UAL asks its pilots for steep cutbacks
Plan calls for longer hours, 12% wage cut
By David Kesmodel, Rocky Mountain News
November 24, 2004
Senior United Airlines pilots would have to fly more hours each month and be away from home longer under a sweeping cost-cutting proposal by the ailing carrier.
That change - as well as others proposed by United - could result in additional furloughs of junior pilots because the airline would gain productivity increases.
The giant carrier also has proposed contracting out jobs of pilot instructors at United's big flight training center in Denver, which could lead to furloughs.
Chicago-based United has proposed minimum wage cuts of 12 percent. The figure could rise if the pilots union does not agree to changes to work rules and scheduling provisions, such as the increase in flight hours.
The United branch of the Air Line Pilots Association released complete details of the carrier's proposal to its members for the first time last week, and the Rocky Mountain News obtained a copy.
The proposed cuts are so drastic that one might ask, "Why would anyone want to work there anymore?" said Bob Mann, an industry consultant in Port Washington, N.Y.
The airline, flying under bankruptcy-court protection for nearly two years, is seeking cutbacks from pilots as part of a plan to pare its costs by another $2 billion a year. It has cut its costs by about $5 billion a year, about half of which has come from labor concessions.
Denver's dominant carrier is asking the pilots group, the best-compensated of the rank and file, to provide $191.1 million in annual wage and benefit cuts and work-rule changes, or about 26 percent of the $725 million it seeks from workers.
The company also is asking all its unions for permission to terminate traditional pension plans, which would result in billions of dollars in additional savings and dampen the retirement benefits of active and retired pilots more than any other rank-and-file group.
United's pilots agreed to $1.1 billion in annual concessions last year, including pay cuts of 30 percent or more. About 2,100 pilots have been laid off since the 2001 terror attacks.
The company wants to negotiate the additional cutbacks by mid-January, which could help it step out of bankruptcy next year.
It will ask the bankruptcy court to impose concessions if negotiations fail.
United proposed increasing monthly maximum flight hours for pilots on widebody jets, such as the Boeing 747, to 95 from 85 and cutting their minimum monthly days off to 10 from 12. Pilots are capped at 100 hours a month and 1,000 hours a year under federal law, so pilots could fly at the monthly maximum rate for only 10.5 months.
The proposed changes would have a big impact on senior pilots' life-styles, many of whom fly to Asia and Europe, Mann said.
"If you figure they do four trips a month and spend a day getting to and returning from (the trip), that means exactly six days off in a month," he said. "You're going to have some very tired, frustrated people."
United pilots on narrowbody jets, such as the Boeing 737, agreed to raise their maximum monthly flight hours to 95 from 81 last year, and many say privately that the change has taken a toll on them and made the job much less appealing.
Other proposed changes by United:
• A 12 percent wage cut, with 4 percent of it temporary. United also proposed being able to impose another temporary 4 percent cut if it would otherwise default on certain financing.
• Replace pilot instructors at United's Denver flight training center with contractors. This could lead to furloughs because the United instructors would return to the cockpit, pushing out the least-senior pilots. United employs about 170 pilot instructors at the center.
• Reduce vacation, sick leave and health care benefits. The vacation cuts could affect staffing and spark some furloughs.
The hodgepodge of wage-cut stipulations and work-rule and benefit changes reflects a lack of resolve by management about the kind of concessions it needs to return to financial health, Mann said.
"I just don't think they have very much confidence in their own business modeling, because they just don't know what they're asking for," he said. "They're asking for more, but they're not willing to say how much more with any finality.
"That tells me they really don't know where things are going from here. Perhaps that is an honest reflection of where they now think they are. In the past, they have been overconfident."
Union spokesman Captain Steve Derebey said the proposal "is just their opening letter" in negotiations.
"We don't put a whole lot of stock in it," he said. "Typically this is what they do. They put things into these proposals that are the most draconian proposals, and they tend to negotiate from there because they know they're not going to get everything in those."
The union's leadership is scheduled to meet early next month to further discuss United's proposal.
The carrier "remains committed to working to reach consensual agreements with all our unions to achieve the necessary labor cost savings through fair and equitable changes to wages, benefits and work rules," spokeswoman Jean Medina said in an e-mailed statement.
"We are eager to continue discussions with our unions and remain open to considering all workable options and alternatives that will still provide the long-lasting savings United needs to exit Chapter 11 successfully."
The carrier says it is seeking further labor concessions in part because it has been hammered by high jet-fuel prices and low airfares.
United, the operating unit of UAL Corp., has racked up more than $9 billion in net losses since the end of 2000.A look at United's proposal to pilots
• Cut permanent pilot pay through 2010 by 8 percent, plus temporary cut of 4 percent from Jan. 1 until bankruptcy exit
• Phase in pay increases of 1.5 percent each year, 2006 through 2010
• Reduce vacation, sick leave and health care benefits
• Gain right to terminate traditional pension plan and replace with 401(k)-style plan
• Increase monthly maximum flight hours for pilots on widebody jets to 95 from 85, and cut minimum days off to 10 or 11 from 12
• Replace pilot instructors at Denver flight training center with contractors, resulting in possible union furloughs
• Possibly begin having United operate air-freighter operation in which United uses another company's jets and pilots
• The union says pay cuts would be as much as 18 percent if the pilots don't agree to any work-rule changes.
• United wants to save $191.1 million a year from pilot wage and benefit cuts and work-rule changes.Source: United Airlines
Plan calls for longer hours, 12% wage cut
By David Kesmodel, Rocky Mountain News
November 24, 2004
Senior United Airlines pilots would have to fly more hours each month and be away from home longer under a sweeping cost-cutting proposal by the ailing carrier.
That change - as well as others proposed by United - could result in additional furloughs of junior pilots because the airline would gain productivity increases.
The giant carrier also has proposed contracting out jobs of pilot instructors at United's big flight training center in Denver, which could lead to furloughs.
Chicago-based United has proposed minimum wage cuts of 12 percent. The figure could rise if the pilots union does not agree to changes to work rules and scheduling provisions, such as the increase in flight hours.
The United branch of the Air Line Pilots Association released complete details of the carrier's proposal to its members for the first time last week, and the Rocky Mountain News obtained a copy.
The proposed cuts are so drastic that one might ask, "Why would anyone want to work there anymore?" said Bob Mann, an industry consultant in Port Washington, N.Y.
The airline, flying under bankruptcy-court protection for nearly two years, is seeking cutbacks from pilots as part of a plan to pare its costs by another $2 billion a year. It has cut its costs by about $5 billion a year, about half of which has come from labor concessions.
Denver's dominant carrier is asking the pilots group, the best-compensated of the rank and file, to provide $191.1 million in annual wage and benefit cuts and work-rule changes, or about 26 percent of the $725 million it seeks from workers.
The company also is asking all its unions for permission to terminate traditional pension plans, which would result in billions of dollars in additional savings and dampen the retirement benefits of active and retired pilots more than any other rank-and-file group.
United's pilots agreed to $1.1 billion in annual concessions last year, including pay cuts of 30 percent or more. About 2,100 pilots have been laid off since the 2001 terror attacks.
The company wants to negotiate the additional cutbacks by mid-January, which could help it step out of bankruptcy next year.
It will ask the bankruptcy court to impose concessions if negotiations fail.
United proposed increasing monthly maximum flight hours for pilots on widebody jets, such as the Boeing 747, to 95 from 85 and cutting their minimum monthly days off to 10 from 12. Pilots are capped at 100 hours a month and 1,000 hours a year under federal law, so pilots could fly at the monthly maximum rate for only 10.5 months.
The proposed changes would have a big impact on senior pilots' life-styles, many of whom fly to Asia and Europe, Mann said.
"If you figure they do four trips a month and spend a day getting to and returning from (the trip), that means exactly six days off in a month," he said. "You're going to have some very tired, frustrated people."
United pilots on narrowbody jets, such as the Boeing 737, agreed to raise their maximum monthly flight hours to 95 from 81 last year, and many say privately that the change has taken a toll on them and made the job much less appealing.
Other proposed changes by United:
• A 12 percent wage cut, with 4 percent of it temporary. United also proposed being able to impose another temporary 4 percent cut if it would otherwise default on certain financing.
• Replace pilot instructors at United's Denver flight training center with contractors. This could lead to furloughs because the United instructors would return to the cockpit, pushing out the least-senior pilots. United employs about 170 pilot instructors at the center.
• Reduce vacation, sick leave and health care benefits. The vacation cuts could affect staffing and spark some furloughs.
The hodgepodge of wage-cut stipulations and work-rule and benefit changes reflects a lack of resolve by management about the kind of concessions it needs to return to financial health, Mann said.
"I just don't think they have very much confidence in their own business modeling, because they just don't know what they're asking for," he said. "They're asking for more, but they're not willing to say how much more with any finality.
"That tells me they really don't know where things are going from here. Perhaps that is an honest reflection of where they now think they are. In the past, they have been overconfident."
Union spokesman Captain Steve Derebey said the proposal "is just their opening letter" in negotiations.
"We don't put a whole lot of stock in it," he said. "Typically this is what they do. They put things into these proposals that are the most draconian proposals, and they tend to negotiate from there because they know they're not going to get everything in those."
The union's leadership is scheduled to meet early next month to further discuss United's proposal.
The carrier "remains committed to working to reach consensual agreements with all our unions to achieve the necessary labor cost savings through fair and equitable changes to wages, benefits and work rules," spokeswoman Jean Medina said in an e-mailed statement.
"We are eager to continue discussions with our unions and remain open to considering all workable options and alternatives that will still provide the long-lasting savings United needs to exit Chapter 11 successfully."
The carrier says it is seeking further labor concessions in part because it has been hammered by high jet-fuel prices and low airfares.
United, the operating unit of UAL Corp., has racked up more than $9 billion in net losses since the end of 2000.A look at United's proposal to pilots
• Cut permanent pilot pay through 2010 by 8 percent, plus temporary cut of 4 percent from Jan. 1 until bankruptcy exit
• Phase in pay increases of 1.5 percent each year, 2006 through 2010
• Reduce vacation, sick leave and health care benefits
• Gain right to terminate traditional pension plan and replace with 401(k)-style plan
• Increase monthly maximum flight hours for pilots on widebody jets to 95 from 85, and cut minimum days off to 10 or 11 from 12
• Replace pilot instructors at Denver flight training center with contractors, resulting in possible union furloughs
• Possibly begin having United operate air-freighter operation in which United uses another company's jets and pilots
• The union says pay cuts would be as much as 18 percent if the pilots don't agree to any work-rule changes.
• United wants to save $191.1 million a year from pilot wage and benefit cuts and work-rule changes.Source: United Airlines
