Analysis of the CRJ-705 Dispute
Prepared by Chip Munn
General Discussion
During the US Airways - ALPA contract restructuring, the pilot’s permitted US Airways to have the most flexible industry RJ scope clause, which includes authorization for 465 RJs including the EMB-170, EMB-175, and the CRJ-700. The 75-seat CRJ-705 is a variant of the CRJ-700 that is dimensionally the same as the CRJ-900. The CRJ-900 is Bombardier’s largest regional jet, can seat 86 passengers in a single class configuration or 75-seats in a two-class configuration. There are no mature carrier scope clauses that permit the CRJ-900 or CRJ-705 and authorization of the CRJ-705 Variant further erodes ALPA’s scope clause. Moreover, by every measure the CRJ-705 is a different aircraft than the -700, requires a different FAA pilot type rating, and exceeds the maximum permissible certificated gross weight.
US Airways is permitted to operate or code share CRJ-700s per the ALPA contract per the language listed below:
US Airways – ALPA Restructuring Agreement, Small Jets, Attachment B
Definitions of Small Jets – Large SJs are defined as jet aircraft having a certificated capacity of 51-70 seats and a certificated maximum gross takeoff weight not greater than 75,000 pounds. In addition Large SJs include (a) the EMB-170 aircraft with a maximum seating capacity of 78 seats and a certificated maximum gross takeoff weight of 82,100 pounds and (B) the EMB-175 aircraft with a maximum gross takeoff weight not greater than 86,000 pounds, provided, however, that every such EMB-170 and EMB-175 aircraft will only be configured for operations with a seating capacity of no more than 76 seats. Any jet aircraft configured for operation with more than 76 seats or with a certificated maximum gross takeoff weight greater than 86,000 pounds shall be operated by US Airways.
Accelerated Small Jets - Letter of Agreement #83
Other than as specifically modified in this Letter of Agreement, all terms and conditions of the ALPA-US Airways Restructuring Agreement effective July 1, 2002 (hereinafter referred to as the Restructuring Agreement) as modified by the Supplementary Cost Reductions Letter of Agreement (L.O.A. 84), shall remain in full force and effect.
2. The terms and conditions for placement of the Small Jet code share aircraft that are authorized to be placed at other carriers and flown under the US Airways code by the provisions of Attachments B, B-1, and B-3 of the Restructuring Agreement shall be modified under the terms and conditions stated below:
A. Up to 20 Medium SJs and up to 30 Large SJs (CRJ-700 aircraft only) may be operated by Mesa Airlines or by any wholly owned subsidiary of Mesa Air Group or Mesa Airlines under terms agreed to between Mesa Air Group and the Association. Such aircraft shall be subject to the Jets For Jobs Protocal and must be placed into revenue operation no later than December 31, 2004.
B. Up to 25 Large SJs (CRJ-700 aircraft only), in addition to the 30 Large SJs authorized in Paragraph 2.A above, may be placed into revenue operation by Participating Affiliate carriers, provided that they are placed inot revenue service no later than December 31, 2004, and provided further that they are subject to the Jets for Jobs Protocol (Attachment B-3 of the Restructuring Agreement). The foregoing does not preculde the placement of Large SJs in MDA in accordance with Attachment B of the Restructuring Agreement as amended by LOA 84.
C. Up to 25 Large SJs, specifically limited to the CRJ-700, may be placed into revenue operation at a Participating Wholly-Owned Carrier, other than MDA. All Large SJ positions created by operation of this paragraph shall be filled by US Airways pilots in accordance with the Jets for Jobs Protocol, Attachment B-3 of the Restructuring Agreement. In addition, as an exception to the Jets for Jobs Protocol, 100% of the first 25 Medium or Small Jet positions at the Wholly Owned Carrier where the above Large Small Jets are placed shall be filled by pilots of that Wholly Owned Carrier. Upon completion of the staffing of these aircraft, the 50/50 balance of hiring pursuant to the Jets for Jobs Protocol will be followed.
Jerry Glass letter to Bill Pollock
In a May 27 letter to MEC Chairman Bill Pollock, US Airways executive vice president of employee relations Jerry Glass said, the economics of the CRJ-700 Series 701 aircraft were never truly competitive with the EMB 170/175. It was not until we met with Bombardier on April 25, 2003, the day we closed the deal on the CRJ-200 and CRJ-700, that the manufacturer informed us of its intention to place an aircraft into the market that would compete with the EMB-170/175 aircraft. In our conversation last week, I also told you that there would be no dispute with ALPA regarding this aircraft. If the US-ALPA MEC believes that this aircraft violates the scope clause as outlined in LOA 83, we will not argue over the merits or intent of that language., Glass wrote.
The company then offered to place the CRJ-705 at a participating wholly owned airline, presumably PSA, and would offer to allow these aircraft to operate under the MidAtlantic contract. In addition, the first 25 of these jets would be staffed by furloughees per section 2.C. of LOA 83, listed above, but this had one catch. This revised agreement would have to be approved by the participating wholly owned carrier because it was not contained in their Jet for Jobs agreement.
ALPA Response
On June 26, US Airways senior vice president of corporate development and express Bruce Ashby and director of labor relations - flight Tony Bralich addressed the ALPA MEC on the CRJ-705 and other RJ issues.
The ALPA June 26 code-a-phone said management asked the MEC to consider several RJ issues: First, to approve Republic Airlines as a Jets For Jobs carrier. Republic Airlines and Chautauqua Airlines are operated by the same parent company. The Chautauqua pilots, who are represented by IBT, conditionally approved a Jets For Jobs agreement, but it was not accepted by Chautauqua or US Airways management. Second, the Company is asking the MEC to approve the utilization of the 75-seat CRJ-900 Series 705, one of the aircraft recently ordered by management, which exceeds the maximum small jet weight limit restrictions of the July 2002 Restructuring Agreement.
MEC members responded to both of management’s requests by stating that until management begins to properly administer the Contract in good faith and begins to engage in sincere efforts to repair the financial and labor relations damage that has resulted from their many insincere actions, MEC members will not consider additional requests for contractual flexibility.
Chip’s comments:
The only way the CRJ-705 can be flown in the US Airways network is on the mainline in addition to the 279 minimum fleet count, which was an option provided by the MEC to management. Obviously, this option was unfavorable to management thus US Airways made decision to place the CRJ-700 at Mesa. Section 2.A and 2.B above permit the company to operate these aircraft at an affiliate carrier and Ashby indicated this would occur at the June 26 meeting, if the MEC did not waive its scope provision by permitting the CRJ-705 to operate at a wholly owned company.
After announcing the decision to place the jets at Mesa Reuters wrote, The company ordered regional jets that were not in compliance with the agreements we had just reached, Air Line Pilots spokesman Roy Freundlich said. This was just one of many issues. ... Right now, we're having more problems with the company than we've ever had before. This is a victory for pilots.
In conclusion, the real issue is that the company may have reached an agreement to operate the CRJ-705 at a participating wholly owned carrier (which also has not agreed to the CRJ-705 with the first 25 going to 100% furloughed mainline pilots) provided in the MEC's eyes the company stops violating the contract in areas such as the 5% pay deferral, agrees to readdress the sick leave issue, and resolves the ACARS flight time problem, but management has elected to not address these issues.
From this observer’s perch, until management and ALPA can work together without strained relations without multiple corporate contract violations, the MEC will likely say no to further RJ contract relief because US Airways already has the most flexible RJ agreement in the industry.
From a corporate perspective, the decision to operate the CRJ-700 at Mesa Airlines will have little effect on US Airways. Regardless of how the aircraft are initially acquired, the CRJ-700 will ultimately be paid for by Mesa Airlines and US Airways will have lower debt and debt service, thus increasing cash flow during this economic down time. During previous RJ discussions, management stressed the benefit of affiliate agreements because it prevented US Airways' capital diversion. This decision will leave more capital available for general corporate purposes that the company can use for MidAtlantic expansion, which will provide a better product than the CRJ-705, the EMB-170/175.
22 AM Furloughedagain wrote: 