Thanks Doug: US Outsourcing 7 cities

[Crash Pad DCA]

Here is a link to the WN (Southwest) ramp contract with TWU Local 555:
http://www.twu555.org/LinkClick.aspx?fileticket=vCp-QfbwZ78%3d&tabid=382

The CBA doesn't seem to have a scope clause, but Article 15 which discusses Reduction In Force (RIF), indicates that moving expenses are paid by the company if the employee is forced to relocate. I think the same is in the Gate CBA agreement between WN and IAM.

Here is a link to the TWU Local 555 CBA Annoucement:
http://www.blogsouthwest.com/news/twu-local-555-ratifies-tentative-agreement-with-southwest-airlines

 

[Crash Pad DCA]

http://bapwild.com/blog/?p=994

Airlines won’t yield ground to unions in bargaining
Posted on June 17, 2011 by Bill_Wilder

US airline CEOs express conflicting positions on the current state of union contract negotiations. US Airways CEO Doug Parker implies past contracts were unsustainable. Southwest Airlines CEO Gary Kelly, whose airline is the most-heavily unionized among “major carriers” (yup, Southwest) considers strong labor relations key to his carrier’s success. While new United CEO Jeff Smisek considers the past irrelevant to current and future labor relations.

http://mobile.reuters.com/article/idUSLNE75G03Q20110617?irpc=932

While CEOs may think continuing concessions will be cost favorable, the frontline service is the biggest factor in customer satisfaction. Continuing five year old (and older) concessions will only undermine that service. And those with lingering disputes will fall further behind airlines that have reset their contracts in new negotiations.

 

[Crash Pad DCA]

Full article:

http://mobile.reuters.com/article/idUSLNE75G03Q20110617?irpc=932

Reuters
Top News
U.S. airlines won't yield much ground to unions
Fri, Jun 17 10:48 AM EDT
image

By Karen Jacobs and Kyle Peterson

ATLANTA/CHICAGO (Reuters) - U.S. airlines, determined to keep their grip on recovery, will at best allow unions in contract negotiations to take back only part of what they gave up in concessions during restructuring.

Interviews with chief executives, consultants and labour experts show airlines are healthier than they were 10 years ago, but are more vulnerable than ever to volatile fuel costs, a sluggish economy, and fickle shareholders.

Labour and fuel alternate as the leading expense for airlines. At the top five carriers, wages and benefits accounted for 24 percent, or a combined $6.7 billion, of operating costs in the first quarter.

Contract negotiations are in various stages at nearly every major airline, and in most cases, they are heated. It is a perfect storm of bargaining triggered by the concentration of giveback agreements and pension terminations between 2002 and 2007.

The stakes are perhaps highest for American Airlines (AMR.N), which already has higher labour costs than rivals and is negotiating with its three big unions. Only pilots are making measurable progress after nearly three years of talks.

Analysts have said labour turmoil at AMR and US Airways (LCC.N) hurt any chances they may have had at finding a partner in the last round of consolidation from 2005 through 2010.

There were 486,000 full-time workers at U.S. passenger airlines in February, down from more than 600,000 a decade ago, according to Transportation Department data. Most of the more than 130,000 lost jobs were unionized.

Employees also accepted wage cuts of 20 percent to 40 percent, $10 billion in pension terminations, and work rules that lengthened shifts, changed schedules and slashed overtime pay.

Now the rank-and-file hopes for sizable payouts to make up for those concessions.

"Rather than getting a decent amount, they want a ton," said Jerry Glass, president of F&H Solutions management consultants and an ex-US Airways labour executive.

Gary Chaison, a labour expert at Clark University in Massachusetts, said airline unions have to understand that they can push only so hard. Unlike the auto industry or other businesses where up and down cycles generally come more slowly, he says, airlines are more volatile and can turn on a dime from boom to bust.

CEO VIEWS

US Airways CEO Doug Parker told Reuters that unions are relevant and managers -- not labour -- bear the blame for contracts that become problems when airline fortunes go south.

"What companies sometimes do wrong is they sign bad contracts," he said.

US Airways began talks with pilots and flight attendants six years ago, but no deals are in sight. The pilots have sued, alleging management has tried to undermine negotiations.

United Continental Holdings' (UAL.N) CEO Jeff Smisek told shareholders the company wanted fair and affordable contracts. In an interview with Reuters, he said past labour acrimony should not matter in negotiations.

"I don't care what the history is," he said. "It's irrelevant because nobody can change the past. What we can do is work together and have a better future."

Southwest Airlines CEO Gary Kelly credits strong labour relations for helping build profits at the company, the most highly unionized of the major U.S. carriers.

"We feel that if we take care of our employees, they'll take care of customers and, in turn, that will take care of shareholders," he told Reuters.

Some labour and management officials are taking a more positive approach. Pilots, especially, have adopted a less confrontational tone.

But Avondale Partners analyst Bob McAdoo said in a May research note that airlines are now managing for profits, not market share.

To this end, carriers are relentless about cost control, capacity reduction, and liquidity. The industry reported $1 billion in first-quarter losses on a 38 percent jump in fuel prices.

Several airlines -- including United, Delta Air Lines (DAL.N) and US Airways -- have become accustomed to the cost cuts made during bankruptcy.

That leaves little incentive to significantly boost wages.

Still, union leaders believe management can afford meaningful contracts even in an era of costly fuel and closer attention to profit potential. They cite increases in executive pay, bulging revenues and strong liquidity positions.

"We're not trying to aspire to vast richness," said Veda Shook, president of the Association of Flight Attendants, "just trying to get to middle class." (Additional reporting by John Crawley; Editing by Lisa Von Ahn)

 

[Tom Bombadil]

Hope the CWA takes notice with this in negotiations. Can't spend an extra buck an hour if you have no job.

 

[SparrowHawk]

Why blame Doug when it's the unions that have priced labor contracts above free market rates? If the unions wanted to keep these jobs they would seek wage rates that are at or below what competitive outsourced rates are. The unions are killing jobs, not Management.

Dear Mr Golf,

Stand by for INCOMING!

Why blame Doug? Are you freaking serious? Blame or praise starts at the top in any organization. Whether it be David Kerns who turned Xerox around or Brian Thomen who very nearly bankrupted it. Right now Doug Parker is the HMFIC (Head MF'er In Charge) so good, bad, indifferent he's the the man who gets the kick in the ass or the pat on the back. END OF STORY!

unions that have priced labor contracts above free market rates? Oh really!!! This one just shows how ignorant of the pay scales of other airlines most notably the most heavily unionized carrier being the most profitable. Flight Attendants at US barely beat out Spirit and some regional carriers on a wage basis. Ditto for the ramp. There is a ton of info on line and you could have easily researched it, but instead chose to bash unions as it appeared easier. CSR at WN crush US wage wise. While you're at it why not inquire as to why WN has superior profits and morale over time then this flying trailer park?

Outsourcing - Outsourcing is neither a panacea nor a Pandora’s Box. It is a reality and how the airlines manage their relationship with outsourcing providers is a critical element in how well airlines perform on operational & customer satisfaction issues. having sold outsourcing services I can tell you that the level of compliance with the contract is directly proportional to the amount of oversight by the Management of the company doing the outsourcing. US Airways has continually demonstrated it's unwillingness to actually manage a contract properly, thereby being penny wise and dollar foolish as a poorly managed outsource provider will almost always cost you more than doing it yourself. Sure it looks good on paper and if managed properly it will be less expensive. BTW do you even know what some of the main considerations are for outsourcing?


Herb Kelleher has weighed in on this topic. To Mr. Kelleher the answer was no mystery. According to Mr. Kelleher,

“You put your employees first. If you truly treat your employees with respect, they will treat your customers well, your customers will come back, and that’s what makes your shareholders happy. So there is no constituency at war with any other constituency. Ultimately, it’s shareholder value that you’re producing”.


Bottom line, Mr Golf on this one you're dead bang wrong. You just hate unions and like to cheap shot them because they often make themselves easy targets. Do your homework next time please.

 

[Dont call me Shirley]

Dear Mr Golf,

Stand by for INCOMING!

...............................


Bottom line, Mr Golf on this one you're dead bang wrong. You just hate unions and like to cheap shot them because they often make themselves easy targets. Do your homework next time please.

Thanks, Sparrow!

 

[BLUTO]

Thanks SparrowHawk,

I was going to post a response, but you pretty much covered it ALL! Mr Golf probably supports the outsourcing of the entire US manufacturing sector to the Chinese. According to folks like him, it was the unions that forced all this to happen.

Currently, less tan 10% of the private sector in unionized, so I suppose the other 90% are ignored when making such arguments.
So, in conclusion, if we were to follow that logic, in order to compete with the Chinese, we should all be able, and more than happy to live on 63 cents an hour!

~Bluto

 

[BLUTO]

Welcome to the boards. Nice avatar and sig line! 😀

Thanks Dude, I almost chose "D-Day", but I remembered that he hasn't been seen since the burn out in the Cop Car over thirty years ago!

I am already enjoying these forums, we have some very informed posters in the house!

~Bluto

 

[Crash Pad DCA]

Dear Mr Golf,

Stand by for INCOMING!

Why blame Doug? Are you freaking serious? Blame or praise starts at the top in any organization. Whether it be David Kerns who turned Xerox around or Brian Thomen who very nearly bankrupted it. Right now Doug Parker is the HMFIC (Head MF'er In Charge) so good, bad, indifferent he's the the man who gets the kick in the ass or the pat on the back. END OF STORY!

I was not at Xerox during the Kearns years, but I did work there during the Paul Allaire and the (brief!) Rick Thoman years. Kearns was absolutely REVERED as a people person. He spoke to EVERYONE! Door guards, custodians, engineers..practically everyone....could remember and recount personal conversations they had with the man. I felt like I knew him even though I never met him. Allaire was cut from the same cloth. Every corporate communication with him had a picture of him WITH employees. He was well loved. Under Allaire the stock soared to $125 and sales boomed. Then somebody got the great idea that Xerox should get somebody from "outside" to break the Xerox culture. So Xerox picked up Thoman the IBM reject that had been looked over for the CEO position at IBM MANY times. Aloof and arrogant (I was in the room with the guy several times...He breezed by us worker bees like we didn't even exist! Even though our labor paid his bills!), under his "leadership" 30% of the sales staff left and the stock (and all our 401Ks) tanked from $125 to $13 (adjusting for splits...lol). So for the brief year or so that Thoman was there breaking the culture, because of the clause in his hiring contract, Xerox is on the hook to pay him $800K/year until his death and then his surviving spouse gets $400K/year until her death- even though he's been fired. Now there's somebody who knows how to negotiate a contract! Thank God Anne Mulcahy and Ursula Burns have been able to right the ship (somewhat) post Thoman.

 

[SparrowHawk]

I was not at Xerox during the Kearns years, but I did work there during the Paul Allaire and the (brief!) Rick Thoman years. Kearns was absolutely REVERED as a people person. He spoke to EVERYONE! Door guards, custodians, engineers..practically everyone....could remember and recount personal conversations they had with the man. I felt like I knew him even though I never met him. Allaire was cut from the same cloth. Every corporate communication with him had a picture of him WITH employees. He was well loved. Under Allaire the stock soared to $125 and sales boomed. Then somebody got the great idea that Xerox should get somebody from "outside" to break the Xerox culture. So Xerox picked up Thoman the IBM reject that had been looked over for the CEO position at IBM MANY times. Aloof and arrogant (I was in the room with the guy several times...He breezed by us worker bees like we didn't even exist! Even though our labor paid his bills!), under his "leadership" 30% of the sales staff left and the stock (and all our 401Ks) tanked from $125 to $13 (adjusting for splits...lol). So for the brief year or so that Thoman was there breaking the culture, because of the clause in his hiring contract, Xerox is on the hook to pay him $800K/year until his death and then his surviving spouse gets $400K/year until her death- even though he's been fired. Now there's somebody who knows how to negotiate a contract! Thank God Anne Mulcahy and Ursula Burns have been able to right the ship (somewhat) post Thoman.

I was there from 1980 to 1992 so I missed Rick Thoman. I think your little story effectively tells the impact that a CEO can have on the direction not only in the "Bottom Line Numbers" way but by building a culture that fosters trust, energizes and empowers employees and managers alike to aspire to do great things.

So tell me has anyone been inspired by Mr Parker to anything beyond look for work outside the company?

 

[Crash Pad DCA]

... Xerox is on the hook to pay him $800K/year until his death and then his surviving spouse gets $400K/year until her death- even though he's been fired...

Correction:
Rick gets "the greater of $600K/year or the calculated special Mid Career SERP benefit described above..."
Here is the link to Thoman's employment offer letter:
http://public.thecorporatelibrary.net/contracts/former_ceos/ceo_xrx.htm

Still, that's one really nice contract for a few years of work(?).

 

[Ramp Rogue]

Here is a link to the WN (Southwest) CBA for the Gate:
http://www.iamdl142.org/Southwest/IAM%202008thru2012.pdf

Article 15 covers Reduction in Force (RIF). Company pays relocation. 120 days of pass travel if you aren't offered a job. You continue to accrue seniority on furlough and can be called back in 5 years. I think I read that right.

The company only pays relocation costs for fulltimers!

 

[Crash Pad DCA]

Summary:

In 2008:
WN Made Money
US Lost Money

WN brought in $11billion in revenue and paid its top executives $4.8 million
US brought in $12 billion in revenue and paid its top executives $14.5 million

WN average employee salary was $72K
US average employee salary was $54K

http://seekingalpha.com/article/174816-trying-to-understand-airline-executive-compensation

Trying to Understand Airline Executive Compensation

In 2008, while the 5 remaining legacy airlines lost a cumulative $4.6 billion (excludes special charges), the 25 top executives collectively received over $90 million in compensation, averaging over $3.6 million per executive.

The legacy airlines are: American (AMR), Delta (DAL), United (UAUA), Continental (CAL) and US Airways (LCC).

So, while upper management did rather well, how did the other stake holders come out?

In just one year, these 5 legacy carriers lost an incredible $17 billion of stock-holder equity as their cumulative market cap dropped from $21.9 billion to only $5 billion. 6,300 jobs were eliminated in 2008. The average annual wage per employee was $57,000 and unchanged from a decade ago.

I guess we could use our imagination to estimate how much executive compensation would increase if the airlines actually made money?

Charts below will provide airline-to-airline comparisons for upper level executive compensation. Data is also included for the low cost carrier Southwest Airlines (LUV).

Of the 6 airlines in this analysis, Southwest was the only carrier to have made a profit in 2008.

The 2008 net losses excluding special items for each legacy airline were:
American - $1.183 billion
Delta - $ 503 million
United - $1.729 billion
Continental - $ 351 million
US Airways - $ 803 million

Southwest had a net profit of $294 million.

See figure 1 for more detailed breakdowns of executive compensation.

Executive comps

Figure 2 below charts the total compensation for the 5 top executives from each airline (in thousands).
Figure 2 - Total Compensation of Top 5 Executives

Each airline has a large variance in size and operating revenues. Figure 3 provides executive compensation as a ratio to each airline’s total wage/benefit expense for year 2008.

Figure 3 - Compensation as a percentage of worker wages and benefits

Figure 4 below further provides a ratio for executive compensation as a percentage of total operating revenues for year 2008.

Figure 4 - Executive Compensation as a Percentage of Operating Revenue
There should be no argument airline executives have faced unprecedented challenges since 9/11. It should also come as no surprise that after losing so much, airline employees and investors have a difficult time understanding “executive compensation”.

 

[Crash Pad DCA]

Summary:

In 2009
WN Made Money (+$99 million)
US Lost Money (-$205 million)

WN paid its CEO $1.6 million
US paid its CEO $2.6 million

WN employed 35,000
US employed 32,000
(http://www.dallasnews.com/business/headlines/20100223-Nearly-a-quarter-of-U-S-896.ece)

http://travel-industry.uptake.com/blog/2010/05/04/airline-ceo-compensation/
Airline CEO Compensation Roundup

May 04, 2010 2:21 - By: P. Ling

As an industry, the CEOs of the top 10 publicly listed airlines in the US took home a combined $34.1 million in 2009, while all ten companies put together showed up a combined loss of $3.3 billion.


But some of them are admittedly doing a lot better than the airline industry as a whole. Also, the 2009 figures are a whole lot better than 2008.

In 2008, this same bunch took home nearly $40 million while leaving their airlines reeling under a stunning $19.5 billion loss.

To assign or absolve each of these CEOs from blame, we’ll have to list CEO compensation individually, followed by a brief assessment of each airline’s financial performance.

2009 Airline CEO Compensation (AP data):-

1. Richard H. Anderson, Delta Air Lines – $8.4 million
2. Gerard J. Arpey, American Airlines – $4.7 million
3. William S. Ayer, Alaska Airlines – $4.3 million
4. Glenn F. Tilton, United Airlines – $3.9 million
5. Lawrence W. Kellner – former CEO, Continental Airlines – $3.3 million
(Jeffery A. Smisek – current CEO, Continental Airlines – $0.0)
6. Douglas Parker, US Airways – $2.6 million
7. Robert L. Fornaro, Airtran Airways – $2.0 million
8. Mark B. Dunkerley, Hawaiian Airlines – $1.8 million
9. Gary C. Kelly, Southwest Airlines – $1.6 million
10. David Barger, Jetblue Airways – $1.5 million

Now let’s take a look at which of these CEOs actually earned their pay.

1. Southwest Airlines Co. (NYSE:LUV)
Net income: $99m
CEO compensation: $1.6m
Even though Southwest’s net income dropped from $178m in 2008 to $99m in 2009, Southwest came through the recession in better shape than most other airlines, maintaining a 37 year unbroken record of annual profitability. Widely accepted view that CEO Gary Kelly deserved his $1.6m compensation.

...

7. US Airways Group, Inc. (NYSE:LCC)
Net income: -$205m (loss)
CEO compensation: $2.6m
US Airways came a cropper in 2008 with a loss of $2.2b, followed by a loss of $205m in 2009. However, unlike United, US Airways CEO Doug Parker’s compensation did not rise. It actually dropped 31%, from $3.7m in 2008 to $2.6m in 2009.

US Airways did not award bonuses based on financial performance, but only as incentives for achieving specific goals, such as improvements in customer service and baggage handling. Shareholders won’t be happy with US Airways’ financial performance, but Doug Parker won’t be taking too much heat for his pay package.

...

In summary, if you’re looking for overall trends from all these numbers, take a look at the chart below. It looks like the legacy carriers and discount airlines are marching to two different drummers.

Comparison chart - Airline CEO compensation vs. Airline Earnings

In the case of the legacy carriers - the bigger the company, the bigger is the compensation for the CEO. They’re more concerned with stock price than actual earnings. But in this case, the biggest companies also happen to be the biggest loss-makers, so ironically enough – a bigger loss corresponds to a bigger CEO compensation package.

In the case of the discount airlines, bigger profits correspond to bigger CEO compensation – regardless of the size of the airline.

Read more: http://travel-industry.uptake.com/blog/2010/05/04/airline-ceo-compensation/#ixzz1XKQ79MXn

 

[BLUTO]

Great posts "Crash", informative and supported with facts! All groups up for, or in negotiations should be aware of these statistics.