How US Air Was Saved

The airline industry's brutal economics leave little room for labor heroes. There is no Norma Rae, no John L. Lewis, not even a Ron Carey, someone who battled the bad guys in his own union.

There are, however, a handful of little-recognized leaders willing to champion hard-to-stomach concessionary stands in order to save their constituents' jobs, even when many of those constituents are loudly opposed. Though their stories aren't often told, these leaders have played a key role in helping to save the legacy airlines.

Among them is Bill Pollock, who stepped down Wednesday after three years as chairman of the US Airways chapter of the Air Line Pilots Association, including two years as a member of the board of directors at US Airways Group (LCC:NYSE).

Pollock is leaving because the union's splintered, 12-member governing council chose to impose a two-term limit, while he served a term and a half. Pollock's allies lacked the votes to determine the body's parliamentary guidelines, but had enough votes to elect his successor.

"Bill is an unsung hero who wanted so much to do right by the pilots, but knew the ugly reality of our financial situation," said the new chairman, Jack Stephan. "His position was not a popular one."   The Long Road

In 2002, US Airways became the first major airline to file for bankruptcy following the terror attacks of the previous year.

The airline secured about $1 billion in labor concessions, but that wasn't enough, so it filed again in 2004 and got about $800 million in additional labor cost savings. Those moves left US Airways' expenses low enough that the airline became a viable candidate to merge with low-fare, low-cost carrier America West Airlines. The US Airways name was retained in the 2005 deal.

To varying degrees, the other five legacy airlines all followed US Airways' lead. They have reduced costs by billions of dollars inside and outside of bankruptcy court, with the majority of the cuts coming from reduced employee costs. At each of the carriers, pilots are the highest-paid work group and have been asked to make the biggest share of the concessions.

At US Airways, the annual salary for an Airbus 320 captain flying the maximum number of hours annually fell to $125,000 from $181,000, while a first officer's salary dropped to $85,000 from $124,000.

The 49-year-old Pollock, a former Navy pilot with 21 years at US Airways, doesn't like the changes, but he was faced with making tough decisions. "I really tried to do my job, and I tried to do the things that the pilots really wanted done, realizing what the consequences would be if I didn't," he said.

As airlines restructure, "their unions engage not so much in adversarial negotiations as in hostile collaboration," said consultant Mike Boyd.

Pilot leaders such as Pollock, Allied Pilots Association head Ralph Hunter at AMR's (AMR:NYSE) American Airlines and Mark McClain, ALPA chairman at Northwest Airlines (NWACQ:OTC BB), "are not going to give away the store, but they have to make sure the store doesn't close," said Boyd, who has advised pilot leaders at American and Northwest.

"Anyone who takes on the leadership of a major union is taking on a job that, regardless of the outcome, he will be vilified," he added. "It's a thankless job."   Fractured Ranks

Pollock faced constant criticism during his four years on the job. "It was the full spectrum of human emotion and character," he said. "It ranged from, on the one hand, the idealist cause of working hard to see the company return to profitability, to, on the other hand, every man for himself."

Among the groups, he said, were several hundred older pilots whose pensions were protected by the federal government's Pension Benefit Guaranty Corp. because they were older than 53.

"Some of them would just as soon have seen the company liquidate as work under draconian pay cuts," he said. "They were not bashful in pursuing that outcome. It made leadership particularly challenging."

Another group, several hundred junior pilots, had been at the bottom of the seniority scale for years, even though most had spent more than a decade on the job.

"Their lifestyle was miserable," Pollock said. "They had almost no control over their flying schedule, they were facing more pay cuts and more shrinkage, and most of them didn't have much interest in whether the airline succeeded or failed."

Other pilots, as a personal matter, "would argue, 'I'd rather die on my feet than live on my knees,'" Pollock said. "A large number of pilots had reached this point, and had become skeptical whether we were working to preserve anything that was really worth preserving."

As Boyd put it: "The word 'union' hardly describes these organizations. You are dealing with an almost unlimited universe of varying opinions. Their leaders have to herd cats."

Today, it seems clear that US Airways was worth preserving. Stephan noted that the airline now has $2.4 billion in cash, its stock has nearly doubled since it emerged from bankruptcy in September, and some managers are collecting incentive pay.

Meanwhile, as a result of the merger, the pilots' contract must be renegotiated. "At this point, isn't it reasonable to expect that, after giving up $2 billion in concessions (including pensions), we would get something in return?" Stephan asked.

"A year ago we were looking at surviving, at putting as many people in the life raft as we could, and it was Bill who kept us going," he said. "I'm sure, given how the situation has changed, that Bill sleeps very well at night."

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