ALPA Wants Carriers to Return $6B in Pay Cuts

Alaska first in line with for new contract talks. Union prepared to strike to recover givebacks.


The airline industry is on the brink of reversing a six-year trend of red-stained bottom lines and staggering losses. In response, North America's largest pilots union is gearing up for a fight to win back the pay cuts that have helped the industry stay buoyant, and pilots say they are prepared to strike if the airlines do not comply.

"They're angry. They're tired. They're fatigued," Air Line Pilots Association International President John Prater said of the union's 60,000 pilot members.

In the U.S. and Canada, pilots have forsaken $6 billion per year for the past five years in reduced benefits and wages, the union says.

Seattle-based Alaska Airlines froze wages for 1,500 pilots after cutting salaries by about 26 percent in May 2005. The union estimates that the cuts cost the pilots between $80 million and $100 million per year in forgone benefits.

"We told them we expect that completely back," said Prater, who was in town Wednesday to rally and listen to local pilots. He said the union is prepared for a fight with Alaska to win favorable terms in its current round of contract negotiations.

"If they push us to strike here at Alaska, I guarantee the other pilots will support them," Prater said. "We don't want to go there."

Other pilots in the union have pledged solidarity - promising to send their paychecks to keep money flowing to striking pilots. The Alaska negotiations are among the first in a round of new contracts that the union will negotiate this year.

"We're optimistic," Alaska Chief Executive Bill Ayer told the Seattle P-I after negotiations began in January. Ayer said he hopes the two sides reach an agreement by May - the date the contract becomes amendable.

Alaska is not alone. Airline labor negotiations will be contentious this year, said Darryl Jenkins, a Virginia-based airline industry consultant.

Like at Alaska, most pay cuts were forced through the bankruptcy process or by arbitrators, and not through bargaining agreements.

"I think these coming negotiations are going to be some of the toughest and meanest that we've ever seen," Jenkins said. "You cannot force things on other people without them retaliating against you at a certain point. The thought that pilots are going to stand back and be an ATM for airlines - we know that's not true."

But the airlines are still in a precarious position. Most carry high debt and revenue growth is expected to slow in 2007, according to the International Air Transport Association.

And it's not just pilots who are tired of concessions, though they get the most attention because they earn the most - and thus lost the most, said Dawna Rhoades, a professor of strategy at Embry-Riddle Aeronautical University's college of business. Flight attendants and mechanics will want raises, too.

Alaska Airlines' parent company lost $52.6 million in 2006. Without fleet-upgrade and other one-time costs, it would have earned $138 million, according to federal filings. Because the company met its goals, employees earned $36.8 million in incentive pay.

Alaska pilots are asking for raises, increased health and retirement benefits, quality-of-life improvements and greater job security, said Sean Cassidy, an Alaska pilot who also is a union vice chairman. Neither side would discuss specifics.

"It's definitely going to be a bellwether year," Cassidy said.

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