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[FONT=arial, helvetica]Transportation[/FONT]
[FONT=arial, helvetica]AirTran's Learning From History
[/FONT][FONT=arial, helvetica]By Ted Reed
TheStreet.com Staff Reporter[/FONT]
[FONT=arial, helvetica]6/2/2006 1:22 PM EDT[/FONT]
[FONT=arial, helvetica]URL: http://www.thestreet.com/stocks/transportation/10289531.html
Considering their background as onetime Eastern Airlines employees, leaders on both sides of the negotiations between AirTran Airways (AAI:NYSE) and its pilots are taking a decidedly moderate approach.
Recent turmoil in the airline industry has left the carrier and the pilots in relatively favorable positions, so that neither side seeks major changes. It's a far cry from what happened at Eastern, where hostility between management and labor led to a three-union strike that shut the airline down 15 years ago.
"We've all learned from Eastern," says Allen Philpot, a one-time Eastern striker who serves as president of the National Pilots Association, the independent union that represents AirTran's 1,400 pilots.
AirTran Chairman Joe Leonard served Eastern in a variety of executive posts, including president. The airline's chief negotiator is Steve Kolski, a veteran of four decades in the airline industry, including four years at Eastern. All three worked at the airline during its final tumultuous years.
In a sense, the AirTran negotiations go against the grain in today's airline-labor environment. Nearly every recent negotiation has involved concessions made in an effort to promote the survival of carriers operating under bankruptcy-court protection.
The current round of talks at both AirTran and US Airways (LCC:NYSE) involve pilots who want to share in the good times at two of the strongest airlines -- even though they're so far seeing just marginal profitability. AirTran has posted annual profits since 2002, but lost $4.6 million in the first quarter of this year.
"We understand the company not wanting to raise costs," Philpot says. "We want them to make money, and we are going to give them a contract that will work for them. That's why we're not going after huge wage increases. We're just trying to fix some quality-of-life issues."
The airline, however, has made concessionary proposals, Philpot says. For instance, one proposal would start a pilot's working time at the moment an airplane starts moving, rather than at the moment when the airplane's doors close. Given that planes often sit at the gate at delay-prone airports such as Atlanta's, where AirTran has about 250 daily departures, the change could cost the average pilot about $3,500 annually, Philpot says.
Leonard, for his part, said on a conference call last month that AirTran's goal is to prevent any change in its cost per available seat mile, currently among the industry's lowest. "We can make adjustments in the contract to improve quality of work life [but] we want to make sure that we stay about CASM-neutral," he said.
The contract became amendable in April. Talks, which began in December 2004, were joined by a federal mediator in September. Both sides agree that things have moved slowly, with deals on just a handful of 19 contract sections. Discussions have been confined to about two days a month, although the pace appears to be quickening. Negotiators met Tuesday and Wednesday in Baltimore, and plan six more days of talks this month.
Philpot suggests that things could speed up, now that AirTran executives can compare their pilot costs with those at Delta Air Lines (DALRQ:BB) , where pilots approved a contract on Wednesday.
Kolski declined to comment specifically on the talks. Early this year, in an interview with the Atlanta Journal-Constitution, he called the pilots' proposals "extremely vague and undefined." He says it would be irresponsible for the company to increase pilot pay when the airline is barely breaking even. "This is the wrong time to increase our pilot costs, and we simply refuse to do it," he says.
AirTran's pilots are among the industry's lowest paid, says pilot spokesman Brian Gaudet. He says the average pilot makes about $78,000 a year, based on flying the guaranteed minimum of 70 hours a month. The airline's average pilot cost is $92 an hour, the lowest of any major carrier.
Pay is a secondary issue for pilots, who are seeking only cost-of-living increases and are focused on other matters that include seniority protection in the event of a merger and a reduction in the percentage of their insurance costs they are required to pay.
In addition, Gaudet says, more efficient scheduling would improve pilots' work lives and reduce costs. "AirTran keeps the overhead down and is very thin in systems technology," he says. "We think an investment in technology would optimize schedules and pay for itself."
Despite the conflicts, pilot leaders profess their admiration for Leonard, who they say has enabled the airline to prosper since joining as chairman in 1999. "We might pick on Joe a little bit, but the bottom line is he saved this company from certain disaster," Philpot says. "When he arrived, we were cash poor and close to bankruptcy." [/FONT]
[FONT=arial, helvetica]AirTran's Learning From History
[/FONT][FONT=arial, helvetica]By Ted Reed
TheStreet.com Staff Reporter[/FONT]
[FONT=arial, helvetica]6/2/2006 1:22 PM EDT[/FONT]
[FONT=arial, helvetica]URL: http://www.thestreet.com/stocks/transportation/10289531.html
Considering their background as onetime Eastern Airlines employees, leaders on both sides of the negotiations between AirTran Airways (AAI:NYSE) and its pilots are taking a decidedly moderate approach.
Recent turmoil in the airline industry has left the carrier and the pilots in relatively favorable positions, so that neither side seeks major changes. It's a far cry from what happened at Eastern, where hostility between management and labor led to a three-union strike that shut the airline down 15 years ago.
"We've all learned from Eastern," says Allen Philpot, a one-time Eastern striker who serves as president of the National Pilots Association, the independent union that represents AirTran's 1,400 pilots.
AirTran Chairman Joe Leonard served Eastern in a variety of executive posts, including president. The airline's chief negotiator is Steve Kolski, a veteran of four decades in the airline industry, including four years at Eastern. All three worked at the airline during its final tumultuous years.
In a sense, the AirTran negotiations go against the grain in today's airline-labor environment. Nearly every recent negotiation has involved concessions made in an effort to promote the survival of carriers operating under bankruptcy-court protection.
The current round of talks at both AirTran and US Airways (LCC:NYSE) involve pilots who want to share in the good times at two of the strongest airlines -- even though they're so far seeing just marginal profitability. AirTran has posted annual profits since 2002, but lost $4.6 million in the first quarter of this year.
"We understand the company not wanting to raise costs," Philpot says. "We want them to make money, and we are going to give them a contract that will work for them. That's why we're not going after huge wage increases. We're just trying to fix some quality-of-life issues."
The airline, however, has made concessionary proposals, Philpot says. For instance, one proposal would start a pilot's working time at the moment an airplane starts moving, rather than at the moment when the airplane's doors close. Given that planes often sit at the gate at delay-prone airports such as Atlanta's, where AirTran has about 250 daily departures, the change could cost the average pilot about $3,500 annually, Philpot says.
Leonard, for his part, said on a conference call last month that AirTran's goal is to prevent any change in its cost per available seat mile, currently among the industry's lowest. "We can make adjustments in the contract to improve quality of work life [but] we want to make sure that we stay about CASM-neutral," he said.
The contract became amendable in April. Talks, which began in December 2004, were joined by a federal mediator in September. Both sides agree that things have moved slowly, with deals on just a handful of 19 contract sections. Discussions have been confined to about two days a month, although the pace appears to be quickening. Negotiators met Tuesday and Wednesday in Baltimore, and plan six more days of talks this month.
Philpot suggests that things could speed up, now that AirTran executives can compare their pilot costs with those at Delta Air Lines (DALRQ:BB) , where pilots approved a contract on Wednesday.
Kolski declined to comment specifically on the talks. Early this year, in an interview with the Atlanta Journal-Constitution, he called the pilots' proposals "extremely vague and undefined." He says it would be irresponsible for the company to increase pilot pay when the airline is barely breaking even. "This is the wrong time to increase our pilot costs, and we simply refuse to do it," he says.
AirTran's pilots are among the industry's lowest paid, says pilot spokesman Brian Gaudet. He says the average pilot makes about $78,000 a year, based on flying the guaranteed minimum of 70 hours a month. The airline's average pilot cost is $92 an hour, the lowest of any major carrier.
Pay is a secondary issue for pilots, who are seeking only cost-of-living increases and are focused on other matters that include seniority protection in the event of a merger and a reduction in the percentage of their insurance costs they are required to pay.
In addition, Gaudet says, more efficient scheduling would improve pilots' work lives and reduce costs. "AirTran keeps the overhead down and is very thin in systems technology," he says. "We think an investment in technology would optimize schedules and pay for itself."
Despite the conflicts, pilot leaders profess their admiration for Leonard, who they say has enabled the airline to prosper since joining as chairman in 1999. "We might pick on Joe a little bit, but the bottom line is he saved this company from certain disaster," Philpot says. "When he arrived, we were cash poor and close to bankruptcy." [/FONT]
