Sound familiar? United is in its infancy of painful realizations!! What do you think?
THIS LETTER FROM A UNITED AIRLINES CAPTAIN. NOT A ROSY PICTURE.
Well, we got to see the Term Sheet from our management here at United yesterday. That is, what they propose to us for a contract for the next six years, and, if we don''t accept it, what they''ll file with the Bankruptcy Court under Section 1113Â© to give us an offer we can''t refuse.
It''s an attention-getter. Some of the highlights, or, I should say, lowlights:
-Base hourly pay rates reduced 29%
-Elimination of all premium pay - international, late-night, etc.
-Elimination of the company contribution to the Pilot Directed Account (that''s another 11% for a total of 40% pay reduction, not counting the rest, below)
-Reduce the multiplier for the Defined Benefit Plan to 1.3 (from 1.5)
-Reduce monthly guarantee to 60 hours (from 75)
-Reduce minimum days off to 10 (from 12)
-Reduce max vacation to 5 weeks (after 20 years)
-Require between 20 and 40% co-pay on health insurance
-Eliminate short-term disability and occupational sick leave
-Eliminate furlough protection, all scope clauses, all limitations regarding RJs and mainline aircraft fleet size, and domestic code-sharing.
-Eliminate virtually all duty and scheduling rigs.
-Allow all layovers, regardless of length, to be field layovers
-Reduce per diem pay by 40%
-Use non-landing-qualified IRPs on long range flights vs First Officers
-Eliminate all limitations regarding closing of domiciles, and institute a 3-year equipment freeze in all positions
-Sick leave bank reduced by 60%
-Commensurate reductions in the quality of retirement benefits
I saved the best one for last: Start a new sub-brand LOW COST carrier to compete with Jet Blue, etc. Low Cost?! Compared to what? I think what that really means is a separate carrier that''ll hire pilots from off the street - or hopefully our furloughed people - for entry-level wages and no work-rules. This carrier will probably gradually start taking over United''s flying.
Now, guys, I know you''ve all been reading in the business press for several months the sordid details of what a basket-case UAL is, but consider a few facts:
Between 1994 and 2000, this is an airline that netted over $7 billion in profit. Gross mismanagement cost it a great deal of its cash going into the current slump in the airline business (US Air, Avolar, failure to stay on top of the money market as the need for loans became obvious). And, no help from the government in the form of the ATSB after 9-11.
All the major labor groups got new contracts in the two years following 2000, that got lots of attention in the media. The most generous and infamous was the pilots'' contract. It was our first raise in ten years, but it was a big one that was immediately labeled as excessive by airline managements everywhere. But when you factor in inflation, (use any calculator you want; I used the one on NASA''s website), that wonderful contract actually only brought us to 98% of what we were compensated in 1978, the year I started at United. You guys at AA and DL, pull out your old contracts from the ''76-''78 timeframe and check it out.
Couple that with the 40% pay cut (I''m not even going to whine about the guarantee-drop or the work-rules gems), and we''re going to be making about 41 or 42% less than pilots in the same seat did 25 years ago. And we weren''t even the highest-paid back then.
I saw Senator McCain (one of the few pols I used to like) at the hearings in D.C. Thursday saying that labor costs, and largely pilot compensation, was to blame for most of the airlines'' woes (Why can''t they have the same costs as Jet Blue?), and therefore tax relief for the airlines is not appropriate at this time. (Taxes make up 26% of the price of the average ticket, up 145% from ten years ago) Well, like most politicians, Senator McCain comes armed with only a handful of the facts. Jet Blue is a virtual airline with no infrastructure, giveback leases and sweetheart deferred payments (not unlike your basic Mitsubishi Montero) to Airbus. Southwest is a wonderful company. But they have a different product, and they don''t fly to Boston or San Francisco, they fly to Providence and Oakland. And Senator, I defy you to identify another job description (particularly one that requires a degree, licensing, and an average of 8 years of apprenticeship to qualify) that''s paid 40% less now than in 1978.
ALPA gets to negotiate for us under the oversight of the Bankruptcy Court, and the company or the judge may throw us a bone here or there. But there''s a strong likelihood that we''ll end up with MOST of the above give-backs (or is that take-aways), because the company''s management team holds ALL the trump cards, and we all want United Airlines to survive. What has happened to United, along with the smoldering crisis facing the rest of the industry, has got to be the dream scenario for airline management teams everywhere.
What a magnificent opportunity to reshape a labor model developed over the last sixty years.
And if you saw and heard Mr. Carty and the other airline executives at the hearings in Washington last week, you know what they want, folks.
Hang onto your wallets.
-UAL 777 Cap SFO