Probe

Agreed. But now it is different. The company won an injunction against ALPA for far less "morale" issues. That ship has sailed. Forever.

Flytolive

To a large extent that is true, but as we see in this instance, leverage, if it is recognized, often presents itself in this dynamic industry. In this case it is in the form of FAR 117 duty waivers, FRMS, a new CEO who told an airline analyst, "We have lost the front line employees," wanting to reset employee relations against the backdrop of unprecedented profitability, a building pilot/pay shortage and 82% of the domestic market being controlled by only four airlines.


Negotiating environment:
• Company ability to pay:
o Unprecedented and growing company profits,
o Unprecedented and growing industry profits,
o Unprecedented financial stability for the company and industry,
• General case for improvements:
o Unprecedented low pilot share of revenue,
o Shrinking pilot share (revenue growth outpacing wage growth),
o Tightening pilot labor pool,
o Shared sacrifice, shared rewards
• Political environment:
o Trending political recognition that labor should have a larger share
• Motivation:
o Labor peace,
o FRMS,
o MOU22 replacement,
o Scope choke

Discussion:
• Does the AIP reflect full value for the conditions?
• Should the company receive a discount for early agreement? If so, how much?
• Windows close?
• Should the AIP be weighed differently than an extension achieved through full Section 6?
• Should the AIP be accepted as an adequate step in a broader strategy?

Old UCAL CA

I agree.

However, the contract had no competitive market basis and ultimately did not hold. It might have also served to illustrate that the "old" UAL was a little late to the ADA game of figuring out competitive marketing pressure.

As another poster stated, "Those days are gone forever..." History is a non-factor in today's competitive environment.

Flytolive

Completely incorrect.

DAL followed up with a more lucrative pilot contract that wasn't dismantled until they entered Chapter 11 nearly five years later. APA also negotiated an equal contract that was voted down by the AA pilots.

Then the 9/11 attacks, a recession, two wars in the Middle East, SARS, the operational inefficiency of UAL and LCC, the lower CAL pilot labor costs, the vulnerability of defined benefit plans, high fuel costs and the relative lack of airline pricing power all conspired against us in ways that don't exist today.

CousinEddie

The writing was on the wall that C2000 was doomed the day we signed it. Flying in and out of ORD on the 737-200 back then, I often wondered how sustainable our revenue premium that we needed to be profitable was. I remember plenty of days of long delays, jammed gate areas with people sitting on the floor, and so on. You could go down to MDW and sit on the floor too, for a much less expensive ticket. I figured the gig was up for us when SWA started getting the 737NGs. That eliminated our only real advantage over them domestically at ORD --- being able to fly nonstop to the West Coast from Chicago. Once SWA had the ability to go non-stop anywhere in the lower 48 out of MDW, our yields were crushed. Just in time for C2000. My last trip before 9/11 the Captain and I were discussing the fact that UAL was on track to lose over 1 billion for 2001. A week later that estimate fell off a cliff.

Flytolive

That was UAL mismanagement. DAL had an even better contract that they were able to sustain until 2005. Only when it was clear that UAL was not liquidating did they & NWA file for Chapter 11 protection. And as I said before APA had a similar-cost TA that they voted down.

Now with all the issues that I listed in the past is clear that the airlines can afford a substantial and sustainable increase in pilot compensation. What is amazing is that pilots seem to be the most difficult to convince.

jsled

Our Contract 2000 was more expensive than DAL's. True story. They didn't even have a B fund until after their A fund was terminated in bankruptcy. While it is true they kept their contract until 2005, it was not "sustained". They lost money, like everybody else. They just told Leo Mullin "a contracts a contract" and to pound sand, like he had told them years earlier.

Nobody doubts that the airlines can afford a "substantial and sustainable" increase in pilot compensation. That is exactly what is coming in this AIP. IF politics doesn't keep it from membership ratification, you'll find out how substantial...as the members will vote it in overwhelmingly.

Go on, take the money and run. whew. whew. whew.

CousinEddie

As I recall we took our initial cuts in early 2002 outside of CH11. More obviously followed. DAL got their contract in the summer of 2001 and held on to it in total for about a year longer than we did. They took cuts before the CH11 filing.

http://www.nytimes.com/2004/11/12/bu...-cut.html?_r=0

The American pilots were refusing the Company offer because of the binding arbitration clause taking away their strike ability. They never got a contract done before 9/11 hit. Despite that, they still took cuts long before the CH11 filing.

Pilots for American offer pay cuts - Washington Times

The whole point of CH11 and merging was to get the airlines in a position where they could ride out the economic cycles instead of going into bust mode, furloughing thousands of employees, and shrinking. If that requires larger buffers between costs and revenues than we have had in the past for that to happen, then so be it.

Flytolive

ERP1/2 were not implemented. The first cuts weren't until Chapter 11. Yes other airlines took consensual cuts outside of bankruptcy which will be an option going forward if unforeseen shocks warrant it.

Chapter 11 is for restructuring when consensual restructuring fails, but I agree that a buffer is required. How much of one is required is the question.

If you think 13%/0%/2% and $32M for the LOA25 furloughees is anywhere close to that buffer then we disagree.

Old UCAL CA

You've brought up events, but the perspective is wrong. None of those contracts "held" very far into the future. Markets and events took center stage and so began a multi-year bankruptcy saga for several airlines and a concessionary environment...the only exceptions being those who had tread those waters before...such as a legacy CAL...but even CAL came very close...again.

Today's environment is very different, especially from a regulatory "experience" perspective and economics. It has become very clearly based upon current events forward, markets and competition. History has little current basis in comp negotiations.