US Airways fliers feel impact of airline's labor woes

By Dawn Gilbertson, The Arizona Republic

Last weekend, shortly after US Airways pilots learned where they rank on a long-awaited seniority list, the airline's on-time performance plunged.

Half the Arizona-based airline's flights were delayed on Sunday — levels not seen since its March meltdown — but without the reservation-systems problems or winter weather to blame.

Coincidence or concerted slowdown?

The airline attributed the poor performance to packed planes and said it held flights to avoid stranding fliers.

But dozens of pilots privately tell a different story. They say some former US Airways pilots on the East Coast — frustrated that many now rank below less-tenured America West pilots — didn't show up for work, did the minimum required or took their time on routine items.

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After the list came out, a Charlotte-based pilot warned in a posting on a union message board: "Get ready because this is about to get real ugly."

The tension and fallout over seniority, which was decided by an arbitrator based on factors other than date of hire, underscores the significant challenges ahead — for the company and possibly travelers.

US Airways is now facing the most significant hurdle of its 20-month old America West-US Airways merger: combining its 36,000 employees into a single workforce.

The airline is in contract negotiations with four major employee groups: pilots, flight attendants, mechanics and baggage handlers.

Executives need to bring the employees from both airlines under a single contract so that America West and US Airways can finally be combined.

Until then, the airlines are effectively separate, with their own planes and flight crews. That has fostered an "Us vs. Them" attitude and prevented the airline from creating a united culture, so critical to the success of mergers.

Rancor is steadily mounting, and the airline hasn't begun to tackle sticky issues such as pay.

Low morale

Employees are fed up that executives already have seen a payoff from the merger while their negotiations are dragging on. They don't like the company's general stance that it can't afford across-the-board raises.

Add in a winter full of airport jams and disappointment over hot-button merger issues such as seniority and employee travel policies, and workers say morale is at rock bottom.

Last week, more than 100 former America West pilots and flight attendants picketed outside the Arizona Biltmore Resort & Spa in Phoenix. The resort was hosting airline CEOs and transportation officials at an aviation symposium.

There also are union campaigns suggesting employees do only their own job, as well as deliberate attempts by some employees to get management's attention by slowing down the operation or running up costs.

In interviews with The Republic, some pilots said they are purposely taxiing slowly on takeoff and landing and are waiting until just before takeoff to report problems, delaying the flight.

Frustrated mechanics said they are dragging out maintenance checks and taking their time getting to the gate when a problem is reported, and baggage handlers aren't loading as many bags on the conveyors as they usually do.

John McIlvenna, chairman of the America West unit of the Air Line Pilots Association, disavowed any campaign to slow the operation. Many actions are illegal under federal law.

But, he said, "I think a lot of people have lost the motivation to go the extra mile."

Added Gary Richardson, president of the America West branch of the Association of Flight Attendants: "Is their heart into this? No."

Both US Airways CEO Doug Parker and President Scott Kirby, the airline's labor point person, concede that morale is low.

They insist, though, that they see no significant evidence that employee actions are hindering operations even though the airline's on-time performance this month is still tracking well below its goals.

"There are isolated incidents and maybe things that wouldn't have happened if we had a contract right now, but they are isolated incidents," Parker said.

Shannon Anderson, a Rice University management professor who studies airlines, calls the labor negotiations the most critical event at US Airways at the moment.

"That is going to be the straw that either breaks the camel's back or lets them move forward to remedy some of their operational problems," she said. "That's the thing I'm watching most."

Negotiations continue

Parker said the company had hoped to have new contracts by now but is not surprised it doesn't. "The company did so well (financially), so quickly, that has made these negotiations go longer," he said.

The goal now is to get them done by the end of the year.

The problem, as he and Kirby see it: Employee expectations about what the company can afford are too high. They said what they are offering now, which they won't disclose, likely would have been seen as reasonable had US Airways not posted a $500 million profit last year.

Union leaders say their expectations aren't out of line, given the early merger payoff for the company's executives and shareholders.

They point to, among other things, Parker's $14.4 million pay package in 2006, which included millions in gains after a big run-up in the airline's stock the first year of the merger.

"It's not fair that everyone else enriches themselves on our (low-cost) labor," said captain Jeff Cote, a 24-year veteran of America West.

'It's our turn'

US Airways isn't the only carrier grappling with a labor issue, although its problems are far more widespread than those facing other airlines.

In fact, "It's our turn" is a common refrain as airline workers seek to cash in on the industry's recent upswing.

American pilots recently asked the airline for a 30% raise and noted executives' bonuses and stock-option riches. Northwest's unions are balking at a big bankruptcy exit-pay package for that airline's CEO, and United workers are banding together to protest executive compensation.

The industry's shifting labor winds were one reason US Airways' second-largest shareholder sold most of its stake a couple of weeks ago.

PAR Capital was attracted to the America West-US Airways merger a couple of years ago by the prospect of low labor costs negotiated inside and outside bankruptcy court as the industry continued to struggle, partner Ed Shapiro said. He saw it as a good buffer against high fuel prices.

But the momentum is shifting.

"We're hearing now how much they're going to demand or want to get back," said Shapiro, who remains a US Airways board member.

Balancing expectations

US Airways does have more negotiations underway than any other airline as a result of the merger.

It also has the challenge of balancing the expectations of employee groups that have long viewed the merger through different lenses and have different pay rates.

Former US Airways employees gave up billions in pay and benefits during the airline's two bankruptcy cases.

Now that the merged airline is among the industry's most profitable, they would like to make up some lost ground and then some.

America West employees, many of whom would already be in separate contract negotiations absent the merger, don't feel any sense of shared sacrifice because they weren't in bankruptcy when the merger was announced.

Many view America West as saving US Airways, a point executives now take great pains to refute by revealing that America West was in danger itself of filing for bankruptcy for a second time without the merger.

Parker never sounded such dire warnings before or after the deal was announced.

Parker and Kirby have rankled employees with their stance that US Airways can only afford to pay employees the highest existing rates of the two companies, in terms of pay and benefits, in each work group.

In the pilots' case, that means US Airways pilots would be bumped up to America West's pay levels because the latter make more. Baggage handlers at America West, conversely, will move up to the higher levels paid at US Airways.

That scenario creates instant losers on one side because the higher-paid employees will effectively get little or no raise.

The status quo won't cut it for America West pilots, McIlvenna of the pilots association said, especially when US Airways is forecast to be solidly profitable again this year.

"It's not like we're going to lose money or barely survive," he said.

Kirby said there are other ways besides pay to make a deal palatable to both sides. He said the proposal sent to the pilots last week is "closable."

Other potential problems

The salary discussions aren't the only issue feeding employee frustrations.

Two others include seniority and employee travel benefits.

Seniority is the employee pecking order that dictates their work life. It is especially important to pilots and flight attendants because it affects the routes they fly, days off, vacations and promotions.

The merged seniority list for the pilots was decided by an arbitrator.

Pilots of the former US Airways are incensed because that arbitrator, who both sides agreed to, didn't go with their wish to rank employees by their date of hire. Doing so would have heavily favored them since US Airways has been around much longer than America West.

Compounding matters, the arbitrator put US Airways pilots who were on furlough at the time of the merger below the active America West pilots on the list, even though many of them had much more seniority.

Union officials reacted swiftly and harshly to the ruling, calling it a travesty, and activated a crisis team generally called on only during emergencies such as a crash.

There are frustrations, too, on the America West side.

One sore point was the decision earlier this year to go with the old US Airways policy on employee standby travel.

America West had a first-come, first-served policy, meaning whoever got to the airport first had the best chances, regardless of their rank. US Airways has always done it based on seniority.

"That (decision) really uncorked a resentment and a fury," McIlvenna said.

And passengers are starting to notice.

Frequent flier Alan Anderson of Phoenix flies US Airways every week and hears about the employees' frustrations firsthand.

Anderson said he was waiting for an already delayed flight to take off from Washington, D.C., recently when the pilot told passengers it was going to be a while longer before they could depart. The pilot said the bags from the previous flight were still on the plane and the current passengers' bags were still waiting to be loaded.

The pilot didn't explain why, but Anderson's thoughts turned to a possible slowdown. "That's the only rational explanation for this," he said.

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