GOOD LETTER
Officers and Members of the APA Board,
I want to thank those of you who responded to my December 27 letter. It is gratifying to know that, despite your busy schedules and holiday plans, many of you commented on my thoughts and ideas. I do believe that the open exchange of ideas is crucial to moving this union and our carrier forward.
In that vein, let me discuss one thing that will come up again and again - that is the steps backward that the "Green Book" represents over the already weak post-bankruptcy contracts of the LUS and LAW pilots. As bad as those agreements were, we have regressed further and it is very important to recognize how we got there - APA negotiated the "Green Book" behind the backs of almost one-third of the current membership in a secret deal with management. They did so in a vacuum, without a basic understanding of many of the tenants of those two contracts and the protections they represented. Since that time, they have allowed management to dictate when and how the agreement has been implemented and and failed to support those disadvantaged by those management decisions. Two final thoughts: 1) I want to make sure that the board understands that the contract will not be fully implemented until 2016, if not later, and 2) At this point, I cannot tell you what parts of the "Green Book" are currently implemented and which aren't because no implementation list exists and that frustrates me as a pilot who wants to fly by and defend his contract.
That said, some members of the board think that negotiations are over. In reality, they have only begun. Having dealt with this management for almost a decade, negotiations are over when the "final language" is written, management implements their interpretation of what was written, we grieve the issue...(pause as we wait for months and years for the grievance to be heard, rejected, reheard, rejected) and finally reach an arbitrator who sides with the company because the final language was vague or in some other way interpretable in any way but the way in which the pilots interpreted it. Only then do you have final language and a contract. Hundreds of grievances later, we know that this is the case. As you can see, we are a long way from completing negotiations with this management group.
As to the current negotiations, it would appear that some of you think that the money outweighs the downside of giving more contract relief. And while the numbers vary, many on the board think the gives are basically "minor" (if $120 to $200 million, according to APA valuations, can be considered minor) when seen in contrast to the "historic" pay rates offered.
Gentlemen, if you believe the valuations APA is using are correct and that management is really giving us $1.9 billion dollars out of the goodness of their hearts, then I have a couple of good savings and loans to recommend AND some swamp land for sale.
Here is a my perspective on some of those gives:
I try to take things at their simplest level - so, if we take the 3 LUS domiciles and split domestic and international flying (airbus and 757/767), add LAA ( Airbus/737/767) domiciles equaling a total of approximately 24 sets of crews (conservatively), then consider only the short call reserves required to operate the flying (6 crews available daily requires 12 crews at 200k/100k - yes, I know that is low but the resulting number is more conservative that way) the annual cost to the company is $86.4 million per year times 5 years equals $432 million. I would consider that a very conservative number - if my calculations are in error or the assumptions are wrong, I'm sure someone will let me know, but my attempt here is to show just how far off the amounts being talked about are and that those numbers pretty much would wipe out the "minor" give category.
Now let's take another large chunk out - HBT. The company has made a commitment for 122 aircraft at a value of approximately $20 billion. Those aircraft have ranges of 7,500, 7,750, and 8,500 miles respectively. Now, I want you to take a map and a compass - from each domicile, I want you to draw a circle at 7,000 nm in diameter. We have already defined the limits of what we can fly under our current agreement (give or take - DFW-HKG at 7,058 nm is clearly at that limit) Next, I want you to look at cities outside those circles which the company would logically want to fly - remember, our competition can fly them (or the equivalent - substitute IAH for DFW, IAD for JFK) right now but we cannot (think Sydney/Melbourne/Johannesburg/Mumbai to DFW, Singapore/Kuala Lumpur to any of our hubs, Miami to any point beyond Tokyo, LAX to almost any point beyond Tel Aviv). How much profit would each city pair generate annually if we could operate it? $1 million? $5 million? More? Now multiply that by the number of city pairs and then by the years in the contract - how much does that equal? $100 million? $200 million? More?
Next, let's address the A321 Pay Issue: Here is something you may or may not know -
Have you heard that AA is negotiating with Airbus for a "Heavyweight" A321neo (approximately a 214,000 gross takeoff weight) for 2019 delivery that will have transatlantic range (source: AA manager interview with Reuters). This isn't a hypothetical - Airbus has had this plan in develop for years, but they needed a customer willing to buy it in order to launch the program. This is the crux of two issues that management wants - combined domestic and international crews (one day you fly DFW-PHL and the next PHL-CDG) and lower pay for a true 757 replacement aircraft (you can also substitute PHL-LAX and LAX-HNL on the A321neo non-heavyweight in 2017). Still think that A321 pay is a non-issue? What do you think it is worth now? A rough calculation would be $200,000 per airframe per year at current rates. What will it be worth for that extra year contract extension that the company wants and beyond? Even more!
That's a quick valuation on only three of the items management has demanded. It would appear that the value APA places on the demands of the company are woefully underestimated and border on breach of fiduciary responsibility.
Many of you think that management will be back in the future and that will give us an opportunity for more "give and take" to improve our contract. In my opinion, and based on past history, you are dreaming. In 10 years under this management, they never willingly entertained improvements in our contract. If we wanted something improved, the answer to our quid pro quo was either NO! or the price was so high that it was not worth the cost.
Lastly, some of you say take the money now. That rhetoric sounds terrific, but the long term costs are far greater than the costs you state as "fact". Waiting an extra year for a raise may be less costly than the extension of the contract for an extra year - we can only speculate, but given the changes to the industry and the prospects for continued future profitability, that extra year with bankruptcy work rules and no raise seems very foolish indeed. Remember, we are negotiating for years 2020 and beyond, not just for the next year or two. A raise in 2019 tilts the pay calculations further in the direction of staying the course and saying no to managements "offer" on the table.
What we do know is that, if we stay with the "Green Book", the company will be back for HBT relief (and more) if they intend to fully utilize the valuable assets they have on order. If we give up these items willingly for a few dollars per hour, not only will we never get them back but management will continue to pressure us for relief or cost reductions on other items in the future based on the way that they bought us off this time around. This is our chance to get true contractual improvements AND monetary improvements in an environment where the company no longer breaks written agreements and dictates the rules of engagement.
Finally, I want to express my disappointment in the officers and those of you on the board who were part of the -10 voting no for not demonstrating a united front to management by unanimously supporting the offer we put forward. Regardless of personal views or position on the issues, presenting a proposal from a divided board provided management another opportunity to exploit the weakness of the pilot group. As members of the board, you owe it to the entire pilot group to unify and demonstrate a single, strong resolve when dealing with this management. Leadership comes from unity. Division equals failure!