Monday, August 10, 2015

Republic to present final contract offer to pilots Aug. 20

Calling current demands from pilot-union leaders “outrageous and irrational,” Republic Airways Holdings executives said they plan to present a best-and-final contract offer to the International Brotherhood of Teamsters (IBT) Local 357 on Aug. 20.

However, the executives, who until this summer expressed optimism an agreement would be reached soon, told analysts they were not sure what would transpire, or even if the union will present that offer to its members.

A major sticking point, they said, is the union wants a $348 million ratification bonus for pilots, at a three-year cost to the company of more than $1 billion. Republic wants to give pilots raises—first-year first officer pay would increase by 74% under their proposal—but executives say they cannot afford the ratification bonus.

“We were left numb to the billion dollar cost,” CEO Bryan Bedford said on the carrier’s
Aug. 7 earnings call. “We just have a gigantic chasm between what we can afford and what their demands are.”

To improve the airline’s financial and operational performance, Bedford said Republic must achieve two objectives—reach a deal with pilots, and come to new terms with the airline’s partners on a reduced flying schedule. He said Republic wants to be “fair and balanced” in discussions with United Airlines, Delta Air Lines and American Airlines.

Republic has short-term deals with reduced flying, but the airline will need to come to a long-term solution with the major airlines, Bedford said.

Changing strategy

If Republic cannot achieve those objectives, Bedford warned the company’s strategy will evolve. He did not, however, give details. “We will not hesitate to peruse an alternative path to preserve the maximum value of our airline,” Bedford said.

Republic acknowledged the lack of a pilot deal is affecting operations and hiring. Further complicating matters, the IBT last month filed a lawsuit against the company in federal district court in Indianapolis, accusing it of illegally overpaying pilots in violation of the Railway-Labor Act. The union said it fears the higher wages undercut its bargaining position.

On Friday, Republic executives reiterated that they believe the suit is without merit.

However, the suit is further hurting Republic’s ability to attract and retain pilots, according to Republic VP-human resources Matt Koscal. He said Republic is experiencing increased first-officer attrition. While a pilot deal could help improve hiring, Koscal said the government deserves some blame for making it difficult for regional airlines to find qualified first officers.

“There is a national pilot shortage,” Koscal said. “It was created by Congress and Congress must address it—and soon.”

(Brian Sumers - ATWOnline News)

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