace of negotiations.

The airlines and the pilots have learned lessons from previous mergers, especially the combination of America West to form an enlarged US Airways Group Inc. (LCC), where labor issues remain unresolved after five years. Pilots at Delta and Northwest Airlines forged a joint deal before the two carriers merged in 2008.

"Being third is good," said Pierce. He said one of the thorniest issues - merging the airlines' pilot seniority lists - won't be tackled until a new contract is agreed.

Other areas include furloughs. United has more than 1,400 pilots on furlough while Continental has 147, all of whom Pierce expects to be called back by year-end. The transition deal calls for furloughed United pilots to be called back to whichever airline requires them before any fresh hiring.

PurdueFlyer

As a regional guy, I'd love to see this happen. I'd sit on the street for years if it meant the end to all of this "express" and "connection" etc. garbage.

Good luck to all the CAL and UAL pilots, at the very least don't relax scope anymore.

shiznitobam

Out-freaking-standing!

johnso29

Hold their feet to the fire Fellas!! You have enormous leverage as these two management teams realize the merger is necessary to be a top competitor. Please don't take that the wrong way. It's not a knock on either CAL or UAL. The industry is changing, & consolidation is becoming inevitable. They know this, so use it to your advantage.

Shrek

None taken Johnso29

SCOPE is everything !!

dosbo

I hope they are including T-props in this as well. The Q-400 is 70 seats and I'm sure larger T-props can be made. Back in the 70's or 80's there was experimentation on something called unducted fans that were essentially T-props by a different name, and these were being tested on a large aircraft.

UAL4LOW Stink

To prevent the turbo prop end run, we just add language that stipulates ANYTHING to xx number of seats be done by mainline, regardless if the propulsion is by jet, fan, or fairy farts.

dosbo

Sounds like a reasonable stipulation if it has teeth. Personally I think if the plane is painted like or has the name United (in any form, express, connect, affiliate, etc...) on it, that it is flown by pilots on the UAL seniority list.

IADBLRJ41

Fantastic.. I think this is something UAL/CAL ALPA needs to hold the line on.

JDFlyer

A mainline pilot negotiating tactic to extract better pay/benefits/work rules from management. Nothing more. Mainline management will give, and mainline pilots will take.

The only thing predictable about humans is their very nature. Self interest always wins at the end of the day for both management types and pilot types.

Noble ideals and higher moral causes mean little to nothing measured against present day cash value.