Pinnacle sets the standard for regional airlines

aobt14

Well-Known Member
Well it appears that the new Pinnacle contract has set the stage for the future of regional airlines. Pay will be cut even more all across the board and I think Eagle might disappear sooner rather than later. I was considering putting in my application but this article has me worried. Does anyone think it holds any merit?

Edit: Article is below

The Air Line Pilots Association unit at American Eagle is telling its 3,000-plus members that a new pilot contract at competitor Pinnacle Airlines Inc. is pushing other regional carriers to bring down their labor expenses as well.

By TERRY MAXON
Staff Writer
Published: 09 July 2013 08:29 PM
Updated: 10 July 2013 10:08 AM
Pilots at American Eagle are under new pressure to accept more cost cutting, less than a year after they swallowed a concessionary contract, their union leaders are warning.
The Air Line Pilots Association unit at American Eagle is telling its 3,000-plus members that a new pilot contract at competitor Pinnacle Airlines Inc. is pushing other regional carriers to bring down their labor expenses as well. Pinnacle is owned by Delta Air Lines Inc.
As a result, the union’s master executive council at American Eagle has voted to negotiate with American Airlines Inc. management to see if there is an acceptable solution.
“We’re committed to finding our way through this challenge,” Dave Ryter, vice chairman of the master executive council, said Tuesday.
The demands are coming as US Airways executives prepare to take over the top jobs at merger partner American Airlines Inc. In early meetings, US Airways leaders have told ALPA officials that American Eagle needs to lower its costs to compete with Pinnacle.
Representatives for US Airways and American declined to comment Tuesday on the American Eagle negotiations.
The new contract talks are “the right course of action,” Tony Gutierrez, president of the master executive council, told pilots in a hotline message Monday.
“It is not uncommon for me to hear pilots state, ‘Tell the company that we’re done negotiating with them,’ or ‘Tell the company we already have a bankruptcy agreement.’ Although these statements may sound simple and even correct, they are not,” Gutierrez wrote.
“It is not the job of your elected representatives [the MEC] to decide whether to shrink Eagle’s flight operation into non-existence. It is their job to fight vigorously to bring pilots as many viable options as possible so that you can decide the fate of your own career,” he wrote.
The ALPA unit at American Eagle agreed to deep cuts in October 2012 as part of the bankruptcy reorganization of American Eagle, American and parent AMR Corp. However, those cuts didn’t slice as deeply as a subsequent concessionary contract agreed to by Pinnacle.
In his hotline, Gutierrez said the union understood that Pinnacle had lower costs than American Eagle and other airlines. The union considered the Pinnacle contract an “outlier and not a likely industry trend,” he stated.
However, Delta has since made public a significant point: It can reset the hourly rates it pays its regional partners to match the rate paid to the second lowest of its partners.
“As a result, Delta’s announcement made public its ability to drive all of its regional feed costs near Pinnacle by the end of 2017,” Gutierrez wrote. “Because nearly fifty percent of all mainline departures are flown by regional partners, the competitive advantage that Delta is threatening to realize is massive.”
Before its bankruptcy filing Nov. 29, 2011, AMR had intended to spin off American Eagle as an independent carrier. The bankruptcy put those plans on hold. The carrier’s future was put in further doubt after American and US Airways announced Feb. 14 that they planned to merge.
Airline officials have not made public the details of the requested concessions. Ryter declined to discuss the specifics of US Airways’ June 12 presentation. “US Airways specifically asked that their proposal stay confidential,” he said, “so I’m not at liberty to discuss it.”
Some union officials have told members that US Airways’ proposal would pay new pilots less than current pilots receive. A Miami-based union leader said in a July 1 message that the “hypothetical proposal would have limited changes to current pilots; however, all future pilots would have a lower pay rate, 401(k), and medical benefits.”
Among the things at stake is a potential order for 76-seat regional jets, which are larger than any aircraft now flown by American Eagle.
After Delta made public its arrangement with its regional carriers last month, US Airways told ALPA that “it is not willing to place the next ‘large’ RJ [regional jet] order at Eagle or any other regional airline that does not have a plan in place to trend toward Pinnacle’s cost structure,” Gutierrez told members. “And that is where we find ourselves today.”
Published reports indicate that American has been talking to Brazilian aircraft manufacturer Embraer about an order for 76-seat jets. An American spokeswoman declined to comment Tuesday on any such discussions. http://www.dallasnews.com/business/...le-pilots-face-new-cost-cutting-pressures.ece
 
From our new york reps today:
As you are undoubtedly aware, USAir management is asking your MEC to broker a deal to achieve further cost reductions as related to pilot labor. I’ll give a very brief history, a best and worse case scenario, and call for you to advise Phil & Me how you’d like us to proceed.
How we suddenly got here:
Delta Airlines CEO Richard Anderson announced during a recent Wall Street investors teleconference that he had Pinnacle, GoJets and Compass as low cost regional feed providers and that 50% of Delta’s feed (which itself is about 50% of the total Delta operation) was performed at Pinnacle costs. A clause in Delta’s Air Services Agreements (ASA) allows Delta to reset what it pays to its more costly feeders to closely align with the more ‘competitive’ rates. This occurs whenever larger aircraft are placed into service and/or at given time intervals. So, in short, Delta says a large portion of it’s domestic operations are performed at these low rates and by 2017 all of it's regional flying will be at those rates.
USAir/AA’s game-plan is not only in flux, but it’s being watched and supervised by Wall Street, the courts and management types who have something to prove to the world. For these reasons, they compelled to match their biggest competitor’s (Delta’s) costs. Hence the request for concessions.
Your MEC did meet with Scott Kirby and the rest of the USAir Senior Management recently where the above was discussed with more specificity. The new USAir bosses seem genuinely interested in the well-being of their acquisition and want to honor the deals we struck with AMR that honor our sacrifice and performance. Hence the concept of a B Scale: Leave us alone, while throwing the unborn into a future cost structure that has a downward trajectory.
My crystal ball is foggy. I have no way of knowing whether Pinnacle style pay-rates and career progressions are part of a sustainable regional airline model. Nobody knows how Delta’s other feeders are going to react when forced to slash their costs (and inevitably lower pilot pay rates). But that isn’t really the point, because that’s in the future. USAir wants to prove to Wall Street that they can run the operation with a similar or better cost structure today.
I do believe the tightening requirements of Part 121 First Officers will greatly reduce the number of individuals willing to slave away for $25k. There simply is no justification for an ATP qualified pilot to be earning anything less than a salary truly commensurate. The regional airline industry must quickly wean itself off the notion that someone who has invested the time and energy necessary to become an ATP (even a restricted ATP) is going to work for $25k a year. Like crack addicts, the sooner there is an intervention, the sooner the healing can begin. Management must shift to the new paradigm, and quickly. Those who get it right first will have the cream of the pilot crop.
What’s the worst case?
We get Comair’ed. Using Comair’s size as a rough model, I can tell you that I think it entirely realistic that AAG (the new AMR) could retire the Eagle certificate by mid 2016 to early 2017.
What’s the best case?
That’s actually a trick question: there is no best case right now. Ideally, management grows us and takes a bold, industry leading step to attract and retain pilots and provides a cradle to grave career progression with compensation befitting ATP pilots while honoring the pain and sacrifice this work group has endured. Having seen the plan, I can safely say that's not the works.
Again, I don’t have a crystal ball, but it’s no secret AAG is about to order several dozen planes. Maybe we will get a few new aircraft to offset the departing ones. Maybe not. And next time AAG wants to buy a few more, we’re going to have face this same issue again: will we match the industry's lowest cost carriers in exchange for aircraft?
Status quo is not good, and isn't sustainable. Eagle can not survive with the status quo. Worse than the airline shutting down, it means stagnation for everyone until the lights get turned out. If you’re a senior CA, you’ll stay that way. If you’re the most senior FO, you’ll probably stay FO. With no growth, with nobody coming in the bottom, there will be no career progression.
Sadly, I think this is a concern no matter how many concessions we give. If AAGdoesn’t invest in Eagle and keep us a bright, shining star and chooses to instead give nice, new airlines to some other carrier I believe Eagle will implode faster than management can wind it down. Performance will quickly languish, dependability will plummet, and FOs will leave for greener mainline or international pastures. Or leave the industry altogether.
The choice ahead is tough. It’s something pilot groups have been facing for quite some time and the pattern is well established: Do I take a haircut and live to fight another day? Or do I stand and say “no more!”
I, for one, am not inclined to attempt to match the industry's lowest costs. Right now they ARE the outliers. I can’t imagine anyone struggling to get an ATP and then going to any airline other than the best paying one. But if we match them, then they become the new de facto standard and the entire industry will follow and we will absolutely eat this at the next amendment round, if not before.
Make no mistake, we’re not alone. Republic, Air Wisconsin and Skywest pilots to name a few are in negotiations with their respective managements over pilot compensation. They’re probably being told they need to acquiesce quickly lest Eagle pilots lower the bar further!
The race to the bottom continues, and we haven’t found bottom yet.
Ladies and Gentlemen of New York, as I wrote when I ran for office, I’m not inclined to enable that race any further. I have outlined the risks involved, but right now I am inclined to invite Mr. Kirby to place his new aircraft elsewhere if it requires me to allow him a B Scale. I represent you, dear friend, to management. You elected me to this position, and contrary to our Chairman’s email of a few days ago, I am completely comfortable with the concept of the Status Reps (MEC) functioning in our role of governance in that ALPA is a Republic, not a democracy. I am completely comfortable voting NO on something that I believe is so wrong it doesn’t even warrant going out for a general pilot ratification.
Now is the time for you to speak up if you feel I am misguided or plain wrong. My understanding is that there is a vote on Monday on how to proceed. If you have comments, suggestions, or feedback please email me ASAP at sam.pool@alpa.org.
Regards,
-sam-
 
Skywest just got a lot of new flying/planes and they have the best regional pay/contract. If they can do it then so can the rest. /end thread
 
Reposted for format adjustments:




-Derg

--------------------------------------------------------------------------------------------

The Air Line Pilots Association unit at American Eagle is telling its 3,000-plus members that a new pilot contract at competitor Pinnacle Airlines Inc. is pushing other regional carriers to bring down their labor expenses as well.

By TERRY MAXON
Staff Writer
Published: 09 July 2013 08:29 PM
Updated: 10 July 2013 10:08 AM

Pilots at American Eagle are under new pressure to accept more cost cutting, less than a year after they swallowed a concessionary contract, their union leaders are warning.


The Air Line Pilots Association unit at American Eagle is telling its 3,000-plus members that a new pilot contract at competitor Pinnacle Airlines Inc. is pushing other regional carriers to bring down their labor expenses as well. Pinnacle is owned by Delta Air Lines Inc.


As a result, the union’s master executive council at American Eagle has voted to negotiate with American Airlines Inc. management to see if there is an acceptable solution.


“We’re committed to finding our way through this challenge,” Dave Ryter, vice chairman of the master executive council, said Tuesday.


The demands are coming as US Airways executives prepare to take over the top jobs at merger partner American Airlines Inc. In early meetings, US Airways leaders have told ALPA officials that American Eagle needs to lower its costs to compete with Pinnacle.

Representatives for US Airways and American declined to comment Tuesday on the American Eagle negotiations.

The new contract talks are “the right course of action,” Tony Gutierrez, president of the master executive council, told pilots in a hotline message Monday.

“It is not uncommon for me to hear pilots state, ‘Tell the company that we’re done negotiating with them,’ or ‘Tell the company we already have a bankruptcy agreement.’ Although these statements may sound simple and even correct, they are not,” Gutierrez wrote.

“It is not the job of your elected representatives [the MEC] to decide whether to shrink Eagle’s flight operation into non-existence. It is their job to fight vigorously to bring pilots as many viable options as possible so that you can decide the fate of your own career,” he wrote.

The ALPA unit at American Eagle agreed to deep cuts in October 2012 as part of the bankruptcy reorganization of American Eagle, American and parent AMR Corp. However, those cuts didn’t slice as deeply as a subsequent concessionary contract agreed to by Pinnacle.

In his hotline, Gutierrez said the union understood that Pinnacle had lower costs than American Eagle and other airlines. The union considered the Pinnacle contract an “outlier and not a likely industry trend,” he stated.

However, Delta has since made public a significant point: It can reset the hourly rates it pays its regional partners to match the rate paid to the second lowest of its partners.

“As a result, Delta’s announcement made public its ability to drive all of its regional feed costs near Pinnacle by the end of 2017,” Gutierrez wrote. “Because nearly fifty percent of all mainline departures are flown by regional partners, the competitive advantage that Delta is threatening to realize is massive.”

Before its bankruptcy filing Nov. 29, 2011, AMR had intended to spin off American Eagle as an independent carrier. The bankruptcy put those plans on hold. The carrier’s future was put in further doubt after American and US Airways announced Feb. 14 that they planned to merge.


Airline officials have not made public the details of the requested concessions. Ryter declined to discuss the specifics of US Airways’ June 12 presentation. “US Airways specifically asked that their proposal stay confidential,” he said, “so I’m not at liberty to discuss it.”


Some union officials have told members that US Airways’ proposal would pay new pilots less than current pilots receive. A Miami-based union leader said in a July 1 message that the “hypothetical proposal would have limited changes to current pilots; however, all future pilots would have a lower pay rate, 401(k), and medical benefits.”


Among the things at stake is a potential order for 76-seat regional jets, which are larger than any aircraft now flown by American Eagle.


After Delta made public its arrangement with its regional carriers last month, US Airways told ALPA that “it is not willing to place the next ‘large’ RJ [regional jet] order at Eagle or any other regional airline that does not have a plan in place to trend toward Pinnacle’s cost structure,” Gutierrez told members. “And that is where we find ourselves today.”




Published reports indicate that American has been talking to Brazilian aircraft manufacturer Embraer about an order for 76-seat jets. An American spokeswoman declined to comment Tuesday on any such discussions.
http://www.dallasnews.com/business/...le-pilots-face-new-cost-cutting-pressures.ece
 
That's funny, Mesaba was told we had to be at Pinnacle's cost structure too during the last bankruptcy, pre-wholly owned. Instead we were the second most expensive airline after the snapbacks. That's because even with the old bankruptcy law, you can't screw over an airline pilot group whose owners have hundreds of millions in the bank.

Is American Eagle on it's last 20 million with liquidity on the horizon? Do they have 3100 pilots, of which, 2100 won't have jobs even after they park 3/4s of the fleet? Pinnacle business failed, their only way out was parking everything that didn't say delta on the side, and 140 planes that do; surprise, we'll be parking or selling the rest too. We were told to get our costs below BlowJet's, which we didn't end up doing. If they set the bar at Pinnacle you're certain to be above us, Republic, and GoJets.

Of course they want to award new flying to the cheapest people out there. We've got something like 60% completion the last time I looked. We just "updated" the crewweb system, and we're using paper and pen to figure out our duty days. Come on boys, we can't wait to not fly your airplane too because we are too inept. Mesaba could never perform like Skywest or ASA EVEN when Northwest/Delta owned them. The Pinnacle pilots that got this place the best on time performance in the industry have mostly left for Virgin, Jetblue, Pizza Hut, Us Airways- and the ones that are still here will be FO's soon (followed by furloughed). The Colgan guys don't even mind because after all this bankruptcy, it's still a pay raise from Colgan's FlOP. Most of those guys will be out the door soon too because they've got the time and the connections to get out. The other's are now junior to me and if they haven't left for Republic or Gulfstream yet, they will be out the door two months before me.

Come on baby, bring them on in American, you too can get bargain pilot prices for an operation that can't put a biscotti in a passengers mouth because we already cancelled the flight. Please tell me you have Pepsi, I can't wait to get a Mountain Dew from the galley cart in MIA while I read up in the Terminal because the reserve captain assigned to the flight was never told to report, catch a deadhead.

We are Team Fail right now, and it's clear what I said months ago is true: Guum-ball has no plans on how to fix the fundamental problems at this airline. That's fine though, we will all be on to another airline soon.
 
Quick though, I wanna climb into the cockpit of one of those EMB-145s before I get my furlough notice. I won't have a captain but it'll be fun to see what all the switches do!
 
If our contract ever gets finished at surejet and I'm making any less than I currently am my vote will be a no every single time. I'd rather leave the industry than sacrifice more than I already have just to be able to fly planes. We need to grow balls.
I'm not trying to pick a fight with you, but point out something I see with this argument.

There was a political cartoon awhile back that was of a driver filling up his Hummer at the gas station over a period of time. In each scene, the gas price goes up, the owner *swears* if the price goes up again, he will sell the SUV. You can see where this cartoon is going-prices keep going up, the threats become more aggressive, but the action is the same-the guy keeps his SUV.

I can't Google search that cartoon for the life of me.
 
I'm not trying to pick a fight with you, but point out something I see with this argument.

There was a political cartoon awhile back that was of a driver filling up his Hummer at the gas station over a period of time. In each scene, the gas price goes up, the owner *swears* if the price goes up again, he will sell the SUV. You can see where this cartoon is going-prices keep going up, the threats become more aggressive, but the action is the same-the guy keeps his SUV.

I can't Google search that cartoon for the life of me.

I hear you, and I understand its more difficult to do when the time actually comes, but my job satisfaction right now is already in the toilet. Actually not my job satisfaction per say, but the stagnation in my financial situation. I'd like to stay in the industry because I really do enjoy what I do. But I'm getting to the point in my life that being able to provide for my family is getting to be of higher importance than being able to fly airplanes. Watching the light at the end of the tunnel continue to get further away is getting pretty damn frustrating.
 
Oh look. Pinnacle voting in that deal completely screwed over the rest of the industry. What a surprise.
 
But I have a wife and kids to provide for. I just have to be able to continue flying a jet. I'll vote yes to whatever it takes as long as I can do that.
 
Yeah, hope they are happy for selling the rest of us out. Nice
Actually I'm about to go sleep just fine in another 15 min (3 min now since I wrote this). I'm happy a lot of the time.

Our vote wasn't about you, or the industry, it was about us. It was bankruptcy, not Section 6. The Phil Trenery business model failed and we voted to take huge hits to our pay to keep the doors open so they could re-organize. Mesaba, at our worst, still had a company with hundreds of millions in the bank. We had to deal with deal with Colgan, Gulfstream, Great Mistakes, and (of course) Big Sky payrates, never mind the Mesa's, Transtates, and who the hell ever else was working for nothing and we came out big.

If we'd voted no, then you all would be congratulating us and talking about "how great it was" those Pinnacle pilots shut down their company and our airplanes went out for another bid, probably GoJets. Your, and other's undying pats on the back don't pay the bills. You'd still have market pressure from GoJets to lower the bar.

There is no unity. Pattern bargaining is a failure. The pilot who sells himself cheapest wins, as long as the pilot group doesn't crash too many airplanes. If it does and it's handled right, you'll still likely see more airplanes. This is your industry, it's been crumbling for a while.

Pinnacle had an honest to God meltdown, and ALPA and the brother and sister pilots out there couldn't fix that. You can't change the law or come to a bankruptcy court whining about "what's fair". Hell even the bankruptcy judge in NY refused the Pinnacle terms in the ask and said he wouldn't help precipitate a race to the bottom. The negotiations got turned around, and the only way to get what we have now (remaining soft pay) was to give them a long term contract. The contract isn't the worst paying one out there.

Furthermore, the company comes out and gives you their first offer, make sure you have a giant ass meltdown online. Truthfully that's what fixes your bargaining. Do I wish Mesaba never was bought by Pinnacle, that we never had to deal with bankruptcy? Sure. I wish that Skywest had bought us and tossed us in with ASA/XJT. At least we'd be at a company that makes money instead of pissing it all away. Pinnacle pilots didn't have a fighting chance, and now we are wholly owned because there was NO business model going forward without Delta providing our financing and "selling" us their lift.
 
This industry sucks. I have offers from Republic, Eagle, and xjet. Would like to stay in Miami, but Eagle looks like a huge gamble. Republic seems to be like selling my soul to the devil, but offers stability. Xjet is a commute to ATL (at best).

Wife + 2 kids + airline job = ?
 
But I have a wife and kids to provide for. I just have to be able to continue flying a jet. I'll vote yes to whatever it takes as long as I can do that.

Forgot the sarcasm tag, Trick! :)

Seriously. Pilots will justify questionable decisions by pinning a tough decision on ancillary considerations every time.
 
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