Friday, August 12, 2005

Your IAM Negotiating Committee met with mediator Pat Sims in Washington DC this week. A separate bulletin has been prepared addressing these meetings.  Additionally, no further developments have occurred at ExpressJet.  We will update you when information becomes available.

Continental Micronesia announced Thursday that it may furlough a number of employees in Saipan, effective October, 1, due to the potential loss or non-renewal of service contracts with other airlines.  Japan Airlines recently announced it will discontinue flights October 4 between Japan and Saipan because of high fuel costs and low ticket prices.

Delta Air Lines' pilots may try to help the struggling airline avoid bankruptcy by accepting another pay cut. The pilots negotiated pay and benefit cuts last year to the tune of $5 billion, but Delta, which has seen numerous executives depart in recent weeks, still faces serious financial woes.

Crude oil traded above $67 per barrel Friday, hitting $67.10 before settling at a record $66.86 per barrel, $1.06 higher than Thursday's record close.

USA Today reported Wednesday that Independence Air, which launched service just 14 months ago as a low-cost carrier, is preparing for a possible Chapter 11 bankruptcy filing this fall. The carrier's cash reserves have plummeted 61 percent in the last six months, and DH did not rule out the possibility that it might have to liquidate its assets.  "Although Delta and Northwest also have warned of possible filings, neither faces the prospect of liquidation," the article said.

United Airlines and Delta Air Lines  raised fares late Wednesday to mitigate skyrocketing jet fuel prices. United raised fares up to $5 for each one-way leg of a trip, and Delta raised fares $10 one-way, except in markets where it faces low-cost competition. Continental matched Delta’s fares.

United Airlines has reached an agreement with a group of finance companies to lower leasing costs on about a quarter of the bankrupt airline's fleet. A result of drawn-out negotiations, the new agreement reduces United's lease obligations by $300 million per year.

The Company reported that the price Continental pays for jet fuel increased $1.68 Tuesday to a record $74.34 per barrel.  Continental uses approximately 40 million barrels of jet fuel each year, so the airline's annual costs increase approximately $40 million for every dollar-per-barrel increase in jet fuel prices. In an article in The Wall Street Journal Tuesday reinforced what Continental's  fuel management team has been reporting.  "With crude-oil prices soaring, refiners are taking advantage of tight supplies to fatten the margins that they earn from turning oil into jet fuel," the article said. "And cash-strapped airlines are picking up the mounting tab."  To a reeling airline industry, the widening crack spread couldn't come at a worse time," the article said. 

Northwest managers have been preparing for a strike by mechanics and flight attendants.  Now, we know how well. In a board of director's report obtained by WCCO, Northwest said it expects to spend $107 million to get ready for the August 19 strike date.  That includes money for extra plane parts, recruiting replacement workers and training them, too.  And, it's three times as much money as what it would take to cut a deal with mechanics for two years. Northwest wants to cut $176 million per year. The union has offered to slash $143 million for each of the next two years.  Northwest's report also said it will move "...spare aircraft to cover potential maintenance inefficiencies" to accommodate customers and even "...focus on reduction of markets where bus transportation can be... an alternative."  That means customers could be taking a bus instead of a plane.  Northwest defends that plan saying, "we are looking at all options. In other cases...we have occasionally utilized surface transportation to get customers to their final destination."  But the airline said it will "...ensure proactive communication to customers and optimal re-accommodation."  Stating that "the US airline industry has permanently changed and Northwest Airlines has no choice but must change with it," President and CEO Doug Steenland yesterday reaffirmed the carrier's commitment to fly through a strike by its mechanics and detailed contingency plans should a job action occur. The 30-day cooling-off period expires at 12:01 a.m. Aug. 20 after which the mechanics, will be free to strike. Negotiations between the two sides resume on Monday.  It has a standby workforce of approximately 1,900 mechanics, most of whom it has recruited directly and around 400 from third-party vendors.  Northwest is also prepared with replacement flight attendants in case some decline to cross AMFA picket lines. It has been developing contingency plans for 18 months, Roberts said the company is seeking $176 million in annual cost reductions from AMFA but contract changes go far beyond pay concessions, as was made clear during yesterday's press conference. "What we are involved in is transforming a legacy airline with legacy business practices into a modern post-deregulation airline," Steenland said. Strike or no strike, the carrier intends to move most of its MRO activities to third parties, including line maintenance at smaller stations, as well as aircraft cleaning and ground handling at smaller stations.

Separately Northwest acknowledged it is in discussions with its pilots union over the airline's wet-lease of an aircraft from Champion Airlines to operate a flight. NWA said the action was taken owing to an abnormally high level of aircraft being out of service. In preparation for an expected Aug. 20 mechanics strike, Northwest Airlines used a plane and crew members from Champion Air for two scheduled flights Wednesday. Union pilots filed a grievance with officials, however, Northwest said it was allowed to use planes and pilots from the charter company as part of a contingency plan should its mechanics go on strike.

We would like to encourage all members to attend your Local Lodge business meeting. Each base must have a quorum to conduct business. The following is a schedule for upcoming meetings:  

Cleveland: Thursday, September 9, 4:00 pm at 669 North Rocky River Drive;

Guam: Wednesday, August 17, 4:00 p.m. at the Airport Conference Room;

Houston: Wednesday, August 24, 1:00 p.m. at 15710 JFK Blvd;

: Tuesday, September 13, 3:00 p.m. at the Wyndam Hotel.