Doug Taylor said:
Here's the second Charlie Tutt "Letter From Your Supervisor"
Anybody else notice this guy doesn't write very well? Also, with all this last-second aircraft transferring, talk of Skywest flying ASA applied-for routes and using our recent over-water exemption, at what point does this become a single-carrier issue???
Dear ASA Pilots,
I have had the opportunity to meet with a number of you recently in the ATL crew lounge and,
undoubtedly, the main topic of conversation is your contract. You have said you want a lot more
information, that you sense things are beginning to move a lot faster than they have in the past and
you want more answers before you are forced into tough decisions. That’s certainly fair. I promise
you that I will do all that I can to get you more information and that I and other senior management
will be accessible to you. It is important that you have the opportunity to learn all you can about
what all of us are facing and to have answers to all of your questions.
Before I get into some of the issues you have asked about, I want to let you know that we are
planning some meetings with you soon to hear your concerns, respond to your questions and
provide information that I think is important for your consideration. The meetings will be next
week in ATL and the following week in SLC. In ATL, they will be Tuesday, June 20, and Friday,
June 23. The ATL meetings will be at 7:00AM, 10:30AM, 12:30PM, 2:30PM and 5:30PM in the
Awesome Service Room under Gate C30. We picked those times to hopefully be able to meet with
as many of you as we can. We encourage each of you to participate in one or more of the meetings,
as your schedule permits and for whatever amount of time you are available. The schedule for the
SLC meetings the following week will be announced soon. We don’t want to bore you with
presentations, but we want to hear from you, share information with you and respond to your
questions.
I am sure you have read my last letter to you, so I’m not going to go back over all of that. But, I do
want to emphasize a couple of things.
First – and this comes as no surprise – we are not in control of the marketplace. The marketplace,
which in our world largely means the mainline carriers, decides what they will pay for our product.
From our conversations, I think many of you don’t understand or believe just how important the
marketplace’s role is in determining what our costs must be. Take the example of what’s happening
with ExpressJet at Continental. ExpressJet decided they wouldn’t or couldn’t meet Continental’s
cost demands and now they are trying to figure out how to restructure themselves and what to do
with 69 idle regional jets in a few months. It would not surprise me if they were going after
everyone else’s business, including ASA’s. That’s the reality of the marketplace.
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June 14, 2006
Second, we must get something resolved on your contract soon if we are to have any opportunity to
be stable and even grow, as I believe you want as much as ASA management does. Our delays
already have cost us at least the first six CRJ900s that we hoped to get in place of the CRJ700s in
SLC. Unless something happens soon, we will lose the chance for getting any of the remaining 11
CRJ900s, which are on firm order. With our costs today and without an agreement that assures
improved costs, it doesn’t make business sense for ASA to get those aircraft. Marketplace events
and business decisions on aircraft asset allocation create the urgency to finish a process that I think
everyone agrees has taken too long.
So, if we need to get a deal soon, why did the National Mediation Board recess negotiations? I
think it’s because the company and ALPA are simply way too far apart and the NMB doesn’t want
to have further negotiations until they believe meaningful progress can be made. We have tried to
communicate clearly that we must get our CRJ700/900 and flight instructor costs in line with
competitors if we want to get access to the new CRJ900s and to hold on to our remaining CRJ700s.
Our proposal calls for a reduction in annual costs of about $3.5 million for those sections where we
do not yet have a tentative agreement. Unfortunately, ALPA calculates that its latest proposal,
related to the open sections of the agreement would, in fact, increase our annual costs by $23.6
million. This amount is in addition to the costs associated with other improvements ALPA
negotiated for and that have been agreed to by company negotiators. That $23.6 million represents
a 22% increase in our overall pilot costs. ALPA’s characterization of that as reasonable and
realistic is, in fact, not reasonable at all in today’s marketplace.
I have also heard a lot of talk about how ASA’s operating profits is among the highest in the
regional carrier industry. In fact, ASA’s operating margin, at least recently, has been pretty good.
However, that doesn’t tell the whole story because in ASA’s case our operating costs do not reflect
the ownership cost of our aircraft. Some carriers include their aircraft lease cost as part of operating
costs and in some other cases it is only reflected in the net results, just like ASA. On a comparative
net basis – when aircraft costs are included for everyone -- our profit margin is not at the top.
Obviously, you can’t exclude aircraft ownership or lease costs in comparing where we stand versus
our competitors. Our net profit margin is quite modest and it is completely unrealistic to believe we
can wipe that out – and go into the red – in order to maintain rates that are out of sync with
competitors.
As we have said before, we are very competitive with our CRJ200 costs and our proposal calls for
improved compensation for those positions through increased pay rates and incentive programs.
The adjustments need to be in our CRJ700/900 rates and our flight instructor costs.
We’re not asking for our pilots to simply give up pay without reasonable expectations of a return.
In fact, we believe that with the benefits of Performance Plus and stock ownership programs, most
pilots would be better off than they are today. Given the pressures of this market – and the size of
cuts being taken throughout the industry – I think that’s a very fair offer.
We don’t have a lot of time left. In fact you can measure it in weeks, not months, before aircraft
asset decisions will be firm and unchangeable.
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June 14, 2006
So, please plan to join us next week and let us know your questions at any time. As always, talk to
your base chief pilot and if he or she doesn’t know the answer, he or she will find out. Watch for
information later this week on both ASAContract.com and FLiCA. It will include a summary of the
Company’s and ALPA’s latest offers on compensation and other cost items. Does our proposal
mean there are concessions for some of you? Yes it does. But I think it is a lot less painful than
what we will face without competitive costs. The industry has never been riper with potential and
we can be in a preferred position to seize the opportunities that are available. We have a great
airline, with among the finest pilots in the industry, and we can have a great future.
Sincerely,
Charlie Tutt
Vice President, Flight Operations
