HIRING, FURLOUGHS, BANKRUPTCIES: It was the best of times...it was the worst of times

[A4sForever]

HAL Update

Hawaiian MEC Approves Tentative Agreement

After a year and a half of bargaining, including challenging management lawyers on the courthouse steps, the Hawaiian MEC approved a tentative contract with management on February 22. Informational road shows for pilots are scheduled to begin the week of February 28, and the membership ratification vote will likely take place the week of March 7.
Pilot negotiators bargained an agreement that preserves the pilots' defined benefit plan through 2012 and gives the parties a chance to look at the issue of future retirement security and benefits more carefully. The TA also allows Hawaiian pilots who are 50 years old and older to remain in the pension plan beyond the 2012 mark to finish their careers. Modest improvements in hourly pay, and compensation for deadhead, landing credits, deadheading, and training pay along with increased per diem reimbursement, are also in the TA.

Disability benefits will now be paid out of a newly created voluntary employee beneficiary association (VEBA) instead of the retirement plan. At the same time, changes in work rules and operational provisions are a "win-win" for both parties and will allow Hawaiian to emerge from bankruptcy protection. The court hearing to do just that should soon be scheduled.

The agreement was negotiated against the backdrop of the Section 1113 bankruptcy process, which management was trying to use to impose deep cuts in pilot pay and retirement and disability benefits, despite the airline's record profits. The TA was finished on the day after the Court hearing was scheduled to begin, but the litigation was postponed to allow the parties to continue negotiations.

"This contract is one that we can be proud of," says the Negotiating Committee chairman, Capt. Jim Giddings. "It accomplishes our most important priorities, builds in improvements we've tried to achieve for a long time and allows Hawaiian to emerge from bankruptcy. More importantly, Hawaiian pilots will be back at the bargaining table soon looking for additional improvements."

If approved by the members, the new work agreement would have an amendable date of July 2007 with a return to the bargaining table in late 2006.

 

[HAL Pilot]

The HIP/HARC/Konop plan as it is known has ZERO chance of approval since the Creditor's Committee, the Federal Trustee and the airline have all gone with the Ranch Capital plan. Further, ALPA has largely ignored them also since they seem to be all fluff and no substance. To date, HIP/HARC/Konop has not even convinced anyone (especially the judge) that they have the money they claim. The judge keeps postponing the hearing on this plan until after the confirmation hearing on the Ranch plan. This effective kills HIP/HARC/Konop because under the law, there can be only one plan. Once the judge confirms the Ranch plan, all others become moot.

The HIP/HARC/Konop plan has just been a constant irritation. Hopefully this will be the end of it. To call it a competing plan is being extremely kind and misleading. It isn't even close to competing with Ranch.

 

[ChuckMK23]

Does ALPA have the ear of the FAA as far as regulatory issues are concerned?

e.g Suppose Big Airline in attempt to save a few $$$ is pushing the envelope on maintenance standards or operations or something in a dire attempt to remain profitable - Does ALPA help maintain the "checks and balances" by saying "we professional pilots don't think this is right..." etc.

 

[A4sForever]

By "regulatory issues", I am thinking you are referencing SAFETY issues ... ??

(This is from the ALPA website):

ALPA’s founders chose as their motto, "Schedule with Safety," and this effort has been central to the union over the decades. Today, ALPA members devote more than 20 percent of their dues to support aviation safety. ALPA has initiated or participated in nearly every significant aviation safety improvement over the years and have helped make airline travel the safest mode of transportation in human history. A network of more than 600 working airline pilots serves on local and national safety and security committees to carry out the Association's work. A staff of aeronautics engineers and safety experts assists them.

ALPA is routinely granted "interested party" status in most major airline accidents, which means that ALPA accident investigators assist National Transportation Safety Board staff at on-site investigations and participate in the ensuing public hearings.

MY PERSONAL OPINION: ALPA ain't perfect and has its own share of faults ... but having said that, I think SAFETY is one of ALPA's strongest suits ... but when we get into questions involving the industry and government, we are always talking about power and money. Sometimes money and power. Shining a public light on hidden $$$$ issues usually helps gain regulatory improvement as well. I hope that helps answer your question ... a long answer that might have been shortened to ... "YES".

 

[saltpeter]

Ah this must be old informaiton, I read the other day in AIR INC. that the airlines were hiring thousands of pilots in the coming months and if I miss out I could lose millions over the course of my career, TEE - HEE HEE.

 

[Geese]

I know I just want semi affordable rates

That right there is the problem. The driving factor in the industry is the cheapest ticket, and whomever can offer that (and make money) will do good.

Major airlines operate on losses every day, it doesn't matter how many pay cuts the pilots and workers take, it's a broken business model, and more than a few major airlines need to "go away" before this resolves itself. Right now, many major airlines are just perpetuating a failed model. If the cost of Jet fuel was not going up, we wouldn't see these effects untill much later down the road, but the price of fuel will determine how quickly the majors are killed off.

SW and a couple others kill majors in areas they'll (almost) never be able to compete in;

Lower operating costs (higher efficiancy, turnaround, etc)
They pay their workforce less so the cost is less to run the business
One aircraft type
More point to point
All seats are FILLED
Fuel hedging (critical)

When it comes down to it, customers will go for the fare that is $1-2 cheaper on the internet, no matter what it entails. Major airlines then lower their prices cheap enough to keep getting customers, but so cheap that they are operating on a loss. They figure that they'll just lower their prices enough that the other's won't take "their customers", but in the end it's only digging them deeper in the hole.

The next year or two should be REAL interesting...

 

[litreofcola]

Sorry if this topic has been brought up already, but is it possible that the government would repeal the Deregulation Act of 1978 or at least legislate some form of barrier to entry or price control, to limit the effects of these low price start up carriers.
and if so would it end this mess that the industry is in, at least from the perspective of the Delta's, United's and Northwest's etc.

 

[A4sForever]

The next year or two should be REAL interesting...

Be careful what you wish for ... Interesting??? That is a Chinese curse ... i.e., "May you live in interesting times .... "

 

[A4sForever]

......is it possible that the government would repeal the Deregulation Act of 1978 or at least legislate some form of barrier to entry or price control, to limit the effects of these low price start up carriers.

ANSWER:

So sorry ..... not as long as the Republicans run the show ... and I'm a Republican, BTW...

 

[HAL Pilot]

The pilots at Hawaiian rejected their Tentative Agreement with management for a new contract. Next up is a probable section 1113c hearing on the 29th where the company will seek for the court to impose a new contract on the pilots. If a contract is not imposed by the court HA will not exit bankruptcy on April 1st as planned, and additional negotiations on the contract will continue.

The current contract has a "change of control" provision where the pilots can extend their current contract for up to 3 1-year periods with a 4% pay raise each year. HAL ALPAs position will be that the company has been making money for 2 years (we are the 3rd most profitable airline in the US and have the highest profit margin at 9.4% - better than SWA's profit margin). We will say there is no reason for any concessions in our new contract especially in light of the fact the reorganization plan will repay all creditors 100% of their claims. Ballys move here - I hope it does not come back and haunt us. I believe we are right, but who knows what the Judge will think. The Judge has approved the reorganization plan and a April 1st emergence dependent on the pilot's approving their contract. Hopefully he won't punish us for this rejection.

According to the MEC, reasons for the rejection include: (1) pilot outrage over management bonuses; (2) concern about protecting our retirement and disability benefits; (3) medical insurance premium increases; (4) the failure to resolve the "32 in 7" grievance; and, (5) the experience and perception that interaction with management does not routinely provide the basis for constructive problem-solving and smooth employee relations.

I personally thought the TA was a wash. We gained in some areas and lost in some. With Hawaiian's record profits, they could have given us the contract we wanted. The bonuses just given to 10 managers would have paid the difference between what was in the TA and what the pilots wanted with $1.5 - $2 million left over. The Federal Trustee is looking at an additional $1.5 to $3.5 million bonus on our emergence - money that he does not deserve (he was worthless and the old management implemented the business plan that is making all the money). His bonus money would pay a very large portion of what the pilots want.

It's going to be an interesting couple of weeks.....

 

[A4sForever]

The pilots at Hawaiian rejected their Tentative Agreement with management for a new contract ....

Well that's really disappointing --- I just got my copy of the ALPA birdcage liner -- April 2005 -- yesterday and the choir was trumpeting the "agreement" between HAL and your MEC .....

Strange, too ... as your negotiating committee guy Capt Giddings was quoted as saying: "This contract is one that we can be proud of ..... "

I am so sick of all this stuff ... can hardly wait to retire.

..... ????

 

[HAL Pilot]

I'm of mixed feelings.

Pay-wise the TA was a little gain (1% per year) and it preserved the retirement. The retirement had a 7 year transition from a DB to a DC based system unless both agreed to a change sooner. It was a target benefit plan that was to result in between 75% to 96% of the current benefits depending on the economic/risk model that is used. But being a DC gives pilots a "sure thing" vice the current trend of terminating DBs.

The TA also had some work rule changes that were slight concessions. More annoyance than anything in my opinion. There were a couple of work rule changes the company wanted that would be big concessions that instead of agreeing to, we said we would let an artibtrator decide within 6 months. This was a big mistake as the pilots do not trust the artibrators or want to leave it too chance.

Under the circumstances of the industry, it was a TA to be proud of because it kept a decent retirement and had a slight pay rase. Compared to what the rest are getting, we came out smelling like a rose.

What caused it to fail? The company giving $5 to $7.5 million in bonuses to 10 managers and the Trustee demanding a $1.5 to $3.5 million sucess bonus. This is $6.5 to $11 million that could have paid for the all the things every employee group wanted in their new contracts. The FAs, mechanics and other employee groups basically broke even. The pilots lost a little more compared to them. The pilots feeling was that why should 11 managers/trusteesvget theirs instead of the employees.

Also, we have over 450 grievances outstanding for 298 active pilots. The head of scheduling violates the contract at will and the company drags out the process. The pilots wanted a mechanism to clear up these grievances and ensure speedy resolution of future grievances. The feeling is what good is a contract if it can't be enforced.

 

[Geese]

There's only two ways this all will change.

1. The price of gas becomes rediculously cheap, allowing the airlines to actually make a proffit on current ultra-cheap fares.

2. The price of fares goes up significantly.

Seems like so many airlines are riding the death spiral all the way in despite obvious facts like daily losses and the inability to compete...

 

[phrogdriver]

Sorry if this topic has been brought up already, but is it possible that the government would repeal the Deregulation Act of 1978 or at least legislate some form of barrier to entry or price control, to limit the effects of these low price start up carriers.
and if so would it end this mess that the industry is in, at least from the perspective of the Delta's, United's and Northwest's etc.

Why would anyone want to go back to the days when a coach ticket cost a month's pay? As much as I feel for my fellow aviators in commercial air, this is how commodity pricing works. If someone gives an identical product (transportation in an uncomfortable seat from A to B) for a lower price, it's a good thing. Eventually an equilibrium will be reached and things will settle down. As long as standards of safety are maintained, who cares if the majors don't make money? SOMEBODY is going to provide this service at a price they can make money on. If that somebody is a start-up and not a major, good on them.

 

[wink]

He is something to consider: Most of the loses, if not all, at the legacy carriers is accounted for by the very sharp increse in fuel. They have lost priceing control becuase of a few different factors, so can't pass on the increased cost. Then there is SWA. They made money, but fuel played a role in their profit too. Most of SWA profit can be accounted for in the fact that their fuel costs were significantly lower because they hedged fuel. That is they bought it in advance under contracts before the price went up. Most other carriers could not make those signifcant hedge purchases because they were short of cash, and have now felt the full brunt of the current cost of fuel. So SWA actually has made most of their money this year not from airline operations, but in the commodities futures. In short order the futures market will reflect the actual cost of fuel and SWA will begin to pay the same as all the other airlines. Let's see what their bottom line is then. If you look at their operating numbers it is very likely that SWA, the industry darling, will be lossing money from the cost of fuel in a year or so. To avoid that, they will raise their fares and that will releive some pressure on the other majors ability to raise their own rates.