UAL Pilots Deal Raises Labor Expectations, Costs
<B>UAL Pilots Deal Raises Labor Expectations, Costs</B>
By David Jonas
The nation's airlines benefited from United Airlines' labor woes this summer through displaced passengers and revenue, but now they face the prospect of more demanding employee unions following United's pilot approval of a landmark labor agreement.
As expected, United pilots, represented by the Air Line Pilots Association, late last month soundly approved the tentative agreement reached in August with carrier management. The contract, which grants pay increases up to 28 percent for the carrier's 10,500 pilots, was given the nod by more than 95 percent of voting pilots. While effectively ending a difficult chapter in the carrier's history--including a summer of delays, forced cancellations, customer defections and rebates for corporate clients--the approval opens a new era of mounting labor costs both within United and across the industry.
In a research note to investors, PaineWebber airline analyst Sam Buttrick said "ever-complacent" business travelers will be expected to cover these increasing costs. "United's labor costs are not one-time, they are permanent," he said. "And they will in time, barring a severe industry downturn, ripple throughout the industry."
United's flight attendants and machinists plan to make their voices heard and leverage the deal given to their pilot counterparts. In fact, the Association of Flight Attendants set a Saturday deadline for United management to respond to its latest proposed renegotiated contract and has threatened to wield its power through job actions, if necessary. The International Association of Machinists, representing 30,000 mechanics and related workers, recently began two weeks of negotiations with carrier management in Washington. The union called the recent talks on its contract, which became amendable in July, "intense." In negotiations now in their 10th month, the union's stance has been "guided by the principle that the results we achieve meet or exceed the industry maximum in every area."
Meanwhile, 9,600 pilots at Delta Air Lines last week heard the first phase of the carrier's response to an initial ALPA contract proposal. Management's compensation offer is an average pay increase of 17.5 percent for mainline pilots and 13.2 percent for Delta Express pilots. Mainline pilots would be the highest paid in the industry until United's next annual increase kicks in, but also would earn additional compensation based on performance and carrier profits. Delta is expected to respond to other contract items next month. Delta chief Leo Mullin told shareholders late last month that the overall pilot contract offer would be "industry leading," using the United contract as a baseline.
American Airlines' 10,500 pilots earlier this fall rejected a tentative agreement after seeing their United counterparts score big. The Allied Pilots Association's long-time president Rich LaVoy, vice president Brian Mayhew and secretary treasurer Bob Morgan resigned late last month amid controversy surrounding the contract rejection. APA this week will name interim appointees who will return to the bargaining table with AA next summer. APA also is considering whether to join forces with ALPA, which recently approved a resolution to fold in any other North American pilot groups not yet represented by the organization. That includes 6,500 Continental pilots now represented by the Independent Association of Continental Pilots. IACP will vote early next year on merging with ALPA.
Meanwhile, IACP already named its negotiating team to amend its contract in October 2002. "We are preparing early because this round of negotiations will be the most important in the history of our union," said Capt. Pat Burke, IACP president. "The recent pilot settlement at United Airlines will leave our members 31 percent to 43 percent behind what is now the industry standard.