Today US Airways senior management met with the ALPA MEC and about 50 other pilots. Management was represented by chief executive officer Bruce Lakefield, senior vice president of planning Andrew Norcella, vice president of flight operations Ed Bular, and vice president of safety Jim Schear.
The meeting started with MEC chairman Bill Pollock reading prepared comments. According to the ALPA code-a-phone Pollock’s statement addressed matters that he sees as the immediate concerns of the US Airways pilots. These issues include:
• An absolute commitment to continue to fix the trip parings, pilot staffing and scheduling so that pilots are working a reasonable schedule, flying productive trips and going to work rested and refreshed.
• The need to see a ruthlessness from management in cutting non-labor costs.
• Respect shown for pilots as individuals, respect shown to the pilots as a group as evidenced by the administration of our contract, and a commitment to fixing the way our disputes are addressed, and
• A reminder that our partnership in this airline is evidenced by the magnitude of our investment. ALPA demands a full accountability of our pilot’s investment and sacrifices.
ALPA communications committee chairman Jack Stephen also reported, “the code-a-phone also reported, “Mr. Lakefield then addressed the MEC on the Transformation Plan, and told the MEC that he knew that our concessions saved US Airways and allowed the Company to proceed with the Plan. He talked about the impact of the high price of fuel, current industry overcapacity, and its effect on our pricing and revenue. He acknowledged that the Company had made some decisions that were penny wise, but perhaps pound foolish and talked about the constant struggle between long term company goals and the reality of our short term financial needs. He also stated that there were no excuses for what has transpired in PHL, we simply had to do a better job there. He also indicated that his primary job remains the same, to preserve cash and as many jobs as possible. He also told the MEC and pilots present that senior management continues to work daily to attract equity investors for US Airways' emergence from bankruptcy.â€
“The MEC and pilots in attendance spoke to Mr. Lakefield about their concerns in several areas, including pilot fatigue, deadhead, and trip pairing issues; PHL operational problems; the sick policy; ACARS issue; and the ALPA/Company grievance process,†Stephen said.
In addition to ALPA’s statement, the information below are bullet points from the meeting. The points below are paraphrased and if I add an opinion or comment, I will use the phrase “I believeâ€, “in my opinionâ€, or “I understand†to separate my thoughts from the comments made by Lakefield.
• Pollock and Lakefield discussed the CEO’s four “P’s†for a successful business: pride, professionalism, partnership, and profitability. Lakefield said that without the first two “P’sâ€, pride and professionalism, by employees, US Airways “would not be here today.†He said he is here for the third “Pâ€, partnership.
• US Airways has two problems: fuel and revenue.
• When the company completed its initial Transformation Plan version last summer crude oil was trading at $35 per barrel. Industry, ALPA, and other financial experts believed fuel prices would remain stable. Today crude oil traded near $55 per barrel and at today’s prices US Airways’ annual fuel expense has climbed about $480 million per year. If oil had remained at about $35 per barrel US Airways would be profitable today. US Airways’ new business plan is at risk at current fuel prices.
• If fuel remains at its current level, fuel will become the company’s largest expense surpassing labor expense for the first time in the company’s history.
• The initial Transformation Plan version addressed lower revenue and the LCC issue. I understand that the deeper cuts in, labor, distribution, and operational expenses would permit US airways to be profitable with crude oil at $45 per barrel.
• Delta’s SimpliFares are suicidal and could be “preparation for bankruptcyâ€.
See Story
• Lakefield attended an ATA meeting on capital hill last week with congress. Lakefield sat next to Glenn Tilton and every CEO expressed panic about what is happening in our industry. Airline’s currently pay $15 billion in taxes, they’re the only companies that pay for their own security, and now congress wants to add $1.5 billion in additional taxes.
• The company is focusing on short-term versus long-term decisions. These decisions may not be the best for the long-term, but are quick and thoughtful and are necessary for survival.
• Lakefield does not like to pull aircraft from the fleet plan or shut down routes. However, he must preserve cash and save as many jobs as possible.
• All of the labor savings have not made it down to the bottom line yet.
• “We have a lot of interested parties that want to help us and are trying to tell us how to run our business. The ATSB, BE, affiliate (carriers), EDS.â€
• He is trying to attract equity investors and he believes it exists. The company talks daily with GE and equity investors. This could lead to tough decisions that are good short-term but bad long-term. He is negotiating for equity every day and in my opinion Lakefield hinted that one potential suitor could be GE. However, “we do not call all the shots.â€
• The job is done on the labor side. Now we “need to do more on the management side.†According to a column in today’s Charlotte Observer “US Airways says it won't seek any more worker concessions to cut costs.â€
Complete Story
• It is easier to grow into profitability.
• The Air Wisconsin deal has the “industry spinning around†and has “UAL confusedâ€.
• We have a competitive cost structure on the labor side.
• Need to stay focused to survive.
• He is very proud of the silent majority who stepped up over New Year’s in Philadelphia.
• Philadelphia overnight cleaning on the third shift went to contract cleaners two week’s ago. By the end of the month, that I understand is March 28, all utility (except about 50 positions) will be outsourced.
• The Philadelphia meltdown was caused by a manning shortfall and excessive sick calls. The company is hiring FSA, CSA, and CAR’s with good success. The company promises the “operational meltdown†will “never happen again†and I believe this has been told to the DOT, who believes that to be the case.
• There have been about 100 new FSA’s hired in Philadelphia, 50 in Charlotte, and 50 in DCA. It is my understanding that the company continues to hire personnel in Philadelphia and Charlotte. Washington has hired all of its required personnel and has a pool of people interested inworking for the company.
See Story
Yesterday Lakefield was talking to Terry Pope, Charlotte Managing Director (Station Manager) who told Lakefield that the incumbent FSA’s and the new FSA’s (with young blood) “are working very well together.†Pope told Lakefield that when the incumbent FSA’s asked the new employees why they came to US Airways they said because “it was a good jobâ€. In one instance a new employee said his wife works at WalMart and the US Airways medical plan is better than WalMart’s.
• While working as the vice president of transformation, Jim Schear “saved the company $100 to $150 million in cost cuts.â€
• US Airways’ 6-month extension in Airbus heavy maintenance checks come due this year and will cost the company abut $100 million.
• “Airplanes today are a dime a dozen.†It’s my understanding that once the company returns to sustained profitability, the airline will add more mainline aircraft. In addition, I understand the company wants to have one widebody fleet type.
• One mission in mind: save the airline and as many jobs as possible.
• Company has made mistakes but will not look back – he is only looking forward.
• Financial partners tough to deal with, but they want us to survive. It is my understanding US Airways has a number of potential equity investors that could be private equity, debt financing, hedge funds, or affiliate carriers. US Airways is negotiating with its affiliate partners, Mesa, Chautauqua, and TSA to dramatically lower the “Fee for Service†contracts, which pay the affiliates cost plus 8% of to provide US Airways with equity. Lakefield believes the current contracts places US Airways with all of the risk and the affiliate all of the benefit. If an affiliate carrier does not provide cost relief or equity, which they all have, then one of them will likely be replaced by Air Wisconsin. I understand US Airways lowest affiliate RJ operator is Mesa. I believe the RJ operator who has the greatest risk of being replaced by Air Wisconsin is Mesa and Chautauqua because of their size and performance. Furthermore, I understand that if US Airways does not get equity and/or cost cuts from all of its partners, one of these airlines will not only be replaced, but US airways would then turn to other equity investors as necessary.
• The affiliate carrier negotiations for reduced “Fee for Service†contracts and equity investment is “one of our strongest cards.â€
• US Airways employment is down 4,000 since September. For those people in management that left the company, he is very pleased with the work of others who have “really stepped up.â€
In regard to MEC member and rank-and-file pilot questions, I believe ALPA will make progress on the Variable Minimum/Deadhead and MDA pilot longevity problem. Lakefield indicated he was willing to sit down with the general’s and see what could be done to fix these disagreements. Lakefield sees the MDA pay issue as a problem.
Regards,
USA320pilot
The meeting started with MEC chairman Bill Pollock reading prepared comments. According to the ALPA code-a-phone Pollock’s statement addressed matters that he sees as the immediate concerns of the US Airways pilots. These issues include:
• An absolute commitment to continue to fix the trip parings, pilot staffing and scheduling so that pilots are working a reasonable schedule, flying productive trips and going to work rested and refreshed.
• The need to see a ruthlessness from management in cutting non-labor costs.
• Respect shown for pilots as individuals, respect shown to the pilots as a group as evidenced by the administration of our contract, and a commitment to fixing the way our disputes are addressed, and
• A reminder that our partnership in this airline is evidenced by the magnitude of our investment. ALPA demands a full accountability of our pilot’s investment and sacrifices.
ALPA communications committee chairman Jack Stephen also reported, “the code-a-phone also reported, “Mr. Lakefield then addressed the MEC on the Transformation Plan, and told the MEC that he knew that our concessions saved US Airways and allowed the Company to proceed with the Plan. He talked about the impact of the high price of fuel, current industry overcapacity, and its effect on our pricing and revenue. He acknowledged that the Company had made some decisions that were penny wise, but perhaps pound foolish and talked about the constant struggle between long term company goals and the reality of our short term financial needs. He also stated that there were no excuses for what has transpired in PHL, we simply had to do a better job there. He also indicated that his primary job remains the same, to preserve cash and as many jobs as possible. He also told the MEC and pilots present that senior management continues to work daily to attract equity investors for US Airways' emergence from bankruptcy.â€
“The MEC and pilots in attendance spoke to Mr. Lakefield about their concerns in several areas, including pilot fatigue, deadhead, and trip pairing issues; PHL operational problems; the sick policy; ACARS issue; and the ALPA/Company grievance process,†Stephen said.
In addition to ALPA’s statement, the information below are bullet points from the meeting. The points below are paraphrased and if I add an opinion or comment, I will use the phrase “I believeâ€, “in my opinionâ€, or “I understand†to separate my thoughts from the comments made by Lakefield.
• Pollock and Lakefield discussed the CEO’s four “P’s†for a successful business: pride, professionalism, partnership, and profitability. Lakefield said that without the first two “P’sâ€, pride and professionalism, by employees, US Airways “would not be here today.†He said he is here for the third “Pâ€, partnership.
• US Airways has two problems: fuel and revenue.
• When the company completed its initial Transformation Plan version last summer crude oil was trading at $35 per barrel. Industry, ALPA, and other financial experts believed fuel prices would remain stable. Today crude oil traded near $55 per barrel and at today’s prices US Airways’ annual fuel expense has climbed about $480 million per year. If oil had remained at about $35 per barrel US Airways would be profitable today. US Airways’ new business plan is at risk at current fuel prices.
• If fuel remains at its current level, fuel will become the company’s largest expense surpassing labor expense for the first time in the company’s history.
• The initial Transformation Plan version addressed lower revenue and the LCC issue. I understand that the deeper cuts in, labor, distribution, and operational expenses would permit US airways to be profitable with crude oil at $45 per barrel.
• Delta’s SimpliFares are suicidal and could be “preparation for bankruptcyâ€.
See Story
• Lakefield attended an ATA meeting on capital hill last week with congress. Lakefield sat next to Glenn Tilton and every CEO expressed panic about what is happening in our industry. Airline’s currently pay $15 billion in taxes, they’re the only companies that pay for their own security, and now congress wants to add $1.5 billion in additional taxes.
• The company is focusing on short-term versus long-term decisions. These decisions may not be the best for the long-term, but are quick and thoughtful and are necessary for survival.
• Lakefield does not like to pull aircraft from the fleet plan or shut down routes. However, he must preserve cash and save as many jobs as possible.
• All of the labor savings have not made it down to the bottom line yet.
• “We have a lot of interested parties that want to help us and are trying to tell us how to run our business. The ATSB, BE, affiliate (carriers), EDS.â€
• He is trying to attract equity investors and he believes it exists. The company talks daily with GE and equity investors. This could lead to tough decisions that are good short-term but bad long-term. He is negotiating for equity every day and in my opinion Lakefield hinted that one potential suitor could be GE. However, “we do not call all the shots.â€
• The job is done on the labor side. Now we “need to do more on the management side.†According to a column in today’s Charlotte Observer “US Airways says it won't seek any more worker concessions to cut costs.â€
Complete Story
• It is easier to grow into profitability.
• The Air Wisconsin deal has the “industry spinning around†and has “UAL confusedâ€.
• We have a competitive cost structure on the labor side.
• Need to stay focused to survive.
• He is very proud of the silent majority who stepped up over New Year’s in Philadelphia.
• Philadelphia overnight cleaning on the third shift went to contract cleaners two week’s ago. By the end of the month, that I understand is March 28, all utility (except about 50 positions) will be outsourced.
• The Philadelphia meltdown was caused by a manning shortfall and excessive sick calls. The company is hiring FSA, CSA, and CAR’s with good success. The company promises the “operational meltdown†will “never happen again†and I believe this has been told to the DOT, who believes that to be the case.
• There have been about 100 new FSA’s hired in Philadelphia, 50 in Charlotte, and 50 in DCA. It is my understanding that the company continues to hire personnel in Philadelphia and Charlotte. Washington has hired all of its required personnel and has a pool of people interested inworking for the company.
See Story
Yesterday Lakefield was talking to Terry Pope, Charlotte Managing Director (Station Manager) who told Lakefield that the incumbent FSA’s and the new FSA’s (with young blood) “are working very well together.†Pope told Lakefield that when the incumbent FSA’s asked the new employees why they came to US Airways they said because “it was a good jobâ€. In one instance a new employee said his wife works at WalMart and the US Airways medical plan is better than WalMart’s.
• While working as the vice president of transformation, Jim Schear “saved the company $100 to $150 million in cost cuts.â€
• US Airways’ 6-month extension in Airbus heavy maintenance checks come due this year and will cost the company abut $100 million.
• “Airplanes today are a dime a dozen.†It’s my understanding that once the company returns to sustained profitability, the airline will add more mainline aircraft. In addition, I understand the company wants to have one widebody fleet type.
• One mission in mind: save the airline and as many jobs as possible.
• Company has made mistakes but will not look back – he is only looking forward.
• Financial partners tough to deal with, but they want us to survive. It is my understanding US Airways has a number of potential equity investors that could be private equity, debt financing, hedge funds, or affiliate carriers. US Airways is negotiating with its affiliate partners, Mesa, Chautauqua, and TSA to dramatically lower the “Fee for Service†contracts, which pay the affiliates cost plus 8% of to provide US Airways with equity. Lakefield believes the current contracts places US Airways with all of the risk and the affiliate all of the benefit. If an affiliate carrier does not provide cost relief or equity, which they all have, then one of them will likely be replaced by Air Wisconsin. I understand US Airways lowest affiliate RJ operator is Mesa. I believe the RJ operator who has the greatest risk of being replaced by Air Wisconsin is Mesa and Chautauqua because of their size and performance. Furthermore, I understand that if US Airways does not get equity and/or cost cuts from all of its partners, one of these airlines will not only be replaced, but US airways would then turn to other equity investors as necessary.
• The affiliate carrier negotiations for reduced “Fee for Service†contracts and equity investment is “one of our strongest cards.â€
• US Airways employment is down 4,000 since September. For those people in management that left the company, he is very pleased with the work of others who have “really stepped up.â€
In regard to MEC member and rank-and-file pilot questions, I believe ALPA will make progress on the Variable Minimum/Deadhead and MDA pilot longevity problem. Lakefield indicated he was willing to sit down with the general’s and see what could be done to fix these disagreements. Lakefield sees the MDA pay issue as a problem.
Regards,
USA320pilot
