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Beantown

Ex Chicken
Joined
Nov 26, 2001
Posts
564
A contract vote at Charlotte-based CCAir has become the focus of a bitter
fight between the airline pilots union and the airline's top executive, an
entrepreneur who has built a business operating small jets at low cost.

About 100 CCAir pilots are deciding whether to approve a new contract in
voting that began last week and concludes Wednesday. Operating as US Airways
Express, CCAir offers 30 daily departures from Charlotte to 12 small cities.

CCAir has said it will be forced to shut down if it can't reduce labor
costs. If the new contract is approved, executives say, the airline -- which
now flies 12 turboprops seating 19 to 39 passengers -- can enter the growing
business of flying 50- to 90-seat small or regional jets.

Although it offers incentives, including a year of pay for furloughed pilots
and a signing bonus, the proposed contract generally reduces wages and
tightens work rules. The reductions and changes are so severe, says the
national president of the Air Line Pilots Association, that the national
union can't approve it.

Without that approval, the contract cannot take effect, which means the vote
is essentially meaningless. "The contract is too flawed to accept," ALPA
President Duane Woerth said in an interview.

CCAir is operated by Phoenix-based holding company Mesa Air Group, which is
headed by Chairman and Chief Executive Officer Jonathan Ornstein. Woerth
compares Ornstein to Frank Lorenzo, whose bitter fight with union employees
at Eastern Airlines led to the airline's shutdown 11 years ago.

"Ornstein is following a classic playbook, a union-busting playbook," he
said. "He bought the company and shrank it, and now he says, `We'll grow it
again, but first you have to be the cheapest people in aviation.' "

After buying Eastern in 1986, Lorenzo moved key assets to a sister carrier,
Continental Airlines, which had lower costs. Woerth said Ornstein wants to
follow a similar course at three Mesa-owned airlines, directing new small
jets to the airline with the lowest wages.

Ornstein rejected the comparison with Lorenzo.

"If I felt there was a shred of truth to it, it would bother me," he said.
"But there's only one person saying it, and if Captain Woerth had taken as
much time as I have to know what our pilots want, he would know it was
untrue."

The contract battle has become a crucial issue for the Air Line Pilots
Association, the 64,000- member union representing pilots at 43 airlines in
the United States and Canada, because the use of small jets is increasing
rapidly.

"Even though CCAir is a relatively small player, it could become a chapter
in the history books, because the new frontier of airline labor relations is
being defined at regional carriers," said David Field, Americas editor of
Airline Business magazine.

Field called the outspoken Ornstein a trend-setter in the small-jet
industry, noting, "What he does should be closely watched."

Small jets became popular in the 1990s. They allow airlines to serve routes
that don't have enough traffic for bigger jets. But, historically, pilots at
the major carriers have opposed their use. Because small jets are flown by
small carriers with lower wages, major airline pilots fear the flying they
do will be transferred to the lower-cost alternative.

This puts ALPA in a tough situation, because it represents pilots at small
carriers such as CCAir and sister carrier Mesa Airlines, as well as at major
airlines. "ALPA has a moral obligation to represent all of its members, and
it's not easy," Field said.

Last year, more than one out of every eight U.S. airline passengers flew on
small or regional jets seating 50 to 70 passengers, according to the
Regional Air Service Initiative, a group of manufacturers and suppliers.
Airlines now fly about 800 small jets and have ordered 946 more.

The national union stepped into the CCAir battle last year, after CCAir
pilot union officials agreed to reopen a contract previously scheduled to be
in effect until November. In February, the national union refused to sign
off on a tentative contract agreement reached by local officials. A
tentative new agreement, with slight alterations, was negotiated in March.

Woerth said if CCAir needs financial relief, the union will provide that --
but not for the five-year term of the proposed contract. "I'm willing to
address near-term survival, but not with a blank check that has nothing to
do with the near term," he said.

CCAir President Carter Leake said changes are desperately needed at CCAir,
which is losing $700,000 to $800,000 a month after suffering a $7 million
pre-tax loss in 2001. Because pilots are the highest-paid labor group, their
contract is the key to reducing costs. CCAir has 142 pilots, including 80
slated for furlough and about 42 not eligible to vote on the contract
because they have less than a year on the job

The contract offer represents an effort to reduce CCAir's pilots wages to
more closely match those at Mesa Airlines. The differences are small in some
cases, but significant in others. Pay for a five-year first officer on a 20-
to 39-seat plane would fall from $31 to $24 hourly.

CCAir pilots normally fly about 1,000 hours a year; wages vary from about
$20 to $55 hourly.

Leake argues that, in some respects, the contract is better than the Mesa
contract. For instance, it includes a signing bonus of several thousand
dollars and a year of no-furlough protection. He said if CCAir survives and
gets contracts to fly small jets, pilots would be paid more than they earn
for flying turboprops.

"Captain Woerth has grossly underestimated this pilot group's resolve to
determine their own destiny, and he will quickly learn that the CCAir pilots
are not about to follow him into some quixotic campaign against Mr.
Ornstein," Leake said.

But a CCAir pilot, who asked not to be named, said the vote, being conducted
online, could be close. "A lot of people are clearly opposed to this
contract, but others are not," he said. "Really, it's hard to tell where
people stand. It's hard to know what they will do in the privacy of their
den."
 
Hey guys and gals,

The reason that I posted this was to get everyone's feelings about ALPA's power. Should they be able to reject a contract that the pilots ratify. We at CCair were taking steps to get rid of ALPA no long ago and in the ALPA meetings senior officials kept telling us how AlPA is run from the ground up. Each carrier and there MEC make the decisions. We (ALPA) just are here to advise and give legal advice.
We at CCair decided to stay with ALPA (at least in the near term) and then they come up with this crap. The new TA at CCair may or may not pass but if it passes and Mr. Woerth does not sign it, he is setting a BAD precedent that ALPA is all about ALPA and not each carrier and THEIR best interests. What do ya think? -Bean
 
Didn't J.O. dangle the ERJ/CRj carrot in front of you guys before, but requiring that the pilots take a pay cut then. Also, at one time, wasn't it CC Air the only one of the three Mesa Air Group certificates that was making money?
 
Steve, When Mesa bought CC three years ago, we were much bigger (well relatively speaking 22 planes and 240 pilots or twice as big) and he offered us all the east coast erj flying if we would take concessions to our contract. ALPA national told us to hold fast and you will get the planes anyway. We did. Well that plan bombed bad. Oriensten moved Mesa to the east coast and now they do all the flying of the erj's. Many at CCair remember this and don't trust ALPA national and there hold fast policy for good reason. They are still telling to not take concessions and that it will all work out in the end. Only this time CCair won't lose the jets, we will lose our jobs! -Bean
 
Beantown:

I wish the best for you guys. I have noticed that standard practice with Mesa is to pit one group against the other. When he was dangling the carrot in front of you guys three years ago, he was hinting that he would send the ERJ's out to you guys if the Mesa pilots didn't meet some of his terms.

On another note, why didn't he transfer the rest of the DHC-8-200's to you guys?

Best of luck.

SC
 
Beantown,

How can you not see that what ALPA is doing IS in your best interest? If you (and the rest of the pilots at CC Air) can't see what Ornstein is up to, that he is constantly making promises (not only at CC Air, but at all the Mesa group carriers) IF you will make concessions...in an attempt to find the absolute bottom dollar that any pilot group is willing to work for, then give that group the lion's share of the flying....and hopefully turn the pilot group against the union, and then break the union...then maybe you SHOULD take steps to get rid of ALPA. Then you will wind up with what you really deserve and Ornstein will get exactly what he wants. Another bargain-basement, non-union pilot group that will work for whatever pittance he is throwing your way this week.
 
trainerjet,
It is easy for you and ALPA to say b/c your jobs aren't on the line in this post 9/11 environment. Without some concessions, CCair is history. They have us by the balls. We are so small now we have no leverage. I was an economic major in Collage and some times companies and specifically employees, have to take a step back to move forward. If we get a few jets on the property we will be worth something and then we can get what we deserve. I understand exactly what Orienstien (sp) is trying to do but there is not much we can do about it if we want the company to survive. We all would like to have a merger list but it is not going to happen and we all know that. I will not be a martyr for ALPA. Not in this hiring environment. I have a house and bills and am not going to put myself on the street to say that I hung tough against Mgmt but they won anyway buy just shutting us down. J.O will still have Freedom to whipsaw the Mesa boys with so it will not solve that problem either.
We don't want Mesa's flying we want new growth flying. If it ends up that we get some of Mesa's jets so be it. They have no problem taking our flying and our routes (which they have done alot of in the last year.
And lastly, no one has answered my original question, Should National ALPA have the power to reject a contract that the pilot group voted in? -Bean
 
Just so everyone knows who your dealing with, and what his motives and tactics are.


Local airline plans non-union upgrade
Mesa fleet stays aloft in economic ill wind



Jack Kurtz/The Arizona Republic

Jonathan Ornstein, the risk-taking CEO of Mesa Air Group Inc., is launching a non-union carrier, Freedom Airlines, in a creative move to double the company's regional jet fleet and to sidestep labor restrictions from pilots unions.

By Hal Mattern
The Arizona Republic
March 24, 2002


During his career as an airline executive, Jonathan Ornstein has gained a reputation as a blunt-spoken risk-taker with a knack for rescuing troubled airlines and building employee morale.


Now he can add another adjective to his resume: shrewd.

Ornstein, chairman and chief executive officer of the Phoenix-based Mesa Air Group Inc., is launching a non-union carrier, Freedom Airlines, in a creative move to sidestep labor restrictions that threaten to ground his plans to nearly double Mesa's regional jet fleet.

The expansion plans come at a time when pilots unions and airlines across the country are battling over the growing use of regional jets, and when relations with the Mesa pilots union appear to be deteriorating.

That has led to speculation that Ornstein also is using Freedom to head off union efforts to exert more control over who can fly the jets and how much they are paid.

But Ornstein insists that creating the airline is purely a business move designed to assure the continued growth of the company.

"It's ridiculous that we have to go through these gymnastics for something that is good for the company, but we have no choice," he said. "We certainly aren't going to give up the business."

Ornstein said Freedom is being started to operate 40 new 64- and 84-seat Canadair regional jets that Mesa already had agreed to acquire over the next few years to fly routes for Tempe-based America West Airlines. Mesa flies regional routes for the airline under the America West Express name.

Ornstein said the planes are being shifted to Freedom to circumvent a restriction stemming from Mesa's partnership with US Airways to fly 50-seat regional jets in the East. A clause in the contract between US Airways and its pilots restricts the size of the jets the airline's regional partners can operate, even if they fly them for other carriers. That means Mesa cannot fly the bigger jets for America West Express, Ornstein said.

The only way to get around the union clause is to create an airline that is independent from Mesa and has no contractual ties to US Airways, he said. Plans call for deliveries of the new planes to begin later this year, and they are expected to generate $350 million in annual revenues once the expansion is completed.

Ornstein also defends his plan to establish Freedom without union representation, which he said is allowed under Mesa's current pilot contract. He said he plans to offer the pilots better pay rates and work rules at the new airline. If he fails to deliver, he said, they can always vote to unionize later.

"The pilots are going to be stunned by what I offer," Ornstein said. "I'm going to give our people the opportunity to fly these airplanes. If they don't want to, I'll have to hire someone else."

Union concerns

Officials of the Air Line Pilots Association representing Mesa pilots say they haven't received any offers from Ornstein, but they have made it clear that they wouldn't support a non-union Freedom. They want one collective bargaining agreement that covers all of Mesa's divisions - Mesa Airlines, Air Midwest, CCAIR - as well as the new airline.

"We don't care how he sets up his corporate structure," said Andy Hughes, chairman of the union representing Mesa pilots. "We're only concerned that we have one contract for all our pilots."

Hughes and Robert Henry, union vice chairman, sent a strongly worded letter to Ornstein last Tuesday, informing him that they wouldn't attend the airline's annual investor meeting this weekend in Telluride, Colo., a mixture of business and skiing designed to schmooze the financial community.

They accused Ornstein of failing to acknowledge the union's concerns about Freedom and criticized his handling of contract negotiations with pilots at CCAIR, a tiny Mesa division that flies five turboprops for US Airways out of Charlotte, N.C. They said Ornstein is threatening to shut down the money-losing division in July if its pilots refuse to accept concessions.

The union officials also said that Ornstein has used tactics designed to alienate and intimidate the pilots, and that by attending the meeting they would send an erroneous signal to investors that they fully supported management's business strategies.

"Clearly, labor relations have veered way off track at Mesa Airlines," they wrote.

There is speculation in the industry that by starting the airline, Ornstein is trying to block efforts by America West Airlines pilots to negotiate an agreement allowing them to fly the bigger regional jets. There apparently are concerns that the national pilots union will pressure Mesa pilots to support such an agreement, which would complicate contract negotiations with both carriers.

None of the parties would comment publicly on such speculation.

Ornstein's decision to start a new airline to dodge union restrictions is a prime example of the labor strife in the industry stemming from the increased use of regional jets. Airlines across the nation are using smaller planes, which essentially are stretched-out business jets that seat from 50 to 90 passengers.

They use them to replace turboprops on short feeder routes into their bigger airport hubs, and to serve markets with too few passengers to fill their large planes. The travel slowdown after the Sept. 11 terrorist attacks accelerated interest in using the smaller planes.

Airline officials say regional jets are more economical to operate, especially on routes where their big planes are flying half empty. They also say that business travelers prefer the faster, quieter regional jets to turboprops.

Union members, however, contend that they lose jobs when airlines contract out routes to regional carriers, which use their own pilots, flight crews and mechanics. Pilots have negotiated so-called scope clauses in their contracts, forcing many airlines to restrict their use of the smaller planes.

Industry competition

Ray Neidl, an airline analyst at ABN Amro, said that the US Airways scope clause is one of the most restrictive in the industry. It limits the airline to only 70 regional jets that seat 50 passengers each, making it difficult to compete with low-cost carriers such as Southwest, AirTran and JetBlue.

"They're getting killed by everybody because their costs are so high," Neidl said.

Now that financial pressures are forcing the wider use of regional jets, negotiations are under way at some airlines to lift the scope clauses and allow the use of more small planes. As a trade-off, pilots unions are insisting on "jets for jobs" agreements that would allow their members to fly at least some of the new regional jets instead of letting the airlines farm out all the business to regional carriers like Mesa.

Such a proposal at US Airways would require that half of any new regional jets be flown by pilots furloughed by the carrier after Sept. 11. The change likely would lift the restriction on the size of the jets Mesa could fly, and could boost the number of flights it operates for US Airways. But negotiations stalled earlier this month.

Ornstein said that because US Airways and its pilots are unlikely to resolve the issue soon, he is proceeding with plans to start Freedom, which is awaiting certification from the Federal Aviation Administration. He said he is confident that an agreement will be reached with Mesa's pilots, and suggested that he would be willing to include the new airline under the pilots union contract if the right terms could be negotiated.

Still, Ornstein, who blames labor demands for the financial problems at many major airlines, said he won't allow the union to derail Mesa's expansion plans.

"I'm not anti-union," he said. "But Mesa is one of only four airlines that were profitable (after Sept. 11), and we're the only ones buying the bigger regional jets right now. The other airlines can't because their unions won't let them. I'm not going to let that happen here."
 
Beantown said:

And lastly, no one has answered my original question, Should National ALPA have the power to reject a contract that the pilot group voted in? -Bean

I'll give it a try. In a word, the answer to your question is, YES! That power is vested in the President by the Constitution of the ALPA.

If you read other threads on this board you will know that I've have quite a few axes to grind with the ALPA so, I'm not just taking their side.

As far as I know, it is extremely rare for this to happen. However, it has happend before. That doesn't mean that ALPA is right in the specific decision, but the authority to do it does exist. If you'd like to do some research, take a look at what happened when American left ALPA. Look also at what happened with the original Frontier. In those cases, I think ALPA was wrong. In your case I think ALPA is right.

In your specific case, I understand your concern about losing your job. I don't know what your TA contains, but let me ask you this. If you accept the contract that the Company wants, does it include any guarantee of how many jets you will receive and when you will get them? Does it include what you will be paid to fly them? Are those two questions answered specifically in your proposed contract or are the answers just promises? I think I know what your answer will be, but I'd like to hear it from you.

I believe your management is deliberately playing you against the other pilot groups in the other airlines that they own. You seem willing to allow them to do that in order to keep your job. I think that is a major error. Perhaps it will result in your keeping the job for a while. Is there anything to prevent JO from shutting down the company after you've signed? Please don't tell me that it's your one-year no-furlough clause. A no-furlough clause means nothing when the company shuts down.

You said:
I was an economic major in Collage and some times companies and specifically employees, have to take a step back to move forward. If we get a few jets on the property we will be worth something and then we can get what we deserve.

Congratulations on your education. Now, how much of your economics training focused on the airline industry? Were your professors pro union, anti-union or neutral? Unless you attended a very unusual school, the probability is that your training was "business" oriented, i.e., from the management perspective. While you cannot ignore that perspective, you are now labor, not management. There aren't too many managers concerned about your job security and the CEO of your particular Company isn't one of them.

The jets you might get today, can be moved again tomorrow when the next group undercuts your new contract. You will NOT get what you deserve, you will get what you negotiate and usually, less than you THOUGHT you negotiated.

As professional pilots we have risks related to job security that are legend. We all have bills, mortgages and families to feed, just as you do. Sometimes we have to take concessions to help the Company survive. Those concessions, if we take them, should have a date certain on which you will be returned to "normal". It's like making a loan. When the bank lends you money, you must agree to repay it at a specified time. When you lend the Company money in the form of a contract concession, the Company must agree to repay you at a specified time, with interest. If your new TA does not do that (I suspect it doesn't), then there's a scam in progress and YOU are the victims.

Do not let 9/11 panic you. There are jobs available in your category. If you have the qualifications, you will get one, just like you got the one you have now. What would you do if you lost your medical tomorrow? Give up? I certainly hope not. There is no need for you to give up now.

Your desire to take what is being offered appears to be motivated by a fear that is normal and that we all have in this business from time to time. If you plan to make a career of airline flying, you must learn to overcome that fear and stand up with your brothers for what is right! Don't sell out for what is expedient. If you do, you will live to regret it.

As you point out, your company is small. It could dissapear and the industry would not notice. You will of course and I can appreciate that, but sometimes we have to bite the bullet and do what is right even if we suffer a temporary personal loss. I think your decision is in that category.

If your contract is bad enough to where the President of the union is actually refusing to sign it, examine what you do very carefully. Do not allow the company to convert what is really a struggle between you and them, into a struggle between you and your fellow pilots. That is the Company's objective. It's not about wanting to give you jets in preference to someone else.

Keep this in mind. What the union can do or should not do is really not what's important here. What you will do to fellow airline pilots, in your own airline and in others is what really matters.

Maybe, just maybe, your concessions will "save CCAir", though I doubt it. After you've made them, ask yourself if CCAir is worth saving? If things are that bad, I suspect it isn't.

Yes, I know it's easy for me to say that but I'm serious. I come from a Company that was among the biggest and definetly the strongest regional airlines in the business. One year ago, almost to the day, my pilot group risked the whole thing and walked the picket line for 89 days for what we knew was right! With all due respect, we had a lot more at stake than you do today. Bottom line is this: If you know that contract isn't what it should be (I think deep down you do know that), then don't take it! If that means the Company will go out of business, then let it. Start looking for a new job NOW.

JO is trying to sell you ocean front property in Arizona. Don't buy it. It's not often you'll get me to say that DW is right about regional pilot issues, but this time I think he is.

I wish you all the very best.
 
Beantown:

Another question to ask yourself, has J.O. ever followed through with anything he has promised your pilot group? Have you ever heard the words "industry standard" and "you will make more money than you ever made before". If so, beware.
 

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