Airline Division News Items
Teamsters Have Good Meeting with Congressman Steve Cohen (D-Tenn) Regarding Airline Bankruptcy Reform
The Teamsters have been pursuing reform of the bankruptcy code by having Section 1113 of the code modified to exclude airlines, just as railroads are currently excluded. Section 1113 allows judges to abrogate union contracts by following certain procedures. The Teamsters and USAPA met with Congressman Cohen to pursue this change. The meeting went well and was very productive.
Flight Options Pilots are Moving Closer to a Contract Through NMB Mediation Process
Negotiation sessions were held July 7 through July 9 in Cleveland . Some 20 sections have been tentatively agreed to (TA'd) and 8 are still in discussion and two have yet to be proposed. Management is working on a "comprehensive response" to the union's outstanding economic and scope proposals. The next bargaining session is being held on July 16 and 17 in Clevelandand another session will be held the week of August 17. The Mediator has scheduled a bargaining session for the week of September 14 at the offices of the National Mediation Board in Washington, D.C.
Arbitrator Sides with United in the OSV Outsourcing Grievance
The grievance alleged that UAL exceeded the contractually-mandated 20% limit on outsourcing in calendar year 2005. The Company contended that since 1998, the lAM had agreed to a specific methodology and fraction-based formula to measure the Company's compliance with the 20% limitation. In this regard, the Company claimed that the lAM agreed to dilute the fraction-based formula by excluding material costs from the formula's numerator while keeping those costs in the denominator (thereby resulting in a diluted or smaller percentage). The Company contended that since 1998, the lAM had agreed to a specific methodology and fraction-based formula to measure the Company's compliance with the 20% limitation. In this regard, the Company claimed that the lAM agreed to dilute the fraction-based formula by excluding material costs from the formula's numerator while keeping those costs in the denominator (thereby resulting in a diluted or smaller percentage). The lAM and then, when it replaced the lAM, AMFA, disagreed with the Company, and argued that the contractually-agreed upon compliance formula required that material costs be included in both the numerator and the denominator.
The Arbitrator ruled that the lAM and the Company had indeed agreed to exclude material costs from the compliance formula's numerator while keeping those costs in the denominator. Unfortunately, in so doing, the Arbitrator credited the Company's testimony and evidence over the clear and credible testimony of the Union witnesses who had been involved in the negotiation of the 20% limitation during the lAM and AMFA days.
Congressman Jerry Costello (D-IL) Hosts a Private Discussion with Pilot Unions
The Teamsters Airline Division and USAPA, CAPA and ALPA met with Congressman Costello and his staff to informally discuss issues of concern to pilots. The Aviation Subcommittee Chairman was gathering information for crafting a bill on pilot training and safety.
New Airline Division Web Page is Up and Running
The new Teamster Airline Division web page was launched this week. Still in the development stage is a forum section which will have separate areas by airline and be divided by craft and major subdivisions such as cargo, regional, etc.
Week in Review News Items
Labor Developments
Pilots at Air Canada have narrowly approved an agreement to help the cash-strapped carrier stave off bankruptcy. USAirways is cutting 600 ground jobs this fall as it continues to struggle with the slow economy. The pilots union at Delta Air Lines said more than 200 pilots, almost all of them from merger partner Northwest Airlines, have taken retirement incentive packages. Of the 215 pilots who signed up for the package by the deadline Wednesday night, 201 were from Northwest. And Steve Crosby, a senior managing director of the securities and investment practice at PricewaterhouseCoopers, says Corporate America's massive wave of off-shoring could come to a grinding halt. Rather so-called "near-shoring" will regain vogue status in these tough economic times.
Regulatory & Safety
The cause of Wednesday's tragic air accident, in which 168 were killed on board of Tupolev Tu-154, en route from Tehran, Iran, to Yerevan, Armenia was a technical failure, not a pilot's mistake. The announcement was made by Ahmad Majidi, Iranian deputy-transport minister.
Inspections revealed no problems with Boeing 737-300s flown by Southwest Airlines following an emergency landing by one of the carrier's planes due to an unexplained hole in its fuselage, the company and US regulators said Tuesday. Noting that airlines continue to rely on "out of date" ground-based radar, aviation operations, safety and security subcommittee chairman Sen. Byron Dorgan (D-N.D.) said the reauthorization bill proposes to move up the dates for air traffic control modernization deadlines. The bill also seeks to increase oversight of foreign repair stations used by U.S.carriers. Some are also questioning the domestic U.S.
resources devoted to checking the mechanics that repair airplanes. In recent years, the number of foreign mechanics being brought into the U.S.to repair airliners has ballooned.
Airline Financial Difficulties
Glenn Tilton's turnaround at United Airlines is turning into a round trip to financial purgatory. Chicago-based United's cash is evaporating as the recession chokes off air travel. With more than $1.5 billion in debt coming due by next year, Mr. Tilton can only hope the economy recovers before the cash runs out. The recession, plunging travel demand and a tough lending environment are battering U.S. airlines, raising the prospect of a liquidity squeeze that could lead to bankruptcy filings by winter if conditions don't improve. And Air France-KLM faces a bigger loss and will run low on cash next year if air traffic does not pick up and oil prices reach new highs.
Global Airline Industry Developments
Fresh concessions to regulators from Lufthansa to push through its purchase of Austrian Airlines made a successful deal seem more likely and sent the Austrian carrier's shares higher Friday. The European Commission said late on Thursday that the German flagship carrier had submitted a new proposal aimed at tackling antitrust concerns over the deal. British Airways is ready to accept close to a 50-50 ownership deal for a merger with Iberia. In exchange, the Spanish airline is prepared to shoulder its share of a shortfall in BA's pension fund, the paper said. Finalizing a major consolidation for China's troubled aviation industry, China Eastern Airlines said it would buy its smaller rival Shanghai Airlines in a share swap.