Despite an overwhelming strike authorization vote, ExpressJet Airlines [XJT] and its pilots are near a "tentative agreement" on new contract terms -- two years after the contract became amendable.

Representatives of the carrier and the carrier's unit of the Air Line Pilots Association (ALPA) met last week in Houston without the assistance of a federal mediator. "We were scheduled to meet in Washington with the National Mediation Board, but we felt we were making better progress trying to hammer out the issue on our own," said Chris Girgis, a spokesman for the union's strike preparedness committee.

"We are beginning to see light at the end of the tunnel. We are being guardly skeptical. The potential for a tentative settlement is near."

"The negotiations are moving forward," said Kristy Nicholas, a spokeswoman for ExpressJet. "We are trying to make them come to a close as quickly as possible." Nicholas added that the company does not comment on ongoing labor negations.

The carrier and the pilots have been negotiating a new pay scale and work rules since July 2002 -- three months prior to the expiration of the current pact. A federal mediator has been guiding the talks since January 2003.

Frustrated by the lack of progress, the union leadership asked the pilots to authorize a strike. The ballots were circulate on Sept. 7 and returned by Sept. 23. More than 98 percent of the voting pilots chose to authorize a strike if ALPA leaders felt it was necessary. Nearly 87 percent of the eligible pilots participated in the vote, Girgis said.

Under the cumbersome federal laws that govern railway and airline unions, the earliest the union could strike ExpressJet would be in January.

"When we initiated the strike authorization vote," Girgis said, "there was some distance between the two positions. Over the last couple of weeks, the two sides have come closer together."

"We are not far apart on the pay increase we would like to see and what they are offering. We are finally in the same ballpark and are hopeful for a tentative agreement on compensation," Girgis said, without providing specifics. With ExpressJet on target to earn $120 million this year, he said, the company realized it could not realistically ask for pay cuts.

ALPA also is seeking greater job security for the pilots with new scope language. "We want to make sure that our flying cannot be farmed out to other carriers, or create an alter-ego airline to whipsaw us," he said. Specifically, he said the union wants language that would prohibit ExpressJet from buying or starting a non-union airline. The pilots have studied the aftermath of the 89-day Comair strike in 1989. While the Comair pilots won an industry-setting contract, its parent, Delta Air Lines [DAL] diverted most of the future expansion flights to Atlantic Southeast Airlines, also owned by Delta, and other Delta Connection carriers. The pilots were effectively denied movement into higher pay scales that were won in the strike because of minimal growth, Girgis explained.

Girgis said the two sides have already reached an agreement on language that would govern the introduction of larger aircraft at ExpressJet. Based on problems at Delta when the Boeing [BA] 777 was introduced, the two sides agreed that the pilots would fly new equipment pending the negotiation of a new wage scale. The pilots would be assured of receiving retroactive pay once a new pay rate is set either via negotiations or binding arbitration.

ExpressJet flies only for Continental Airlines [CAL], its former parent. The ALPA contract with Continental precludes the introduction of 70-seat or larger regional jets by either ExpressJet or a Continental Connection carrier. However, ExpressJet can fly larger planes for another airline. As ExpressJet seeks new code-share relationships, Girgis said the carrier has not asked the union for any different work rules that would only apply to these future relationships.

Should the two sides not reach an accord "in the near future," the union is on the "cusp" of making a request that a federal arbitrator step in and iron out a settlement, he added. It could take the National Mediation Board about 60 to 90 days to determine if the situation has progressed to the point that arbitration would be successful. As a tactic, Girgis said, the pilots would then reject the arbitration offer because the current Republican-appointed board "is very tilted to the right and any finding would not be neutral." The rejection would trigger a 30-day cooling off period after which the union could then strike.

However, he said, both sides realize they would "lose" in a strike. "We have a relatively good relationship between management and labor. It is one of the things that has made this airline so successful."

>>Contacts: Chris Girgis, ALPA, (281) 987-3636; Kristy Nicholas, ExpressJet, (713) 324-4755.<<