Tomorrow marks the
eleventh anniversary of the terrorist attacks that brought down 4 planes
and killed thousands of people. We all have our own memories of that
day, and it is important that we never forget. We can mourn, but it is
also important that we do something to bring honor to that day, and to
those lights that were extinguished in an act of evil that we can never
let happen again.
You all know that I have
my own unique tradition where I board a United Airlines flight and
travel to New York and back on the same day. I hand out cards and wrist
bands as a way of saying thank you to United's front-line employees who
show up every day and hold to their commitment to get us customers to
our destinations comfortably and safely. Employees at United and
American feel an added loss as it was their planes that were used, and
their friends that went down with them.
Why bring up Tulips and
Eagles? These represent the brands that are United and American
Airlines. Back on 9/11/2011, all of United's planes were marked with
the distinctive double "U" slanted shield that came together to look
like a tulip. On American's planes, the double AA painted on the tail
is protected by a bald eagle, the national bird for the United States of
America. The employees that were lost on that day were also wearing
either a Tulip or Eagle on their uniform.
Combined there were 17
crew members on American Flights 11 and 77 that were lost. On United
flights 93 and 175, there was a total of 18 crew members (including 2
customer service employees traveling on that day) lost. Those souls were
proud to wear the Tulip and Eagle symbols as they showed up to do their
job on that fateful day.
For those of you that
fly American Airlines, you will still see the Eagle being proudly
displayed. When you look at it, remember what it means. It is a symbol
for our country. It represents strength and protection. The employees
of American Airlines wear their Eagles with honor.
Sadly, management at
United Airlines has decided to take down the Tulip. It may seem silly,
but flying United Airlines today without the Tulip does not carry the
same prestige. This little flower represented so much of what was
United Airlines. Tomorrow, I will wear as much of my United Tulip bling
I can find. This is my way of honoring those United crew members who
died 11 years ago.
To the employees at
United, pull out and wear as many Tulips as you can find. For the
sCO employees, those crew members that were lost are part of the
heritage of this great airline. They were your co-workers. Honor them
and find some way to wear a Tulip.
Tomorrow, Mr. Smisek
will receive an arrangement of 20 white tulips. Eighteen representing
the crew members lost, and 2 representing the planes. I would challenge
him to put the Tulip back on at least 20 of the planes in the current
fleet as a way to remember and honor t
519e
he losses from 11 years ago. Its just a little flower, but it is hardy
and full of color and it carries so much meaning for those on the front
lines at United Airlines. Perhaps the new 787's being rolled out would
be the perfect place to do so.
However you all remember
the day tomorrow, just make it a safe day. Do a good deed, say a
prayer for those lost, attend a memorial, talk to your kids about what
the day means. It was a day where our freedoms were under attack, but
we came together as a nation to make sure that we protect, honor and
respect those freedoms.
Wednesday, May 30, 2012
What the heck is a "Proxy?"
It was a
typical Los Angeles morning for me today. If I leave my house no later
than 6:00 AM, my 18 mile commute takes no more than 40 minutes. This
morning I slept in, and did not leave until 6:30 AM. It took 90 minutes
to get to work. Sometimes I just hate this town.
By now, for those of you that
own shares in United Continental Holdings (UAL), you have received your
"Definitive Proxy Statements" notifying us of the Annual Shareholders
meeting, and the proposals to be voted upon for that meeting. During
this morning's lengthy commute, I got to wondering if individual
shareholders truly understand what a Proxy is and its value to them.
If you hold shares of UAL in
your 401K, mutual fund, or other brokerage account, those shares are
registered to the brokerage firm or mutual fund manager, not you
individually. These shares are held in "street name." For you to be
able to vote your shares, you must request a Proxy from the brokerage
firm or fund manager. If you do not request a Proxy, then the vote
stays with the brokerage firm or fund manager. If a vote is not cast by
you, or the entity that holds the shares in "street name," then the
Proxy automatically defaults to UAL management, and they can vote those
shares as they wish.
More often than not, individual
shareholders will not request a Proxy and exercise their right to
vote. They either do not understand the proxy and voting process, or
the proposals that are on the agenda to be voted upon. Many investors
in UAL are short term and just make quick trades based solely on the
changes in the price of oil or jet fuel. They are not in the game for
the long-term. They do not care about the outcome of elections. This
lack of understanding the proxy process, or not caring about the
long-term health of the company, is why we see proposals being
approved in favor of management by 85% or more. Most of the voting
rights behind those shares have defaulted to management
because individual shareholders did not take the steps to obtain their
own Proxy.
If you have shares in a 401K,
mutual fund, or your own brokerage account, take the steps now to obtain
your Proxy. Once you have your Proxy, you can cast your vote yourself,
or you can transfer that Proxy to someone you trust to vote for you.
You may want to do this if you know someone who will be attending the
shareholders meeting. For this year, with your own Proxy, you can cast
your vote against the compensation plan for senior management, and
against those individuals slated for a position on the Board of
Directors. Remember, the Board of Directors is supposed to represent
your interest and keep management in check. If you feel they are not
doing their job, you can vote them out.
I have my Proxy and am planning
at being at that meeing in New York. I am also soliciting individual
shareholders who feel they can trust me, to transfer their Proxies to
me. I will then carry those shares to that meeting and vote against the
executive compensation plan, and against the proposed Board of
Directors. This may not change the outcome of the vote, but I may be
able to carry a louder voice to that meeting. Many of you know how
committed I am to United Airlines. This merger has only served to
devalue a very powerful brand, and its time for management to to wake up
to the damage that is being done.
If you are interested in transferring your proxy to me, you can send me an e-mail to mailto:totjanderson@terraent.com and
I can give you an address to send your Proxy. Whether you transfer you
Proxy to me, someone else, or cast your vote yourself, it is so important is that you take the time to exercise your right to vote. Do not waste this right. Individual shareholders can no longer just sit by and let their rights default to management.
Wednesday, May 23, 2012
Am I "Over-Entitled?"
Mr.
Rainey's comment at the Merrill Lynch Investor's Conference were
unfortunate. What follows is a letter that is going out to him today. I
am sure it will just meet its end in some shredder at Wacker Drive.
Enjoy.....
May 23, 2012 ** Via Fedex Overnight **
Mr. John D. Rainey
Executive Vice President and Chief Financial Officer
UNITED CONTINENTAL HOLDINGS, INC.
77 West Wacker Drive
Chicago, Illinois 60601
RE: United Angers Frequent Fliers By Calling Some `Over-Entitled’.
wsj.com “Middle Seat Terminal” article dated May 21, 2012.
Dear Mr. Rainey:
Congratulations on your
promotion to EVP and Chief Financial Officer. Mr. Smisek has placed a
lot of responsibility on your shoulders. You have his trust, and you
should be proud of this accomplishment.
I was saddened to read
about and then hear your comments that some of United’s elite customers
(most likely those of us at the 25,000 mile “Premier Silver” level) had
become “over-entitled,” and to quote you, “and now we’ve realigned the
benefits of that program with what the customers and program
participants are actually providing to the program.’’ In writing this
letter, I did not want to boast or appear arrogant, but I felt it
important you understand one of those “over-entitled” customers who have
been insanely loyal to United Airlines. You come from Continental
Airlines, so I am not sure you are really aware of the degree your
comments have insulted a customer base that, along with the airlines
front-line employees, has kept United Airlines flying. What follows is a
true story of one of the “over-entitled.”
I have been a member of
Mileage Plus since 1985. In the last ten years, my status has been
predominantly at the “Premier Executive” (50,000 miles per year) level. A
few years I reached 1K. Sadly, because of time considerations, I was
unable to fly as much as I would have liked last year, and am now only a
Premier Silver member.
From 2006 through 2009,
for my travel alone, I spent almost $150,000 with United. During those
years I was also a member of the “Pass-Plus” program. Since 1996, 95% of
my ticket purchases have been under “F” or “A” fares, never requiring
the use of upgrade awards I had earned. One time, for fun, I calculated
my PRASM contribution in 2008 at $.70, almost seven times the average
United earned from all customers.
For trips to New York, I
use United’s Premium Service exclusively, and with every trip I sit in
the First Class Cabin under tickets purchased under “F” fares, or
sometimes unrestricted “C” fares using miles to upgrade to First. The
average fare paid for those tickets is almost $6,000.00. Since the
Premium Service flights began, I have never sat in the Business or
Economy class sections. On every anniversary of September 11, 2001, I
purchase a First Class Premium Service ticket to fly to New York and
back on the same day as a way to bring some honor and to recognize
United’s professionals who keep show up to work every day to get me to
my destination safely. In 2006, the wonderful people at LAX honored me
by naming me their “Customer of the Year.” I cherish that award as it
came from the front-line workers. I will never be able to thank them
properly for that honor.
Since September 11,
2001, as another way of thanking the under-appreciated front-line
professionals at United, I began handing out $10 Starbucks gift cards.
They are well-received and it is so nice to be able to put a smile on
their face again. To date, I have handed out over 5,000 of those cards.
Since 1977, in one form
or another, I have also been a shareholder. I was 16 when I purchased
100 shares with money I saved from working a part-time job. I so wanted
to be a part of a company I admired for the power of its brand and the
professionalism of its front-line employees. At the Shareholder’s
meeting in 2008, I was witness to a lot of discord and hatred that the
front-line employees had for management. I expressed my concern to Mr.
Tilton about what I was witnessing, and how it would affect the elite
customer base. His response was that I was free to go to another airline
where I would find much of the same.
Bringing us to the
present, as the new United feels I had become “over-entitled,” and as it
is all about numbers and what I provide to the program, my benefits at
the lowest tier of the Mileage Plus elite have been “re-aligned.” This
status does not offer me much, but buying First Class tickets makes up
for some of that loss. With the switch to the new reservation system, I
find am unable to buy an un-restricted Business Class ticket and use
some of the miles I have accumulated to secure a First Class seat. I am
also unable to find First Class seats on 2-cabin domestic flights under
the lower “A” fare. The new system restricts me to the higher “F”
fare. I am no longer able to secure an Economy Plus seat when making a
reservation, I have to wait until check-in. It is all just too sad, and
it turns me off from flying.
I am lucky in that I
have made many friends who work the front-line at United. United’s new
management may not realize how truly loyal United’s elite customers are,
but when I show up at LAX, I always run into someone I know, and they
make sure that I have everything I need, irregardless of my status. Not
all of the elite Mileage Plus members are so lucky, and if they don’t
have the right numbers behind them, the management of this new United
Airlines does not give them the respect they have earned, and more
importantly, this new United Airlines has taken away any authority for
the front-line to provide lower-tier elite customers with any measure of
service.
Your comments at the
Investor Conference are unfortunate, and I hope that you or Mr. Smisek
can find a way to take them back. If you do not, then you have made it
very clear that the “Skies are no longer Friendly.”
Sincerely,
James T. Anderson
Mileage Plus #HVCxxxxx
Shareholder, and United LAX-2006 Customer of the Year.
cc: Jeffrey Smisek, President and CEO, United Continental Holdings, Inc.
Friday, January 6, 2012
What will tomorrow bring? Part 2
Today, January 6, 2012, marks the end of the second full year that the contract with United's Flight Attendants became amendable, as well as the 2 years and 9 months that the United AFA
(Association of Flight Attendants) has been in negotiations with
management over new contract terms. To that end, it is significant that
today is the last day of the "expedited mediation" process in those
on-going negotiations. Today, United management is to present what they
consider to their "best and final" terms for a new contract to be voted
upon by AFA members.
United management will present this Tentative Agreement ("TA") to AFA's Negotiating Committee. They will take this TA back to the United AFA Master Executive Council ("MEC"). The MEC will carefully review this TA and decide if this is something they feel should be presented to the membership for voting.
This will be a very difficult process and decision for the MEC. They are keenly aware how eager their members are to move forward and finally get a well-deserved raise. However, the MEC also knows that if they give in too quickly just to get on with things, it will set the tone for the relationship the union will have with the "new United" management from this point forward. Management still feels there is room to cut labor costs and they will not hesitate to exploit any weakness that presents itself.
No one can predict what will come out of this last week of "expedited mediation." Mr. Smisek and his management team appear to be getting testy and arrogant, and I am doubtful that any terms, over and above what the Continental subsidiary flight attendants have now, will be presented. It is also very unlikely that salary increases will be fully retro-active to the January 7, 2010 amendable date. To do so would cost the company, at a minimum, $200 million (just for the United subsidiary flight attendants). United management is not prepared to take this kind of hit as it affects their compensation. They also do not want to set such a costly precedent to be exploited in the on-going negotiations with pilots from both subsidiaries, as well customer service agents, ramp, dispatch and other work groups.
The United AFA MEC should take this review time and sit down with the ALPA (Air Line Pilots Association) MEC's from both the United and Continental subsidiaries. From here you will be able to gain your best support in your decision whether or not to present the Tentative Agreement to the membership. You are all in this together, and any weakness shown by one group will only make things harder for the others.
To my AFA readers, I make no illusions as to what you want or how to tell you to vote. I know how badly you deserve and need raises, and how many of you really just hate this whole process. If the MEC comes out tomorrow and presents a Tentative Agreement, they have only done so because they feel they have a responsibility to do so. It is up to you to carefully review this agreement and decide if you want the MEC to go back management and say "thanks, but no thanks."
United management will present this Tentative Agreement ("TA") to AFA's Negotiating Committee. They will take this TA back to the United AFA Master Executive Council ("MEC"). The MEC will carefully review this TA and decide if this is something they feel should be presented to the membership for voting.
This will be a very difficult process and decision for the MEC. They are keenly aware how eager their members are to move forward and finally get a well-deserved raise. However, the MEC also knows that if they give in too quickly just to get on with things, it will set the tone for the relationship the union will have with the "new United" management from this point forward. Management still feels there is room to cut labor costs and they will not hesitate to exploit any weakness that presents itself.
No one can predict what will come out of this last week of "expedited mediation." Mr. Smisek and his management team appear to be getting testy and arrogant, and I am doubtful that any terms, over and above what the Continental subsidiary flight attendants have now, will be presented. It is also very unlikely that salary increases will be fully retro-active to the January 7, 2010 amendable date. To do so would cost the company, at a minimum, $200 million (just for the United subsidiary flight attendants). United management is not prepared to take this kind of hit as it affects their compensation. They also do not want to set such a costly precedent to be exploited in the on-going negotiations with pilots from both subsidiaries, as well customer service agents, ramp, dispatch and other work groups.
The United AFA MEC should take this review time and sit down with the ALPA (Air Line Pilots Association) MEC's from both the United and Continental subsidiaries. From here you will be able to gain your best support in your decision whether or not to present the Tentative Agreement to the membership. You are all in this together, and any weakness shown by one group will only make things harder for the others.
To my AFA readers, I make no illusions as to what you want or how to tell you to vote. I know how badly you deserve and need raises, and how many of you really just hate this whole process. If the MEC comes out tomorrow and presents a Tentative Agreement, they have only done so because they feel they have a responsibility to do so. It is up to you to carefully review this agreement and decide if you want the MEC to go back management and say "thanks, but no thanks."
We
all may be surprised and management might be changing course and
setting a new tone for this "new United." Lets keep our fingers crossed
that this is the case. Nonetheless, today is again another significant
day for United's front-line employees.
In all of this, please remember, irregardless of which subsidiary writes your paycheck, you are all more than Mr. Smisek's "co-workers" - YOU ARE UNITED AIRLINES. I, along with millions of other customers, support you.
In all of this, please remember, irregardless of which subsidiary writes your paycheck, you are all more than Mr. Smisek's "co-workers" - YOU ARE UNITED AIRLINES. I, along with millions of other customers, support you.
Sunday, December 25, 2011
More than "co-workers" - you are United Airlines.
Hello All -
it is a beautiful day here in Southern California making for a
fantastic and relaxing Christmas Day. Wherever you may be, I hope you
are all able to enjoy the day.
For
the readers who are traveling this time of year, bring with you a lot
of patience. I am sure many you have already experienced one hassle or
another. Be patient with the TSA agents, and please be patient with
those on the front-line of any airline. Many are away from their
families today. Many have chosen to work on the holiday to pick up the
extra pay they need to help them cover extra expenses they too have at
this time of year. They will put up with full planes, and passengers
fighting for overhead space as they try to bring their "kitchen sink"
aboard in their carry-on. Customer service agents will have long lines
of customers who have missed connections, or weather has caused delays
or even cancellations of flight. If you are traveling this season, bring
a smile, and take the time to really say "thank you."
For
my friends at United, this is my chance to again say "thank you." You
are truly dedicated. You endure long hours, and layovers away from your
family just so that us customers will be able to enjoy the holiday
season. You are more than "co-workers," you are United Airlines.
I
need to get a mileage run in to lock-in my elite level Mileage Plus
status for 2012. I have picked up a last minute trip from LAX to
Richmond and back for Monday, December 26. I have connections in
Chicago. The fare was pretty decent, I guess there are not many going to
Richmond this time or year. It will be a long day, 6:00 AM flight
(ughh), but with a double miles promotion in place for flights going to
or through Chicago, I will hit my mileage goal. I hope to see some of
you tomorrow.
When
I return I hope to finish up two blog entries I have started. One
discusses the importance in recognizing humility against arrogance. In
the other, as I remain puzzled by the status, pace and direction of the
labor negotations; what are the reasons? Well, I can think of about 200
million of them. The first week of 2012 will mark the second anniversary
dates from when many of the contracts became amenable. Other than with
the engineers, where a tentative agreement has been announced, there has
not been much progress with the other groups. Mr. Smisek continues to
look for that agreement that is "both fair to the employee and fair to
the company." Each time he repeats that statement I get the feeling that
what he sees is "fair to the company" will not be as fair to the
employee.
Again - Merry Christmas everyone. I appreciate all my readers and supporters. Be safe!
Monday, September 5, 2011
Ten Years Later - Always Remembering, Never Forgetting
This
Sunday, September 11, 2011 marks the ten-year anniversary of a very dark
day in history. Over the last month, we have been reminded that this
indeed is the tenth anniversary of the 9/11 attacks. Retrospectives have
appeared daily in the newspaper, and television has had one program or
another with interviews and in depth analyses of the events of that day.
It was hard for me to watch what was happening on that day ten years
ago, and it is hard for me to watch again, so I don't. Is that wrong?
There is something good to remember though. At that time, this country and its citizens came together in such unity and resolve, the likes of which had not been seen since the U.S. entered World War II. Thousands of volunteers descended upon New York, Washington D.C. and Pennsylvania, coming from all corners of the world, to assist in any way they could. In local communities, people packed churches to attend prayer vigils and services honoring the dead, the wounded, and the emergency responders working hard with rescue and clean-up efforts at the crash sites. Heck, even our government cast aside politics and party lines to come together to quickly get money, supplies, troops and equipment to these sites. I will never forget the horror, but to get through that I remember that feeling of unity and determination that the U.S. is still the greatest nation on the planet, and its citizens are going to do all they can to make sure it never happens again.
"Always Remember" and "Never Forget" are phrases we will hear and see a lot as the tenth anniversary nears. They both carry a lot of meaning. Always remember and never forget the dead and wounded - innocent victims of an evil act put together by a few nutjob religious zealots thinking this is what their god wanted. Then there are the fire, police and other first responders fighting tirelessy in their rescue and then sadly recovery efforts. So many of them lost their lives too. Not to be forgotten are the crew and passengers on those four airliners that did all they could to stop what was happening, even if it meant their own lives.
As I have every 9/11 since 2002, this Sunday, I will get on a United flight and take a moment to thank every crew member I can. This year, as I have for the least six years, I will fly non-stop to JFK airport and back to Los Angeles on the same day. There are many reasons why I set this tradition for myself as a way to bring honor to the day. I think the biggest reason I do so is that, despite what happened 10 years ago, the men and women who are on the front line of our airlines continue to show up for work and bring us confidence that we will reach our destinations safely. The good people at United have been through so much in the last ten years. The dedicated front-line employees accepted pay cuts and loss of pensions just so that the company they have devoted their lives to would survive. My little trips and Starbuck's cards will never go far enough to thank them properly, but I do what I can. September 11 is a very difficult anniversary for them and I just want them to know that the customers do appreciate their dedication.
This being the 10th anniversary, a lot more is being made of the day than in recent years. That is fine, but I urge everyone to keep and honor every anniversary of September 11. A new generation of young Americans is coming up that are too young to remember, or were not even born yet. It is our responsibility to pass on and make sure they understand what that day was about. It is up to you what to tell them, but just make sure you tell them something they will take to heart and pass on to the next generations. This is how we "Always Remember" and "Never Forget."
There is something good to remember though. At that time, this country and its citizens came together in such unity and resolve, the likes of which had not been seen since the U.S. entered World War II. Thousands of volunteers descended upon New York, Washington D.C. and Pennsylvania, coming from all corners of the world, to assist in any way they could. In local communities, people packed churches to attend prayer vigils and services honoring the dead, the wounded, and the emergency responders working hard with rescue and clean-up efforts at the crash sites. Heck, even our government cast aside politics and party lines to come together to quickly get money, supplies, troops and equipment to these sites. I will never forget the horror, but to get through that I remember that feeling of unity and determination that the U.S. is still the greatest nation on the planet, and its citizens are going to do all they can to make sure it never happens again.
"Always Remember" and "Never Forget" are phrases we will hear and see a lot as the tenth anniversary nears. They both carry a lot of meaning. Always remember and never forget the dead and wounded - innocent victims of an evil act put together by a few nutjob religious zealots thinking this is what their god wanted. Then there are the fire, police and other first responders fighting tirelessy in their rescue and then sadly recovery efforts. So many of them lost their lives too. Not to be forgotten are the crew and passengers on those four airliners that did all they could to stop what was happening, even if it meant their own lives.
As I have every 9/11 since 2002, this Sunday, I will get on a United flight and take a moment to thank every crew member I can. This year, as I have for the least six years, I will fly non-stop to JFK airport and back to Los Angeles on the same day. There are many reasons why I set this tradition for myself as a way to bring honor to the day. I think the biggest reason I do so is that, despite what happened 10 years ago, the men and women who are on the front line of our airlines continue to show up for work and bring us confidence that we will reach our destinations safely. The good people at United have been through so much in the last ten years. The dedicated front-line employees accepted pay cuts and loss of pensions just so that the company they have devoted their lives to would survive. My little trips and Starbuck's cards will never go far enough to thank them properly, but I do what I can. September 11 is a very difficult anniversary for them and I just want them to know that the customers do appreciate their dedication.
This being the 10th anniversary, a lot more is being made of the day than in recent years. That is fine, but I urge everyone to keep and honor every anniversary of September 11. A new generation of young Americans is coming up that are too young to remember, or were not even born yet. It is our responsibility to pass on and make sure they understand what that day was about. It is up to you what to tell them, but just make sure you tell them something they will take to heart and pass on to the next generations. This is how we "Always Remember" and "Never Forget."
Tuesday, June 28, 2011
What will tomorrow bring?
"Any agreement (with labor and the unions) has to be fair to the employee, and fair to the company."
I still cannot shake this talking point that Mr. Smisek kept using at the shareholders' meeting earlier this month. To my disappointment, Mr. Smisek made it very clear that management will be deciding what is fair to the employee. That got me to thinking about what senior management is looking at to come up with that number they call "fair."
Mr. Tilton always used to say that airline management needs to deal with the "structural issues that plague the industry." Mr. Smisek talks about "fairness." No matter how you say it, both of them still have it in their minds that controlling and reducing labor costs is one of key avenues to "sustained profitability." It is also the fallback plan when they cannot compete well enough to increase revenues. This view is backed up by Wall Street analysts crunching numbers and offering their take on how well an airline is managed. With all that, the front-line employees only chance to be heard is through their union representation.
Nearly all of the collective bargaining agreements in place, for both the United and Continental subsidiaries, are currently "amendable." The Railway Labor Act (RLA) prohibits any agreement from expiring at the end of its term, it only becomes "amendable" and both parties are able to negotiate new terms for a fixed period. Until new agreements are ratified, labor groups keep working under the the existing terms of their contracts.
Getting back to "fairness" and "structural issues" - it has become clearer that Mr. Smisek's leadership team has their "fair to the employee, fair to the company" plan already mapped out, with all roads leading to concessions on the part of the employees. Again, to them, labor costs are a "structural issue" to be reformed. Management has already and "in general" conceded that employees deserve raises, but where they hope to gain the greater concessions are in work rules, productivity improvements, reduced employer contributions for benefits, and more outsourcing of jobs to third parties. This outsourcing includes expanding the scope and having more flexibility to use regional and code share carriers.
FLIGHT ATTENDANTS - In just a little over 24 hours from the time this entry is posted, flights attendants at United and Continental will have made their choice as to which single union will represent them as part of the "new" United. This is an important decision as it will demonstrate to management how hard the flight attendants are willing to fight to restore pay and benefits back to levels they deserve. As an outsider, from what I can see, the best chance for the flight attendants to make a real difference and show management that their contributions deserve more respect is with the "AFA," the Association of Flight Attendants.
In their representation of the Continental flight attendants, the other union, the International Association of Machinists and Aerospace Workers ("IAM") has already set the tone and floor for any contract negotiations with United's senior management. Having already already negotiated an agreement for the Continental flight attendants, they really have no leverage to go back to the table to demand more in their representation of all flight attendants of the combined carriers.
Being the largest union in place to represent only flight attendants, the AFA will make sure their membership is heard. They clearly understand the needs of of all flight attendants whether they are senior or junior, line-holder or reserve, and know how to structure an agreement where they all are represented fairly. They have professional standards in place for their members to abide by so that they stand out as more than just a commodity to management. As a customer, I feel comforted when I see a flight attendant wearing their AFA pin.
As with the pilots, any contract the flight attendants agree to should make sure loopholes are closed for management to outsource service to regional or codeshare carriers. Just to keep up with inflation, wage rates need to be higher than those set in the agreement the Continental flight attendants recently ratified. Protections also need to stay in place so that flight attendants get enough rest, layovers are in safe hotels, and make scheduling more efficient to minimize dead-heading and make the number of hours that they are actually paid for is closer to the number of hours they are actually "on duty."
CUSTOMER SERVICE - I have many dear friends in customer service at United. One of them is a shop steward for her local IAM council. In conversations we have had, there is no real love of the IAM with CSR's. Continental's customer service agents do not belong to a union.
Sadly, number crunchers for senior management will view this group as being more expendable than others. It costs less to hire and train a new customer service agent than it does a pilot, flight attendant, mechanic or dispatcher. Without union protection, management is free to hire and fire, or to reduce wages and hours "at will." When senior management sends out the directive to cut labor costs, employees who are not part of a collective bargaining agreement are the most vulnerable.
At hubs, mainline customer service agents will not be affected as much when service goes to regional carriers. They are still needed to check-in the customers, work the clubs and lounges, and work at the gates. CSR's should care though at the smaller stations at risk of going to all regional service, like Burbank did recently.
THE PILOTS - Continental's Board of Directors should never have approved the merger without this matter being resolved beforehand. Pilots from both subsidiaries are represented by the Air Line Pilots Association (ALPA), and that gives them more leverage than any of the other labor groups. Continental's pilots have been in negotiations since 2008, and United pilots started their negotiations in 2009. Little of any substantive value has been resolved. Wages and seniority integration are two big issues, but from what I have read, scope protections, particularly limiting the use of regional carriers is going to be the biggest fight. United pilots, in the bankruptcy, were forced into conceding more on this issue. It seems like Denver has become more of a Skywest hub than it is a United hub. Continental pilots are better protected.
Management loves the flexibility of using regional carriers. It helps them get load factors up, which will drive yields up, particularly in mid-size non-hub destinations. More profit is derived from filling 70 seats on an RJ-700 than filling 70 seats on an A-319 or 737. The RJ-700's and similar equipment are easy sells to the customer because they can put in a First Class section for the elite flyers and instead of offering one flight on an A-319, they sell the customer on the flexibility and convenience of two flights to different hubs on the RJ-700.
ExpressJet is a regional carrier that is the primary provider of regional service for Continental Airlines. On May 1, 2010, Continental and United announced they were going to merge, and on August 5, 2010, Skywest announced it would acquire ExpressJet. In February of 2010, United exercised warrants they owned to acquire a large stake in ExpressJet. Continental already owned a large stake. United and Continental management had already decided before they announced their own merger that they were going to sell their majority interest in ExpressJet to Skywest (or another regional operator). This accomplished two things - (1) it would help to minimize anti-trust problems which may quash the merger they were planning, and (2) they knew that when they needed to add regional service with jets carrying more than 50 passengers it could be done under the "United" subsidiary by a third party like Skywest. To remain competitive and keep their elite customers happy, Continental has had to keep mainline service on some routes that might be more profitably served with regional jets carrying more than 50 passengers. There is now nothing stopping the new United from replacing that service with regional service under the "United" subsidiary and "United Express" name on larger regional jets. Skywest, as the third party and without scrutiny, when mechanical or other 1208 unforeseen issues arise, can now "substitute" larger regional jets on routes operated by ExpressJet. When that happens, there is nothing stopping the new United from selling those extra seats.
It is an ugly issue, and if there is any sticking point that will lead to a strike, it is this one. This issue also impacts flight attendants, and if there is anything management would fear, is that the pilots and flight attendants stand firmly together and go to the negotiating table with the same terms on this one issue.
BACK TO MANAGEMENT - As I started to write in this post, management has already made up their minds as to what they feel is "fair." They favor the IAM over the AFA for the flight attendants knowing which union is more "fair" to management. With the pilots they will push the loopholes now provided by the merger to increase outsourcing to regional carriers and will use threats of legal action and base closures to weaken their ranks.
Even threats of work actions or strikes by the workers are in their calculations of what is "fair." To them, in the short term, the cost of any work action may reap its own returns by wearing down union members enough they will eventually give in to management's terms. All that I ask is that the employees remain strong.
Some are going to argue that my observations are without merit and that this fight is not mine. However,as a shareholder, I am concerned about how this company is run, and I firmly believe that a well-paid, well-respected front line is the only way to the "sustained profitability" management so desparately seeks. As a customer, if the front-line employees are enthusiastic about going to work, then the "travel experience" Mr. Smisek wants to sell to me will be that much better.
Mr. Smisek, these good people on the front-line are not your "co-workers." They are more than that, they are this airline. Until you are outside, below the wing, on a snowy Christmas Eve in Chicago, or sitting at a customer service counter after a flight cancellation; until you put yourself on the front-line you will never be able to call yourself a "co-worker." Get your number crunchers to take some time to re-think what is "fair," and by all means get yourself into this mix and settle these contracts.
I still cannot shake this talking point that Mr. Smisek kept using at the shareholders' meeting earlier this month. To my disappointment, Mr. Smisek made it very clear that management will be deciding what is fair to the employee. That got me to thinking about what senior management is looking at to come up with that number they call "fair."
Mr. Tilton always used to say that airline management needs to deal with the "structural issues that plague the industry." Mr. Smisek talks about "fairness." No matter how you say it, both of them still have it in their minds that controlling and reducing labor costs is one of key avenues to "sustained profitability." It is also the fallback plan when they cannot compete well enough to increase revenues. This view is backed up by Wall Street analysts crunching numbers and offering their take on how well an airline is managed. With all that, the front-line employees only chance to be heard is through their union representation.
Nearly all of the collective bargaining agreements in place, for both the United and Continental subsidiaries, are currently "amendable." The Railway Labor Act (RLA) prohibits any agreement from expiring at the end of its term, it only becomes "amendable" and both parties are able to negotiate new terms for a fixed period. Until new agreements are ratified, labor groups keep working under the the existing terms of their contracts.
Getting back to "fairness" and "structural issues" - it has become clearer that Mr. Smisek's leadership team has their "fair to the employee, fair to the company" plan already mapped out, with all roads leading to concessions on the part of the employees. Again, to them, labor costs are a "structural issue" to be reformed. Management has already and "in general" conceded that employees deserve raises, but where they hope to gain the greater concessions are in work rules, productivity improvements, reduced employer contributions for benefits, and more outsourcing of jobs to third parties. This outsourcing includes expanding the scope and having more flexibility to use regional and code share carriers.
FLIGHT ATTENDANTS - In just a little over 24 hours from the time this entry is posted, flights attendants at United and Continental will have made their choice as to which single union will represent them as part of the "new" United. This is an important decision as it will demonstrate to management how hard the flight attendants are willing to fight to restore pay and benefits back to levels they deserve. As an outsider, from what I can see, the best chance for the flight attendants to make a real difference and show management that their contributions deserve more respect is with the "AFA," the Association of Flight Attendants.
In their representation of the Continental flight attendants, the other union, the International Association of Machinists and Aerospace Workers ("IAM") has already set the tone and floor for any contract negotiations with United's senior management. Having already already negotiated an agreement for the Continental flight attendants, they really have no leverage to go back to the table to demand more in their representation of all flight attendants of the combined carriers.
Being the largest union in place to represent only flight attendants, the AFA will make sure their membership is heard. They clearly understand the needs of of all flight attendants whether they are senior or junior, line-holder or reserve, and know how to structure an agreement where they all are represented fairly. They have professional standards in place for their members to abide by so that they stand out as more than just a commodity to management. As a customer, I feel comforted when I see a flight attendant wearing their AFA pin.
As with the pilots, any contract the flight attendants agree to should make sure loopholes are closed for management to outsource service to regional or codeshare carriers. Just to keep up with inflation, wage rates need to be higher than those set in the agreement the Continental flight attendants recently ratified. Protections also need to stay in place so that flight attendants get enough rest, layovers are in safe hotels, and make scheduling more efficient to minimize dead-heading and make the number of hours that they are actually paid for is closer to the number of hours they are actually "on duty."
CUSTOMER SERVICE - I have many dear friends in customer service at United. One of them is a shop steward for her local IAM council. In conversations we have had, there is no real love of the IAM with CSR's. Continental's customer service agents do not belong to a union.
Sadly, number crunchers for senior management will view this group as being more expendable than others. It costs less to hire and train a new customer service agent than it does a pilot, flight attendant, mechanic or dispatcher. Without union protection, management is free to hire and fire, or to reduce wages and hours "at will." When senior management sends out the directive to cut labor costs, employees who are not part of a collective bargaining agreement are the most vulnerable.
At hubs, mainline customer service agents will not be affected as much when service goes to regional carriers. They are still needed to check-in the customers, work the clubs and lounges, and work at the gates. CSR's should care though at the smaller stations at risk of going to all regional service, like Burbank did recently.
THE PILOTS - Continental's Board of Directors should never have approved the merger without this matter being resolved beforehand. Pilots from both subsidiaries are represented by the Air Line Pilots Association (ALPA), and that gives them more leverage than any of the other labor groups. Continental's pilots have been in negotiations since 2008, and United pilots started their negotiations in 2009. Little of any substantive value has been resolved. Wages and seniority integration are two big issues, but from what I have read, scope protections, particularly limiting the use of regional carriers is going to be the biggest fight. United pilots, in the bankruptcy, were forced into conceding more on this issue. It seems like Denver has become more of a Skywest hub than it is a United hub. Continental pilots are better protected.
Management loves the flexibility of using regional carriers. It helps them get load factors up, which will drive yields up, particularly in mid-size non-hub destinations. More profit is derived from filling 70 seats on an RJ-700 than filling 70 seats on an A-319 or 737. The RJ-700's and similar equipment are easy sells to the customer because they can put in a First Class section for the elite flyers and instead of offering one flight on an A-319, they sell the customer on the flexibility and convenience of two flights to different hubs on the RJ-700.
ExpressJet is a regional carrier that is the primary provider of regional service for Continental Airlines. On May 1, 2010, Continental and United announced they were going to merge, and on August 5, 2010, Skywest announced it would acquire ExpressJet. In February of 2010, United exercised warrants they owned to acquire a large stake in ExpressJet. Continental already owned a large stake. United and Continental management had already decided before they announced their own merger that they were going to sell their majority interest in ExpressJet to Skywest (or another regional operator). This accomplished two things - (1) it would help to minimize anti-trust problems which may quash the merger they were planning, and (2) they knew that when they needed to add regional service with jets carrying more than 50 passengers it could be done under the "United" subsidiary by a third party like Skywest. To remain competitive and keep their elite customers happy, Continental has had to keep mainline service on some routes that might be more profitably served with regional jets carrying more than 50 passengers. There is now nothing stopping the new United from replacing that service with regional service under the "United" subsidiary and "United Express" name on larger regional jets. Skywest, as the third party and without scrutiny, when mechanical or other 1208 unforeseen issues arise, can now "substitute" larger regional jets on routes operated by ExpressJet. When that happens, there is nothing stopping the new United from selling those extra seats.
It is an ugly issue, and if there is any sticking point that will lead to a strike, it is this one. This issue also impacts flight attendants, and if there is anything management would fear, is that the pilots and flight attendants stand firmly together and go to the negotiating table with the same terms on this one issue.
BACK TO MANAGEMENT - As I started to write in this post, management has already made up their minds as to what they feel is "fair." They favor the IAM over the AFA for the flight attendants knowing which union is more "fair" to management. With the pilots they will push the loopholes now provided by the merger to increase outsourcing to regional carriers and will use threats of legal action and base closures to weaken their ranks.
Even threats of work actions or strikes by the workers are in their calculations of what is "fair." To them, in the short term, the cost of any work action may reap its own returns by wearing down union members enough they will eventually give in to management's terms. All that I ask is that the employees remain strong.
Some are going to argue that my observations are without merit and that this fight is not mine. However,as a shareholder, I am concerned about how this company is run, and I firmly believe that a well-paid, well-respected front line is the only way to the "sustained profitability" management so desparately seeks. As a customer, if the front-line employees are enthusiastic about going to work, then the "travel experience" Mr. Smisek wants to sell to me will be that much better.
Mr. Smisek, these good people on the front-line are not your "co-workers." They are more than that, they are this airline. Until you are outside, below the wing, on a snowy Christmas Eve in Chicago, or sitting at a customer service counter after a flight cancellation; until you put yourself on the front-line you will never be able to call yourself a "co-worker." Get your number crunchers to take some time to re-think what is "fair," and by all means get yourself into this mix and settle these contracts.
