The recent Alaska Airlines Air Line Pilots Association’s (ALPA) Master Executive Council (MEC) podcast came with a tone of healthy optimism about contract negotiations with management – creating an impression the talks between the pilots and leadership are about at V1, or the take- off speed where an abort is no longer practical. Nonetheless, serious issues have been resolved so far, but some economic problems remain to be fixed before presenting a tentative agreement (TA) to the pilots’ union for ratification (which would be Vr speed or rotating for take-off).
The optimism for a successful conclusion is first fueled in by Alaska Airlines’ record returns of $ 2.7 billion in its second quarter operating revenues, the highest revenue-generating quarter in company history. Profits were $ 139 million after tax. During the earnings call, Alaska Airlines leaders reaffirmed their commitment to simplifying the airline’s fleet to get both more efficiency and revenue out of every airframe. As Strategic Planning Chairman Ronan O’Donoghue said, the earnings call and statements made during the call helps put negotiations on a “solid footing.”
Negotiating Chairman Chris Gruner then went on to explain that current negotiations are moving really fast, noting that,
“A lot of the issues that we’re proposing are getting agreed to.”
Gruner went on to address pilots, saying that, with industry-leading profit margins for Alaska Airlines, “… there’s a lot of opportunity here to make sure we get your expectations taken care of”. One would note this positive perception is from more focused negotiations after the union’s April 2022 informational picket and the union’s strike authorization vote.
The contract has to be “at market”
Alaska Airlines management pledges to pay its pilots market rate, including these two Embrarer ERJ-175LR pilots. Photo: AvgeekJoe Productions
As Alaska Airlines’ Executive Vice President Finance and Chief Financial Officer Shane Tackett stated on the earnings call that labor negotiations would ultimately conclude by taking compensation “at market”. At market means paying market wages.
Pilots’ union President Capt. Will McQuillen gave a response stating his expectations of the contract:
“It has to be right. It has to address the problems and the concerns that have been identified, it has to be at market. And when we achieve that threshold, that’s when we’ll be ready. It could be in short order where it could take a little bit longer. “
Some of those expectations are, as Gruner explained, eliminating an Alaska discount that only pays 91% of market, and better scheduling. The latter appears to be already addressed.
Turbulence for Alaska Airlines
Alaska Airlines as an organization is flying through the turbulence of needing to retain enough pilots to avoid another round of flight cancellations. Photo: Joe Kunzler | Simple Flying
As to turbulence, during the podcast, the union leaders mourned the growing attrition of pilots from Alaska Airlines. Almost 130 pilots have left Alaska Airlines – and that’s pre-retirements – but to the union President Capt. Will McQuillen a new contract is the first step to the retention of trained Alaska Airlines aviators. It’s worth noting that the Spring 2022 flight cancellations by Alaska Airlines were driven largely by overscheduling versus available pilots and flight attendants. Pilots’ union President McQuillen was clear that stressed margins and overreliance on reserves are “sweat equity” generated by the reserve pilots for the earnings call results.
For Gruner, negotiation of this contract is about truly serving the members versus a win for union leaders. In Gruner’s words;
I want to be clear, our goal is not to just squeak this thing over the line, right? And just hope it gets over the hump, it’s to make sure that it fully reflects what you guys expect.
Ultimately, as Capt. McQuillen explained,
“We are indeed at kind of a pivotal moment. As we’ve said, we’ve got a lot of structure put together. “
For McQuillen the change in negotiation productivity is because, “… it really boils down to when you have a motivated dance partner, you can get a lot done in a short period of time. And that has been the difference since that April first picket and since the strike authorization vote”.
Do you think Alaska Airlines will be able to conclude a deal with its pilots without a strike? Please share in the comments.