Piece of the sky; Alaska Airlines' pilots union wants members to see a share of the company's profits

June 14, 2007

About 60 Alaska Airlines pilots angry about pay cuts picketed outside a downtown Anchorage hotel Tuesday while the airline's top brass met inside with shareholders to discuss signs the once-staggered airline might be undergoing a financial turnaround.

The pilots are demoralized, and if the airline executives think the company is financially stronger, the pilots should be seeing it in their paychecks, officials of their union said this week.

At the company's annual shareholder meeting Tuesday in the Hotel Captain Cook, the chairman of their union admonished Alaska Air executives.

"Beneath our profits is a management team that has not demonstrated a willingness to share the success we helped generate," said Tom Crank, the union chairman, speaking into a microphone in front of the crowd of at least 100 people.

Alaska Air Group chief executive Bill Ayer answered Crank. He said management and the pilots want the same basic things, but the company is facing some competitive challenges.

Some major U.S. airlines have recently used bankruptcy court to slash pilot and other employee wages, end pension plans and impose other cuts.

Ayer told shareholders Tuesday that Alaska Air now faces more aggressive competition from the airlines emerging from bankruptcy.

The company's shareholders convened in town to celebrate the 75th anniversary of the company, which originated in Anchorage as a Bush flight service to Bristol Bay. The last time the shareholders met in Alaska was 2002 in Fairbanks.

Alaska Airlines' pilots have been unhappy with their pay for at least two years, but tension has escalated because they are back in contract negotiations this year. Their ­salaries were slashed by 22 percent to 34 percent in 2002, with the lowest-paid pilots receiving the biggest cuts.

Pilots are paid $32,000 to $157,000 today, compared with $47,000 to $200,000 before the cuts, the union said.


Alaska Air Group, which includes Horizon Air, posted a $52.6 million loss last year. That's not the number Alaska Air executives stressed Tuesday, however. They said that except for one-time losses of about $190 million, the company's "adjusted profit" was $138 million -- its highest level in years. The one-time losses were mostly due to writing down the value of MD-80 jets after the company decided to stop using them earlier than previously planned.

Through the early part of this decade, the company consistently lost money, its financial reports show.

Alaska Airlines hasn't attempted to declare bankruptcy, though it has taken many other steps to reduce costs, such as purchasing more fuel-efficient airplanes and outsourcing hundreds of baggage-handling jobs at the Seattle airport.

The Airline Pilots Association's contract with the airline became available to renegotiate May 1. Talks started in January, but the union and the airline haven't yet dealt with the major issues -- salary, retirement and work schedules -- union and company officials said this week.


Pilots said they are unhappy with the Seattle-based airline's stance that it is willing to reconsider their pay -- which an arbitrator slashed by an average 26 percent two years ago -- but not at an increased cost to the company.

"This one sticks in my craw ... this is a profitable company," said John Prater, president of the Air Line Pilots Association, in an interview this week.

He said the pilot's union wants to resolve the contract without resorting to a labor strike.

Airline managers are meeting with the union's negotiating team about three times per week, union officials said.

"I'm optimistic we can get a deal that works for everybody," Ayer told shareholders Tuesday.

Find Elizabeth Bluemink online at adn.com/contact/ebluemink or call 257-4317.

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