Pilots Agree To Wage Freeze, Others Still Talking

A new pilots' agreement with Comair is designed to promote the carrier's "long-term viability and growth," but it begs the question: Is the growth inside the Delta Air Lines [DAL] family or as an independent company?

In the agreement, which amends and extends the carrier's contract with the Air Line Pilots Association (ALPA), the pilots agree to forego a 4.5 percent raise that is scheduled for June and accept a salary freeze for the next two years. While the agreement would save the company an estimated $20 million, the agreement also includes a number "contract enhancements" that provide the pilots with a better position to begin the next contract talks in 18 months.

The keystone of the agreement is a pledge by the company to add 35 more regional jets to the Comair fleet. "The agreement also guarantees that Comair will take delivery of 35 growth aircraft - 10 Bombardier [BBD] CRJ 200s and 25 70-seat jets - by March 31, 2008, or the original pilot working agreement will be immediately reinstated," said Comair President Fred Buttrell in a memo to employees.

For the company to move forward with aircraft deals, Buttrell said the carrier needs a similar agreement with the flight attendants. "We need the flight attendants' help if we are to be successful," Buttrell wrote.

In the telephone poll of the 1,800 pilots, ALPA said 61 percent supported the agreement. The ballot drew a vote from 87 percent of the pilots.

The Teamsters, who represent the flight attendants, are still negotiating with the carrier. Earlier last month, the mechanics rejected a 2 percent raise contained in a new contract. The union's leadership had endorsed the agreement when they submitted it to the rank-and-file mechanics. No new date has been set for these talks to resume.

The pilot's agreement includes a "snap back" provision, said Brian Moynihan, the spokesman for the Comair ALPA unit. "If management does not get agreements with others and if it decides not to go forward, we have provision to snap back with the raises to take effect," he said.

Comair won't discuss the details of the aircraft deals, said spokesman Nick Miller.

In essence, Comair is putting the cart before the horse compared to how Delta normally secures flying capacity.

In late 2003, Delta requested proposals from a variety of regional carriers: its two units, Comair and Atlantic Southeastern Airlines (ASA); its current code- share partners, SkyWest Airlines [SKYW] and Chautauqua Airlines [RJET]; as well as other carriers. In the end, Delta gave the new planes to ASA, SkyWest and Chautauqua. Comair lost out because its labor costs were 9 to 11 percent greater than ASA (CRAN, March 8, 2004). Buttrell at the time was the Delta executive in charge of all Delta Connection operations.

As it struggled to avoid its own bankruptcy last fall, Delta won a 33 percent wage cut from its pilots. The new Delta-ALPA contract enables Delta to fly more 70-seat RJs. Analysts at the time predicted that Delta would split a future order of 50 new 70-seat RJs between a company-owned unit and a code-share partner (RAN, Dec. 6, 2004). Since Delta has not ruled spinning off either Comair or ASA, these analysts suggested that Delta had to provide its units with new aircraft to enhance their future growth prospects. Furthermore, since Comair had been denied the early aircraft, it needed the new planes more than ASA. Earlier this year, Delta contracted with Chautauqua to fly 16 Embraer [ERJ] 170s.

Miller said that the first of 10 CRJ 200s should be delivered to Comair this summer. In fact, the effective date of the wage freeze is tied to the delivery of the first CRJ 200.

At this time, Comair has not decided whether to buy 25 additional CRJ 700s or 25 Embraer 170s. The carrier currently flies 27 CRJ 700s and 106 CRJ 200s. An Embraer 170 was at Comair's Cincinnati base earlier this month for employees to tour.

As a result of a three-month strike in 2001, Comair pilots have had what many consider the gold standard pay scale among the regional carriers. Even with a two-year wage freeze, Comair pilots will still out pace their peers. A captain on a CRJ 700 with five year's experience will have his hourly wages frozen at $75-an-hour. In 2007, the Comair pilot will still make more than a counterpart at ASA or Chautauqua. The Comair pilot of a 50-seat RJ with 12 years experience - but frozen at the 10-year grade - will again make more per hour than his Delta Connection peers and tying the hour wage rate of a 12-year ExpressJet pilot.

'The bottom line is that we are not just buying growth with the concessions," Moynihan told Regional Aviation News. "We are looking to improve our quality of life and position ourselves for the next bargaining."

In addition to the new aircraft, Moynihan said the union secured a "de facto furlough protection plan" for all current pilots as well as future pilots. The agreement requires that Comair maintain a minimum of 165 aircraft. The carrier now has 164 thus requiring the addition of at least one more plane. Furthermore, he said, the addition of each new plane raises the minimum fleet level by one unit. "These planes have to be staffed and in operation," he noted.

After the 2001 strike, only those pilots working at the time of the strike were protected by a "no furlough" clause.

To staff the additional planes, Comair may need to hire 400 new employees. The carrier currently employs about 4,000.

The agreement also wipes out a penalty arising from the 2001 strike, which docked senior pilots 89 days of longevity from the strike. Once the wage freeze expires, he said, the longevity raises will again be based on a pilot's actual hiring date.

The agreement extends the current contract to May 2007. As part of the agreement, if the two sides have not reached a new contract by December 2007 then the pilots will get a 2 percent cost of living raise.

Given the concessions the union obtained from the carrier, it appears to be designed to create a better labor climate within Comair, said Kenneth Buttons, an airline labor expert at George Mason University. "The agreement seems to be designed to create an esprit de corps between the pilots and management and among the various employee groups. There has been internal friction that has affected external operations. Delta can't spin it off if it has bad employee morale. They have got to fix it."

The provisions to prevent the furlough of pilots run counter to the trend if the purpose of the new pact is to reduce short-term and long-term labor costs. Instead, Buttons said it is designed to increase the carrier's competitive edge only in the near-term.

Given the relatively low pay regional pilots earn, Buttons said it is unlikely that the other carriers will use the Comair contract to extract concessions from their ALPA units. In the last six months, ExpressJet and American Eagle have given raises to their pilots.

Comair and ASA have been pressured by Delta's financial problems to try to reduce labor costs, Buttons said. However, Buttons said there is bound to be tensions between Comair pilots, who are taking a wage freeze, and the Delta mainline pilots, who agreed to a 33 percent salary cut. ALPA represents the pilots at all the Delta carriers.

>>Contacts: Nick Miller, Comair, (859) 767-2832; Brain Moynihan, Comair ALPA, (859) 866-4111; Kenneth Buttons, George Mason University, (703) 993-4647.<<