Received in a CWA email today.
A view from the US Airways Board
CWA BOD Member Maggie Jacobsen
Following is my report covering the Board of Directors Meeting held in October. The mood was somber, for although employees are doing their utmost to make the company succeed, and traffic has improved, and revenue is up, the yield is down and competition is threatening to erode market share in cities the US Airways Group has served for many years.
The minutes of the regular Board Meeting, held in July were approved. In addition Board Members covered the following:
* Approved charters for the Corporate Governance, Nominating and Safety Committees. Charters are documents that set fort the authority, responsibilities and duties of the designated Committees. In addition each Committee reported on matters in their purview.
*The Board approved authorizing the Corporation to enter into lease transactions for up to seven A319 aircraft and one Airbus A320.
*Revenue improved year over year, with the highest 12-month level since November 2000. Although earnings were $282 million better than 02 - with 9.6% revenue increase, improved productivity, advance booked seats above 02 levels, positive growth in Caribbean destinations, and improved revenue from the UAL code-share - the company still shows a $93 million loss in the 3rd quarter.
*The management and pilot groups of US Airways are continuing to try to work out differences over the regional jets. The issue involves the labor costs of US Airways pilots compared with pilots of other carriers certified to fly these aircraft. A number of RJs that are already in the pipeline will be delivered and start flying through contracts with Mesa, TransStates and Chautauqua Airlines.
*Corporate Affairs presented information about issues before Congress that include a commuter slot at DCA, a dispute on air traffic control privatization and pension legislation that could lead to restoration of the pilot defined benefit plan. Pittsburgh hub negotiations continue, with the state budget crisis having complicated the process.
*The Social Responsibility Committee reported on the Corporate Giving program, which continues to focus on airline tickets as an in-kind gift, for charitable contributions. The Committee recommended setting aside up to $100 thousand for charitable contributions.
*Low cost carriers continue to undercut the pricing of major carriers. Their lower workforce costs (wages, benefits, pensions, etc., are lower because their workforce is younger), their lower maintenance costs (due to newer aircraft, or more leased equipment), and their choice of routes (point to point flying, targeting major markets), are all factors that provide the latitude to compete on US Airways routes against US Airways schedules at a much lesser cost.
Jet Blue is, as yet, non-union which gives management total control over their employees' salaries, benefits and other terms and conditions of employment. Decisions over manning, scheduling, work assignments, promotions, discharges, application of tenure (seniority) on work assignments, contracting out, and more are all made without any requirements to answer to their employees. Jet Blue also appears to be the darling of the stock market and are drawing investments and getting credit substantially greater than mature carriers.
Southwest also has attributes, which create value and increase their ability to offer very low fares. Their workforce "legacy" costs (a term referring to the additional costs of long-term employees, i.e. retirement, etc.) are somewhat behind the majors because the company has not been around as long as other major carriers. And, some very smart decisions were made along the way that have served the carrier well.
Their point-to-point route structure, no-frills practices in boarding procedures, open seating and peanut service gives them an edge. Also, there is also a culture within the airline which has created a flying environment which the public and employee's like - you can see it and feel it. And, yes, Southwest employees are union, and their salaries and benefits are right up there with the other major carriers in the industry, showing that a competitive carrier does not have to be built on a low employee salary and benefit structure.
During the Board meeting Dave Siegel led the discussion about the challenges US Airways is facing. He suggested that the industry, especially the network carriers, must look at structural change. The discussion ranged from financing issues, building confidence in the financial markets, trends in the way travelers find travel options and buy tickets, their expectations for service, marketing our product, route structure, the government's role in regulating and rewarding competition, competitive challenges, especially with the low cost airlines. He suggested that the industry must find new ways that will effectively compete with the low cost carriers now targeting US Airways markets.
I think that we must engage everyone at U.S. Airways, labor and management, with the task of developing new ways. We must create an environment in which creativity and ideas can be nurtured and there is the latitude to explore new options and the commitment to follow up on suggestions. We cannot simply compete with downward spiraling fares that do not reflect the long-term realities of the costs of running an airline or downward spiraling salaries and benefits that do not reward the years of service employees put into this airline.
A view from the US Airways Board
CWA BOD Member Maggie Jacobsen
Following is my report covering the Board of Directors Meeting held in October. The mood was somber, for although employees are doing their utmost to make the company succeed, and traffic has improved, and revenue is up, the yield is down and competition is threatening to erode market share in cities the US Airways Group has served for many years.
The minutes of the regular Board Meeting, held in July were approved. In addition Board Members covered the following:
* Approved charters for the Corporate Governance, Nominating and Safety Committees. Charters are documents that set fort the authority, responsibilities and duties of the designated Committees. In addition each Committee reported on matters in their purview.
*The Board approved authorizing the Corporation to enter into lease transactions for up to seven A319 aircraft and one Airbus A320.
*Revenue improved year over year, with the highest 12-month level since November 2000. Although earnings were $282 million better than 02 - with 9.6% revenue increase, improved productivity, advance booked seats above 02 levels, positive growth in Caribbean destinations, and improved revenue from the UAL code-share - the company still shows a $93 million loss in the 3rd quarter.
*The management and pilot groups of US Airways are continuing to try to work out differences over the regional jets. The issue involves the labor costs of US Airways pilots compared with pilots of other carriers certified to fly these aircraft. A number of RJs that are already in the pipeline will be delivered and start flying through contracts with Mesa, TransStates and Chautauqua Airlines.
*Corporate Affairs presented information about issues before Congress that include a commuter slot at DCA, a dispute on air traffic control privatization and pension legislation that could lead to restoration of the pilot defined benefit plan. Pittsburgh hub negotiations continue, with the state budget crisis having complicated the process.
*The Social Responsibility Committee reported on the Corporate Giving program, which continues to focus on airline tickets as an in-kind gift, for charitable contributions. The Committee recommended setting aside up to $100 thousand for charitable contributions.
*Low cost carriers continue to undercut the pricing of major carriers. Their lower workforce costs (wages, benefits, pensions, etc., are lower because their workforce is younger), their lower maintenance costs (due to newer aircraft, or more leased equipment), and their choice of routes (point to point flying, targeting major markets), are all factors that provide the latitude to compete on US Airways routes against US Airways schedules at a much lesser cost.
Jet Blue is, as yet, non-union which gives management total control over their employees' salaries, benefits and other terms and conditions of employment. Decisions over manning, scheduling, work assignments, promotions, discharges, application of tenure (seniority) on work assignments, contracting out, and more are all made without any requirements to answer to their employees. Jet Blue also appears to be the darling of the stock market and are drawing investments and getting credit substantially greater than mature carriers.
Southwest also has attributes, which create value and increase their ability to offer very low fares. Their workforce "legacy" costs (a term referring to the additional costs of long-term employees, i.e. retirement, etc.) are somewhat behind the majors because the company has not been around as long as other major carriers. And, some very smart decisions were made along the way that have served the carrier well.
Their point-to-point route structure, no-frills practices in boarding procedures, open seating and peanut service gives them an edge. Also, there is also a culture within the airline which has created a flying environment which the public and employee's like - you can see it and feel it. And, yes, Southwest employees are union, and their salaries and benefits are right up there with the other major carriers in the industry, showing that a competitive carrier does not have to be built on a low employee salary and benefit structure.
During the Board meeting Dave Siegel led the discussion about the challenges US Airways is facing. He suggested that the industry, especially the network carriers, must look at structural change. The discussion ranged from financing issues, building confidence in the financial markets, trends in the way travelers find travel options and buy tickets, their expectations for service, marketing our product, route structure, the government's role in regulating and rewarding competition, competitive challenges, especially with the low cost airlines. He suggested that the industry must find new ways that will effectively compete with the low cost carriers now targeting US Airways markets.
I think that we must engage everyone at U.S. Airways, labor and management, with the task of developing new ways. We must create an environment in which creativity and ideas can be nurtured and there is the latitude to explore new options and the commitment to follow up on suggestions. We cannot simply compete with downward spiraling fares that do not reflect the long-term realities of the costs of running an airline or downward spiraling salaries and benefits that do not reward the years of service employees put into this airline.
