Reshaping ALPA to Meet Challenges

By Capt. Chris Beebe, Vice-President–Finance/Treasurer
Air Line Pilot, January 2005, p.8

Since ALPA’s founding, its success as an organization--whether at the international, national, master executive council, or local council level--has depended on the effectiveness of our pilot leaders’ decision-making. Equally important, but much less apparent, has been the importance of the availability of the resources essential for carrying out those decisions. Through the 73 years since ALPA was born, this pilots’ union has been shaped and reshaped both organizationally and financially into what we are today as we face different, but no less daunting, challenges.

A prime example of reshaping the Association to address challenges facing the organization is the Major Contingency Fund, which the Board of Directors, with member-ballot approval, established in 1985. To fund it, the Board took the unprecedented step of raising dues by a full 1 percent, to 2.35 percent of pilot income. The 2.35 percent dues rate was in effect from 1985 to 1993, when it began decreasing gradually to the 1.95 percent in effect today. The MCF has been a stunning success. Today, it stands at $78 million and remains a potent weapon in procuring fair and equitable contracts for our pilot groups. The MCF is an example of forward thinking by pilot leaders and putting political risk aside to achieve a goal to benefit all ALPA pilots, and one that we draw strength from today.

ALPA is also strong because of the depth of its expertise in safety, negotiations, representation, and economic and financial analysis, which are known and recognized internationally. We also analyze and forecast our economic future in a myriad of ways. As one year’s budget is approved and put into place, consideration is already being given to the next year’s budget. This anticipation of a changing revenue environment has allowed us to maintain a consistent level of service. At the same time, we have emphasized maintaining staff integrity and the financial stability of the Association.

The financial challenges that ALPA currently faces arise from the airline cutbacks and concessionary agreements over the past 3 years. From a peak of $135 million in mid-2002, our dues income has steadily declined during the past 2 years, and it is forecast to be less than $109 million in 2005. This has led to many changes, including numerous reengineering initiatives, to prevent a tsunami of red ink.

At the national level, we closed our Print Shop. We negotiated new contracts with the two in-house unions that represent our professional and administrative employees and implemented a new salary and benefit plan for our management and nonbargaining employees. The total number of ALPA employees was reduced by more than 40, or more than 10 percent. We have cut expenses in all categories--travel, insurance, organizing, LEC funding, national committee funding, Leadership Conference, Board of Directors, just to name a few. We have modified policies related to computer purchases and cell phone plans. More of our MECs, and all of our national committees, use the Herndon Conference Center, which saves ALPA hundreds of thousands of dollars a year. We strive to contain flight pay loss expenses, from modifying ALPA policies to securing company-paid FPL provisions. For most of you, these changes have been transparent and painless because of the advance planning that went into them and the work of our fine staff.

Today, however, more change is looming. The outcome of negotiations at several of our carriers could have a profound effect on both the national budget and individual MEC budgets. Our forecast of $109 million in dues revenue for next year may prove to be too optimistic. The good news? We have the essential tools, dedicated staff, efficient decision-making process, and, most of all, the will to survive.

To maintain as much of the status quo as possible, we have reengineered and reduced costs in anticipation of revenue decreases. However, we anticipate the need to continue to cut costs, reengineer, and streamline the organization in 2005.

The challenge to do more with less begins with ALPA’s elected officers. We must continue to balance the services we provide, maintain a motivated staff, and preserve and enhance the financial viability and stability of ALPA. Together, we are responsible for seeing that the resources of ALPA are used wisely and for holding each other accountable for how we spend our members’ hard-earned money.

This "crew room standard" has served us well throughout our 74-year history and will continue to be the yardstick by which financial decisions are made within the Association.