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Friday, September 25, 2009

Capacity Up, IBT Attacks Republic, Embraer Offering; More News

Kathryn B. Creedy

Yesterday was a busy news day in the airline industry as aviation interests peppered the news wires with press releases ranging from regional airline punishment of tired pilots to capacity growth in September.

OAG Sees Capacity Growth for 2nd Month
Global capacity rose 1.4% (4,130,744 more seats) to 296.9 million seats in September over the year-ago period, according to statistics released by OAG.

"As the summer season winds down, the steady upward trend we have seen since May is continuing,” said David Beckerman, vice president OAG Market Intelligence. “After 11 straight months of capacity cutbacks, these figures indicate a growing confidence within the industry that demand for air travel is starting to pick up."

Frequencies are marginally down compared to September 2008. The world's airlines have scheduled a total of 2.4 million flights for September 2009, down by 0.6% (14,321 fewer flights) compared with the same month last year. Last month, the year on year global frequency figure was down by 2% and capacity was up by 0.2%.
Coverage continues below chart


Teamsters Rub Salt in Regional Wounds
Not satisfied with the drubbing the regional airline industry took during the House hearing into regional airline safety on Wednesday, the International Brotherhood of Teamsters issued a release reiterating charges by the Air Line Pilots Association during the hearing that regional airlines are punishing sick or fatigued pilots. While ALPA is working on new pilot contracts for both Pinnacle and Trans States, the airlines it identified before the House Transportation and Infrastructure Committee, the IBT is using the issue to leverage its position in its negotiations with Republic Airways. Related Story

“The first-hand experience of IBT Local 747, the union representing the Republic Airways flight crewmembers, reveals [this],” said the union. “One of the largest member airlines in the RAA – Republic Airways – comprising Chautauqua Airlines, Republic Airlines, Shuttle America, and now Midwest Airlines – has an attendance policy that strikes fear in the employees who fly for these airlines. In practice, it is a punitive policy. Republic has an attendance policy that ignores mitigating factors as to why a pilot would notify his or her employer of fatigue. When calling in sick, a Republic pilot is considered ‘unavailable’ regardless of the reason for being unable to fly and the absentee policy dictates the employee is automatically charged with an 'occurrence.' It does not matter whether the pilot is sick with a doctor's note, has a bona fide family emergency, or is calling in fatigued. But here's the rub . . . if you tell your employer you are fatigued, the employer can then make an ad hoc determination of how many occurrences to charge you and eight occurrences will likely result in termination.”

The union charged that data demonstrates that application of this policy at Republic led to about 49 attendance disciplinary letters in 2007, about 176 attendance disciplinary letters in 2008, and about 104 attendance disciplinary letters as of the first quarter in 2009.

“By April 2009, following two National Transportation Safety Board (NTSB) recommendations and repeated pleas by the union to amend its fatigue and attendance policies, the carriers under Republic stopped sending copies of these disciplinary letters to the local union,” said IBT. “The union now only discovers the existence of these letters, following complaints lodged by crewmembers. Republic is currently averaging more than three attendance disciplinary letters a day among the 2,000 pilots they employ. Pilots are required by regulation to determine that they themselves and the aircraft are fit to fly. No one would consider firing a pilot for finding eight pre-flight discrepancies during a one year period, yet flight crewmembers are often reprimanded when an honest self-assessment is not a positive one.”

The union cited April 2008 National Transportation Safety Board report on a Delta Connection/Shuttle America accident which cited fatigue and “the carrier’s failure to administer an attendance policy that permitted flight crewmembers to call in fatigue without fear of reprisal."

“Last year, fatigue management experts reported 80 percent of regional airline pilots surveyed said they had nodded off in-flight and that scheduling factors such as multiple take-offs and landings were top contributors to operational fatigue,” said the union. “It seems that Republic's fatigue policy is in essence a reliability policy; and rather than properly staff the airline with sufficient pilots to cover normal and irregular operations they administer an attendance policy based upon fear and intimidation. As the aviation infrastructure shifts towards regional airlines, we need to seriously consider how these carriers operate and we must have an honest dialogue about the degree of oversight the FAA needs to exercise over these carriers. Essential to that conversation, however, is basic honesty if maintaining safety truly is the highest priority. That honesty, unfortunately, is lacking from the Regional Airline Association when it comes to discussing the issue of pilot fatigue.”

Embraer Offering
Embraer
plans to offer in the global capital markets a series of notes due 2020 through its wholly-owned subsidiary Embraer Overseas. The company plans to use the proceeds for general corporate purposes including the possibility it will repay short-term debt.

The notes will be senior unsecured and unsubordinated obligations of Embraer Overseas. Embraer will unconditionally guarantee Embraer Overseas’ payment obligations under the notes and the indenture. The guarantees will constitute direct, senior unsecured obligations of the company. The Deutsche Bank and Morgan Stanley are acting as book-running underwriters.

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