No worries; hope that helps a bit. TZskipper, Probe, and CAL73 have also added some background to the discussion.

Predicting the future price of oil's not an easy thing; there are a lot of moving parts. Andrew Hall is a legendary oil trader, but he remained bullish on oil this year and got crushed - his hedge fund lost 16.6% in July alone. His belief has been (and probably still is) that US fracked oil will not be on the markets much longer - this assessment is shared by the Wall Street talking heads. I disagree with that assessment after reading some monthly reports put out by the state of North Dakota discussing oil production, costs, profitability, etc. Oil companies have been lowering costs significantly by getting concessions from every supplier from drilling rigs to banks to labor. And even if some small oil companies go out of business, all of those resources will be scooped up by the next new oil company that pays pennies on the dollar for drilling rights, rigs, and employees. There were a lot of premium rates being charged to oil companies when prices were $80+/barrel. Those premium rates are almost completely gone and most of the small oil companies remain profitable even at these low oil prices.

In the supply-demand equation, I don't see supply declining too much (if at all) in the next few years. If anything, oil exporting countries are pumping even more oil to offset low oil prices so there's a downward spiral in the price of oil.

On the demand side, I mentioned alternative energy. If you want to read a bit about how rapidly Germany is converting to renewable energy, here's a pretty good article. Germany Just Got 78 Percent Of Its Electricity From Renewable Sources | ThinkProgress

While I don't fully agree with Probe's comment that oil markets are heavily manipulated, it's not hard to push around the price of oil by trading futures contracts at certain times of day. There are some extremely thin times of day where even a smallish trade can make the price of oil move by a large amount. Short term manipulation is possible, but it's hard to make a big price move stick during normal trading hours.

As far as storage capacity, I've watched Cushing storage on occasion and have seen the amount of oil climb quite a bit as oil prices have fallen in 2015. While storage is near capacity, they've been adding storage there over the last year. https://www.eia.gov/dnav/pet/hist/Le...YCUOK_MBBL&f=W

I've had a more difficult time getting a handle on the amount of 'floating storage'; where someone rents a tanker, fills it with oil, and has it sit for a year or so. This is an arbitrage play where a large trader will take delivery of a bunch of oil and long term lease a tanker while simultaneously selling futures contracts on the oil. As long as the price of oil one year in the future is high enough to cover the cost of floating storage and make a profit, this will continue to be done. But there are only certain classes of oil tankers where this is viable; IIRC, it's older tankers that have low long term lease rates. There are a number of ways to gather data on this stuff but I found it to be very cumbersome for a small potatoes trader.

My reasoning for thinking that oil will remain low for a long time is primarily because of demand destruction due to alternative energy sources coming online. And the trend toward alternative energy is accelerating; I can no longer walk into a Home Depot in my area without being asked by a Solar City salesperson if I have solar panels or am interested in getting solar panels at 'no cost'.

Honestly...reserve could be better...but with the increase in pay it's like getting 85 hours compared to now. Reserve just doesn't seem too bad...

Respectfully, can I assume you are saying that because you live in domicile?

(Don't sell yourself short, you're still getting paid only 73 hours. Maybe 76 with excessive unused short calls)

I do not feel sorry for you if you commute. Commuting is a choice.
If life is hard for you...move. Reserve is just not that difficult.
People spend weeks without flying a trip and then **** and moan when they do.

And yes, I'll still be getting paid for 73 hours...but it will be equivalent to me getting paid 85 hours now.

Fellow United Pilots,
Tentative Agreement Con Letter
December 30, 2015

As you may know, the MEC vote to accept the Tentative Agreement was not unanimous. We seven members of the MEC, who voted not to accept or endorse the TA, write this letter because you deserve to understand the reasons behind our vote, which was reached by a logical, deliberate, and unemotional assessment of the Tentative Agreement (TA).

Before casting our votes, we evaluated the TA in the context of the MEC’s strategic plan, the data from the contract survey and telephone polling, and the MEC direction given to the Master Chairman and Negotiating Committee. Over the past year, the MEC has been briefed in closed session on Company and MEC confidential information regarding the economic and negotiating environment in which we find ourselves. Based on this information, the MEC created a strategic plan to exchange opening letters for Section 6 negotiations in May 2016. Exchanging openers for our next contract would have been the first step toward fixing the litany of items we all find completely unacceptable.

A full Section 6 CBA negotiation would be the venue to regain all the concessions from the bankruptcy era contracts and JCBA 2012. Through the tens of thousands of PDRs, hundreds of grievances, and contract survey/polling data, pilots have repeatedly expressed frustration about our current UPA and management’s inability to properly administer the contract or pay us correctly. Not one PDR filed in the last three years has been to complain about pay rates. Instead, all complaints clearly depict a pilot group that wants work rule improvements and gains in QOL.

As your representatives, we felt that it was our obligation to vote against accepting and endorsing this TA for the following reasons:

1. It failed to meet MEC direction. There was a specific list of items that were given as direction to the negotiators. This list was based on the Company’s initial proffer. Both the company’s October 2nd letter from Doug McKeen and the MEC resolution (Agenda Item 216-2) are attached to this update. Several key items were not satisfactorily met.

2. It failed to offer enough pay to offset the length of extension. An extension of two years is too long. It pushes our amendable date to January 31, 2019, preventing us from fixing anything within the contract until that time. A 13 percent pay raise is simply not enough to delay, for two additional years, the opportunity to fix things.

3. It failed to meet the survey/polling data on pay and working conditions. In fact, the pay rate increase is less than the minimum pay rate increase indicated you would find acceptable with QOL improvements and an order for 100-seat aircraft.

4. It failed to bring a 100 seat aircraft onto the property. The company’s proposal offered repair to reserve rules and a firm order of New Small Narrow Body aircraft (NSNB). The company reneged on these two items. A NSNB order of similar size to Delta’s 88 NSNBs would equate to approximately 1000 new pilot jobs, including hundreds of Captain positions.

5. The CS100 pay rate is the new B-Scale. The United Pilot’s strike in 1985 was over a B- Scale. Now our TA has one. The takeoff/landing weight of the CS100 is greater than the 737-500, yet it pays far less.

6. FDP Extension Add Pay is problematic. Although there is a promise to explore applying the FDP extension Add Pay to the other fleets, we opposed selling safety for pay. Equally problematic is the implementation and administration of the FDP extension Add Pay provision: this is completely dependent on “yet to be developed” technology.

7. FRMS does not improve safety. It does not restore premium break seat in the B756 (seat 4B) and non-FRMS 777 flights. This was something we maintained in our 2003 bankruptcy contract, but now are unable to achieve during times of record profits.

8. No QOL improvements. There are no reserve process improvements that were promised or any other work rule gains.

9. DAL Snap-up is weak. The DAL snap-up does not account for improvements in retirement or other forms of compensation (i.e. stock, pension restoration, annuities, etc.). The language is complex and ambiguous, which leaves little doubt it will ultimately result in a dispute. There is an internal dispute resolution process built into the language which is not unlike other “dispute resolution processes” and can easily be delayed, postponed and convoluted. Since the RLA provides for no punitive decisions against the Company, it’s not hard to see how pre-arranged dispute processes like this one can delay the outcome of a decision in our favor and advantage the Company. One example is the 3-L Profit Sharing grievance which has been “in process” for 4 years.

The greatest reason for us voting NO is a strategic one. If this TA is ratified, it will remove our ability to negotiate a Section 6 in the current highly favorable environment. We find ourselves with the most amount of leverage in the last 15 years post-bankruptcy era. 67 percent of you voted for the current UPA. One of the selling points and counters that even though the UPA fell short in many areas and contained nebulous language, is that we would be able to repair and improve it during the next negotiation. By accepting this extension, you are forgoing those changes and improvements for several more years.

We believe that a full Section 6 negotiation is in the best interests of the United Pilots, our future careers, and the Company for which we work. There is a unique confluence of events that makes this our best opportunity to enter into comprehensive negotiations with management. It is obvious that management clearly understands this as well.

We remind you that UAL recently approved $4 billion in stock buybacks. In this vein, an examination of the state of the airline industry uncovers the tremendous leverage we currently have:

 Consolidation has reduced competition for the three remaining large global U.S. carriers and created a capacity-controlled industry.

 Wall Street forecasts oil to remain low for the foreseeable future with jet fuel priced at less than $1.00/gallon. We have not seen these prices since the late 1990s.

 Industry analysts are forecasting revenues to be at historic highs with gains between 18- 20 percent.

 The next several years are expected to be the most profitable years ever for U.S. airlines.

Industry analysts predict continued strong travel growth along with high yield margins. Therefore, there is a real incentive for management to negotiate in an expedited manner. The current combination of a strong financial environment and management’s desperate need for FRMS changes and labor peace has created a tremendous leverage point for us. As such, we believe if we entered section 6 negotiations at this time, it would not be a prolonged drawn out process, as we have experienced in the past.

The Delta MEC sent their opener to DAL management and its members on the same day that the UAL MEC accepted the TA. In fact, it was delivered on the hour of our scheduled adjournment of our MEC special TA meeting. The DAL opener asks for far more than we are getting in our extension TA. The ask includes improvements in vacation and training pay, retirement, scheduling, and other QOL items. It also includes a 22 percent increase in pay the on date of signing with a 7 percent increase on each subsequent year for the duration of the three-year agreement.

From 1979 (after deregulation) to 2002 (prior to bankruptcy) the average yearly cost of the pilots to United Airlines as a percentage of company revenue was 10.85%. Today we find ourselves at 7.5%.
2014 revenue = $38.9 billion
Current cost of pilots to company = $2.92 billion/year
Average cost of pilots to company @ 10.85% = $4.22 billion/year
This equates to an average deficit of $1.3 billion/year in wages and benefits to our pilot group. The TA sent to you is valued at just under $400 million/year.

Not only does the TA come up short of your expectations and direction, but also it fails miserably on the merits of total value. It is reasonable for us to expect more from any deal today. On value alone, the DAL opener stands hundreds of millions of dollars more per year above our TA. Clearly, the new leadership at DAL ALPA understands the leverage we have and how the positive confluence of events has provided us a very strong hand.

This TA does not bring enough value for the amount of leverage we are giving up. You deserve better. The deal was rushed; money was left on the table, and it fails to bring any QOL improvements or capture any additional jobs (an aircraft order). Today, with a single and unified pilot group and the current negotiating environment, our leverage is the strongest. We are recommending a resounding NO VOTE to this TA.

Every pilot has different ideas about what UPA improvements are needed. The only way to fix any of these is to go through full Section 6 negotiations. We are giving up a stupendous opportunity all in exchange for a 13 percent pay raise, which is effectively a cost-of-living adjustment. In closing, we leave you with a telephone-polling question many of you were asked:

“What percentage pay raise at date of signing would you find acceptable for a two-year contract extension with contract improvements and an order for NSNB aircraft to be flown by the mainline?”

Fraternally,

Glenn Johnson Council 5 Chairman

Andy Collins Council 11 Chairman

Eric Popper Council 12 Chairman

Carlos Rodriguez Council 12 Vice-Chairman

Dan Hahn Council 34 Chairman

Tom Murphy Council 34 Vice-Chairman

Al Gaspari Council 57 Vice-Chairman


Flytolive, thanks for posting. I've changed the attribution to 'The Magnificent Seven' - not meant to be derogatory; it was a good movie (1960) that's been remade and will be released next year.

Note the sentence I bolded in red. Then read the edits I left. Almost all mention pay.

I want to comment further on a few items:

Bullet point 5, CS100 pay rates. They are the same as EMB190 and 195, which were both in C2012. And the CS100 rates are higher than the CRJ900, also in C2012.

Jet Fuel at $1/gallon. In the third quarter, the lowest cost among American, Delta, Southwest, and United was $1.67/gal. While I expect oil prices to remain low, I'd like to know who's forecasting $1/gal jet fuel. I'm not able to find any forecast with a search - is this Costco pricing? Price at the refinery rather than at the delivery point? I'm sure someone fed them this number, but I don't see $1 per gallon for jet fuel to be very likely unless we have a rather nasty deflationary economic depression. And if that's the case, we'll be worrying about much different things than jet fuel prices.

I am thankful for the men that wrote this letter. As ALPA reps, they work hard and face criticism from all sides. I think that they've tried to make a point of why we should vote this TA down. However, I did not find it persuasive and am ready to vote yes.

Commuting is not a choice for some, don't pretend to know everyone's life/family circumstance.

Commuting is a choice for 100% of pilots. Some of the ones that choose to commute, claim they have no other choice. That means, they chose to commute, it sucks, and they want to blame others for a decision they regret.

Few other industries have the ability to commute. They can choose to take, or keep, the job, or quit and find another job. We have an almost unique choice, in our ability to commute.

Choose wisely, but don't expect the rest of the pilot group to conform to your personal requirements.

I have personally chose to commute for half of my 20 years. Sometimes it sucked, sometimes it was good. I never blamed others for the times it sucked, or expected them to change their condition for my choice.

The union negotiates for the majority, at least in theory. Don't make a screwed up choice, and expect the rest of the pilot group to give concessions so you can sit at home 30 days a month and commute to reserve. It will not ever happen.

In the future, I might again commute. If it sucks, I won't expect the other 90% of pilots to make up for may failed decision matrix.

Far more than 10% of pilots commute especially to higher cost hubs like NYC and SFO and to wide body fleets. You are way late with your non-reality based contractual prohibitions because our whole reserve system and numerous company policies like prudent commuter policy are already based on the reality of a huge percentage of pilots being commuters. The goal of our union should be to maximize the aggregate value of our contract and representation for all our pilots.

I'm liking this aggregate value.... cha cha cha ching

Example #1: 2ndYear Narrow Body FO with Longevity Date of February 1stTotal Additional Value from the Extension TA $61,480

Example #2: 9thYear Wide Body FO with Longevity Date of February 1stTotal Additional Value from the Extension TA = $87,097

Example #3: 10thYear Narrow Body CA with Longevity Date of February 1stTotal Additional Value from the Extension TA = $103,282