Wednesday, May 18, 2016

Southwest Airlines pilots descend on the carrier's annual meeting in Chicago

Southwest Airlines CEO Gary Kelly was full of nothing but cheery news — including a boost in the company stock dividend and new routes — as he stood before shareholders this morning at the carrier's 2016 annual meeting at the Renaissance Blackstone Hotel in Chicago.

But outside the hotel it was quite a different story.

More than 500 Southwest Airlines pilots, disappointed by the glacial progress in getting a new contract with the airline, were walking a massive picket line holding signs such as "Contract 2012: Four Years Delayed," that captured the group's none-too-upbeat mood. Several hundred more pilots were expected to walk a second picket line this afternoon near Chicago's Midway Airport, where Southwest has it largest hub.

The pilots were joined on the picket line today by representatives from both the flight attendants and mechanics unions at Southwest. Both groups also have been trying for years to get new deals with the low-fare behemoth, also with no success. The show of solidarity among three key labor groups at Southwest is the largest such demonstration ever in the company's 45-year history.

Southwest Captain Jon Weaks, president of the powerful Southwest Airlines Pilots' Association, said his members are tired of waiting to get a deal. "We want to be rewarded for our productivity," said Weaks, who believes new contracts and wage scales should reflect the work his pilots do.

Weaks also indicated some of his membership are now leaving Southwest because they are frustrated by the slow pace of negotiations and are going to other carriers where they can get better deals. At a press conference Kelly later disputed the claim that significantly more pilots are leaving as contract talks with pilots have dragged on for four years.

Weaks also suggested the union has seen some slight positive movement in the contract talks the past couple of weeks, but remains skeptical a breakthrough could be imminent. CEO Kelly is expected to meet with the pilots' negotiating team on June 7, the first time he has personally sat at the bargaining table during the talks. In an interview earlier this week, Kelly signaled any new contract could hinge on what kind of productivity concessions pilots were willing to make.

Meanwhile, at today's annual meeting Kelly called 2015 a "very gratifying" year for Southwest, citing record traffic, record revenue, record profits and a record stock dividend, among other accomplishments. Kelly said the company is increasing its quarterly dividend by 33 percent. On a cumulative basis, Southwest has grown its quarterly dividend twenty-fold over the past five years, the company said. The Southwest board of directors also authorized a $2 billion share repurchase plan.

Kelly's route system growth plans for the near term remain relatively modest. Long Beach, California, will come on line next month, and the carrier plans to add service from Los Angeles International Airport to several destinations in Mexico in the near future. And Kelly said once Southwest gets final approval from the federal government, it is prepared to launch service to Cuba by the end of 2016.

But Kelly steered clear in his prepared remarks of any comments on the prolonged contract negotiations with pilots, flight attendants and mechanics. But he repeatedly said how much he respects the company's employees, even as huge numbers of pilots were walking a picket line just a stone's throw from where Southwest CEO stood.

(Lewis Lazare - Chicago Business Journal)

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