July 16, 2010 Newsletter

/ Teamsters Airline Division Week in Review News Letters / By

Arrow Air Bankruptcy being Watched by Division, Questions Surround Firing of Members

Arrow Air recently ceased its operations and filed for bankruptcy under Chapter 11 of the Bankruptcy Code.  Although the company filed under Chapter 11, it appears that the Company is undergoing liquidation.  The IBT Airline Division, through Local 1224, represents Arrow’s flight deck crewmembers.  Local 1224 have raised significant concerns about Arrow’s actions, including the Company’s purported discharge of the flight deck crewmembers, as well as Arrow’s steadfast refusal to honor the terms of the collective bargaining agreement and arbitration decisions.  The Airline Division is closing monitoring the situation in conjunction with Local 1224, and is evaluating its options as yet another airline bankruptcy fiasco unfolds.

UAL Talks Focus on Bringing the Best of Both Contracts Together

Negotiations for UAL mechanics reconvened at Teamsters Local 856 in San Bruno, CA on July 6th through the 9th. Prior to meeting with the Company, the Teamsters negotiating team had revised Article 4 to bring together the “best language” from both the UAL and CAL contracts, as well as newer language from proposals submitted to the committee. The new proposal comprises approximately 50% UAL language, 25% CAL language, and 25% new language.

In formulating the proposal, the Committee focused on protecting existing UAL language that benefitted the membership, and incorporating CAL provisions and new proposals to further enhance and supplement the current agreement. The weeks negotiations involved extensive discussions and good progress was reported, with more work remaining before agreement is reached on the article.

The Union negotiating committee also spent considerable time preparing additional articles for presentation to the Company later this month.

Negotiations will continue the week of July 26th in San Francisco.

CAL Negotiations Continue in Philadelphia

Negotiations for Continental continued this week in Philadelphia, PA this week under the auspices of mediator Gerry McGuckin. He assisted the group in reaching Tentative Agreements on Articles 4 and 10 (Seniority and Leaves of Absence). He also requested that both parties provide documentation that outlines the remaining open economic items.

The union has proposed a package addressing the open economic items in Article 7, 8, 9 and 11. The company briefly reviewed the package and indicated they will be performing an in-depth review and analysis of the proposal.  Once completed, the union will have their financial expert cross analyze and verify the company’s costing of the proposal.

A response was received from the company regarding the Union’s comprehensive proposal regarding Article 16 (Benefits). After detailed review of the company’s proposal, it failed to meet the Union’s expectations.

The negotiating committee will be meeting July 26th to the 28th to formulate economic responses and will meet with their economist on August 4th through the 6th in Houston to prepare the proposals to be presented and discussed with the company at the next session.

Boeing Delivers NewGen Tanker Proposal to USAF, Would Support over 50,000 U.S. Jobs

Boeing has delivered its proposal to the U.S. Air Force for its NewGen Tanker to replace the current KC-135 tankers that have been a mainstay of the military since the 1950’s. The new tanker, a derivative of the Boeing 767, would replace 179 of the aircraft currently in service.

The proposal document, some 8,000 pages in total was created by an integrated Boeing team from various divisions, proposes to deliver and provide service of a U.S. built aircraft that satisfies every requirement set forth by the military and will provide a multi mission platform that can be used for cargo and troop movements in addition to its refueling abilities.

Using the 767 aircraft, a proven airframe in commercial and military service worldwide, Boeing has updated the cockpit with the integrated 787 Dreamliner flight displays and more importantly a process that always gives the flight crew ultimate command of the aircraft, instead of others where computers can overriding the pilot decision making process. 

"We are honored to support our U.S. Air Force customer and submit this proposal to meet the critical mission needs of this nation," said Dennis Muilenburg, president and CEO of Boeing Defense, Space & Security. "Boeing has more than 60 years of experience developing, manufacturing and supporting tankers for America's war fighters, and we're ready to build the NewGen Tanker now. 

“This revolutionary tanker will deliver widebody capabilities in a narrowbody footprint; operate in any theater or from any base, and — with the lowest operating cost of any tanker in the competition — save the Air Force and the American taxpayers billions of dollars."

In addition to the upgraded flight deck, the NewGen Tanker will also utilize an advanced KC-10 boom with an expanded refueling envelope, increased fuel offload rate and fly-by-wire control system.

Boeing projects the NewGen Tanker will save American taxpayers an estimates $10 billion in fuel costs during a projected 40-year service life, based upon a 24% smaller fuel burn that the Airbus A330 Tanker being proposed by the European Aeronautic Defence and Space Co. (EADS). Boeing also projects their tanker also will cost 15 to 20 percent less to maintain than the A330, which means it will save taxpayers hundreds of millions of dollars in maintenance costs.

It is expected that the NewGen Tanker will support approximately 50,000 experienced and well trained employees at Boeing and approximately 800 component suppliers in more than 40 states, as opposed to a majority of jobs for the EADS/Airbus 330, which would be in Europe.

Boeing, in addition to supporting the current KC-135 and KC-10 fleet, has delivered four derivative KC-767J aircraft to the Japan Air Self-Defense Force and is delivering four KC-767As to the Italian Air Force.

Week In Review News Items

Legal & Regulatory  

A U.S. appeals court on Tuesday upheld a Transportation Department policy that would allow airports to charge airlines higher landing fees during congested periods of the day. In doing so, the court rejected arguments from U.S. airline trade group, the Air Transport Association, which had argued the fees were arbitrary and outside the scope of regulatory authority. "So long as it complies with the applicable statutes, its creativity should be welcomed on its merits, not spurned for its novelty," wrote Judge Douglas Ginsburg. 

Airlines will have to inspect the cockpit window heaters on 1,212 Boeing airliners and perhaps replace the windows under a safety order the Federal Aviation Administration said it plans to issue. The window heaters have been tied to dozens of incidents involving in-flight fires, smoke, open streams of electricity known as electrical arcing, and shattered windshields in Boeing planes. In many cases, pilots have made emergency landings. 

Airline Industry Finances & Structure

British Airways and Iberia on Wednesday won the European Union's regulatory approval to merge and to team up with American Airlines to share more of their lucrative trans-Atlantic routes. The companies say the two deals will help them cut costs and survive a tough business climate as they struggle with falling passenger numbers and industrial unrest…Virgin Atlantic Airways president Richard Branson is not one bit pleased that the European Commission has approved the partnership of his bitterest rival, British Airways, with American Airlines and Iberia. VA and BA compete fiercely at London's Heathrow Airport, and Branson and Co. has fought this proposal, plus two earlier attempts between BA and AA that were unsuccessful…and Lufthansa's cargo business is benefitting from rising demand for goods in China and growing appetite worldwide for Chinese goods, the airline's finance chief said. "The cargo business is currently absolutely booming.”   

Airline Unbundling

U.S. airlines make billions of dollars in fees for check-on luggage, refreshments and other services formerly included in ticket prices, but consumers have a hard time figuring out how much they'll pay in total to fly, a congressional committee heard Wednesday…unbundling and extra fees are causing travel buyers "serious problems", the Business Travel Coalition told a US hearing on airline fees…and as airlines boost their revenue by charging for bags, the carriers are siphoning tax money that the FAA depends on to fund airports and other services, according to a report released Wednesday by congressional investigators at the Government Accountability Office.   

  Miscellaneous

Germany plans to levy up to a 26 Euro ($33) fee for each passenger on flights under a plan aimed at taxing air traffic's impact on the environment and bolstering government finances…Boeing raised its forecasts for new plane demand on the growth of low-cost carriers, the replacement of less efficient aircraft and economic recovery…travelers used to getting a free wireless Internet connection on land aren't willing to pay for one at 30,000 feet. Wireless Internet service on airlines hasn't caught on, mostly because of the price…six legacy airlines have formed an organization to develop and promote a new electronic messaging system for content distribution based on XML standards…and opposition to new full-body imaging machines to screen passengers and the government's deployment of them at most major airports is growing.