Captain Duane E. Woerth
May 20-22, 2003
This is the fifth May Executive Board that I have had the honor to address you as President. My first was in May of 1999. We as an Association, in spite of numerous years of at least modest revenue growth, had allowed our costs, both fixed and variable costs to out pace whatever revenue growth we were experiencing. And, as consequence by May of 1999 the Operational Contingency Fund or the OCF had evaporated, it was gone, and even our operating cash reserves were at a very, very dangerously low level. I had come into the office as President five months earlier with a plan that would later become known as the "Pilot Unity" campaign. But all such strategic initiatives had to be put on the shelf; they had to be put on hold until ALPA could first bring stability to our financial and administrative houses. You have to plan for success and prepare for it before you can actually do it.
So, for those of you who were not present four years ago, the May 1999 Executive Board was highly contentious because it was initiating the necessary changes to restore that stability and break out of an unsatisfactory status quo. And that was difficult, to say the least. But to their everlasting credit, the Master Chairmen came together to rally around the only pragmatic solutions that were available to them. More than a few of them returned home to MECs that were not exactly happy with some of the votes they had taken at this Board. But we can all be grateful, and I remain so today, that the Master Chairmen had the political courage to step up to the plate and do the right thing for their pilots and this association. Now, due in no small measure to the actions taken by the master chairmen at the May 1999 Executive Board, within one year we were financially able to launch the "Pilot Unity" campaign, although we a still needed about five more months to achieve the necessary political consensus to actually do it. But, because we had planned for, because we had sacrificed for success, we were at long last in a position actually achieve it. Those joyous May Executive Boards of 2001 and 2002 where we celebrated the return of the Continental pilots and the FedEx pilots, those Boards were made possible by the much more contentious May 1999 Executive Board where the Master Chairmen really made hard decisions that enabled that success to happen.
Here we are in May of 2003 and I can report to you that, in spite of sustaining over 20 months of the most dramatic reversal of fortune that has befallen any industry, our union is still financially strong, vibrant and resilient. This is true because we not only planned for success but we also responsibly managed the success we had achieved over the recent years. We saved for a rainy day. But, while it is true that we are currently financially strong, the deep and long-term concessionary contracts that have been forced upon us have so dramatically affected our future revenue stream that maintaining the status quo again is simply not an option. We must re-engineer ALPA to ensure that we are able to fulfill our mission statement in a more streamlined and a more cost efficient manner. The necessary re-engineering Iím talking about will not be a minor tweak; it will be significant, it will be substantial. In some cases it will seem painful. The 2004 balanced budget that the Executive Council must approve in September will involve serious cost cutting to match our reduced revenue stream. Captain Beebe will be giving a detailed financial briefing in his report, so I will not belabor the point further now, except to say that the Executive Council and you, the Executive Board, over the coming months and weeks will be making numerous hard choices that will allow this union to plan for dramatic and remarkable success in the future, just like that May 1999 Board meeting.
As I travel across the country meeting with elected reps and the line pilots, the most frequently asked question is: when is this industry going to bottom out and stabilize and hopefully start a long-term recovery? Nothing gets asked of me as much as that. I always reply that while I do not know precisely when that will occur, I do know what conditions will be necessary to allow it to occur. At our Board of Directorsí meeting last October, a period of time when labor bashing in general and pilot bashing in particular were at their zenith, we put forward our position papers on the real reasons the industry was in such a nose dive. And, those reasons can be subdivided into at least three categories: category one would be the extraordinary market forces; category two would be a series, a continuing series, of management failures; with category being three being government-imposed costs and unfunded federal mandates. Now, the aftermath of the burst of the bubble economy and also the tragic events of September 11th were truly extraordinary events, triggering additional extraordinary market forces. But, virtually every other reason for our industryís demise can be laid at the feet of management and the government. First of all, low-cost carriers achieved critical mass because many of our managements failed to develop pricing and marketing strategies to effectively deal with the problem. I believe we have also demonstrated that management further lost control of their pricing via the Internet. And, instead of funding their pensions and retiring long-term debt, many of these managements spent 11 billion dollars combined, purchasing now their own worthless stock.
More importantly, user fees that were already too high were increased, especially after September 11th, in the form of security fees and unfunded federal mandates Ė thatís purely a governmental decision. And the worst of all, the White House subverted the congressional intent of the 10 billion dollars in loan guarantees that left 80% of this program untouched, and as the pilots of US Airways and United know all to well, the conditions that were attached to the ATSB loans became simple labor extortion tools, pure and simple.
So, if those were the reasons why this industry is in such a mess, what has changed to allow stabilization and recovery? Well, so far the only across the board positive change is fuel prices are lower. The jury is still out on strategies to deal with low-cost carriers, but after months of bad mouthing by analysts many have changed their minds and now think both United and Delta may have strategies that will work. However, the only effective, long-term keys to airline industry stabilization and recovery are frankly still in the hands of the government. Will security and user fees and taxes be rolled back and permanently be shifted to the Homeland Security Department? Will our especially desperate need for pension reform occur that will simultaneously protect our pensions and at the same time smooth out airline cash flows? The skyrocketing costs of health care, will anybody have a program to deal with that? Will the stimulus tax package that is now in conference between the House and the Senate have any chance at all to actually stimulate the economy and get people and business travelers back to work and flying again? Also, will our the national airspace system, our modernization program which embodies the principals and protocols of free flight to alleviate congestion and relieve the 5 billion dollars in annual delay costs that are still with us but have all but been forgotten while we have been focusing on security so much. These vital programs must go forward, and theyíre at risk now. Until all these questions I just posed can be answered with a resounding "yes," the industry may stabilize but at some uncomfortable lower equilibrium. However, it is unlikely to enter into a period of sustained recovery with growth and prosperity unless we make changes. And the bottom line is this, without a change in political leadership and philosophy, especially in the White House, most of what ails us is going to be with us for the future and threaten our long-term viability.
With the 2004 elections only 18 months away, it is not too early for ALPAís leadership and membership to begin becoming educated as to what political alternatives we have and how we may most effectively influence events to produce a more secure and promising future for our members and their families. To that end, I have invited presidential candidate Congressman Dick Gephardt to address us this afternoon at 1:15. We will tape his remarks to us and stream them to our members so that they can have a chance to become aware of the candidatesí positions critical to our job security, our rights to collective bargaining, including the right to strike, pension reform, health care reform, cabotage and a whole host of other issues pilots need to be and are interested in. How many of our members have forgotten that only a couple of weeks in office President Bush made a speech where he said that there would be no airline strikes on his watch. Except for the Comair strike, that was right, itís been nothing but PEBs other threats of a PEB ever since. We wouldnít be worrying about a McCain-Lott baseball arbitration bill if the President of the United States hadnít set us up with a record-breaking number of PEBs and a clear message he doesnít want airline strikes. After September 11th the White House wanted no, "zero" airline financial aid package. Would accept no language to include Cobra health care benefits for airline workers in the bill, he even had Republican senators filibuster to make sure the Democrats didnít have a right to vote on it. The White House turned the ATSB loan process on its head to crush pilots in particular. They opposed our arming of pilots legislation. They fought the second relief package for the airlines after the war with Iraq. It provided no help and only roadblocks to the pension reform. They donít want any airline security fees to be transferred to the Homeland Security where general treasury money will be used instead of user fees because that would detract from the larger income tax cuts they need for corporate CEOs. With corporate scandals everywhere they proposed LM2 reports so that unions have a 20- foot thick report that will cost over three million dollars in the first 18 months alone here at ALPA to implement. Ladies and gentlemen we have to go to that clue store, we have to tell our pilots whatís going on in their lives and what they have to do to change it.
Now Iím proud of all of you for helping us increase ALPA PAC to record levels. We are now the 25th largest PAC in the country Ė any kind of PAC, not just union PACs any kind of PAC, weíre number 25 in the country. Just last week alone we had to stop a cargo cabotage rule from being attached to the FAA reauthorization Bill. We got a cargo security bill that allows the arming of cargo pilots as well. We also got a markup of a technical corrections bill to end the TSAís rights to declare a pilot a security threat with no due process and no appeal process.
The Communications Department has been just as busy fighting pilot bashing, fighting CESTA and theyíre getting our message out. I hope all of you Master Chairman had a chance to review ALPAís new strategic plan for communications. If itís true that all politics are local, itís nearly as true that all communications are local too.
We need to expand our reach with the local markets, both TV, radio and print. And only a trained motivated pilot volunteer will be available and accessible all across the country can do that for us. Iím exited about its potential and urge your support for the plan that was endorsed by the Executive Council. Now much of this same type of field mobilization that worked for Communications can also help us directly out in the field in politics. Now, how do I mean to impose that? We can take these members, and know your members out there want to work very hard with us in helping fight for their agenda. We have the single best inside the Beltway team thatís ever been assembled and Paul Hallisay, Brendan Kenny and Jerry Baker, that team is the best. Inside the Beltway weíve got it covered. Where we donít have it covered are the Congressmenís home offices back in the field. Thatís where you come in. Thatís where your Legislative Affairs people come in. An awful lot of people have gotten a free ride because they may think the pilots out in the field are either politically agnostic or theyíre not getting it or theyíre voting for the very people that are opposing them. The only way we can connect the dots is to have our pilots go to home districts, not here in Washington, at home, and let them know where the voters are Ė weíre paying attention, and we can do that.
Since we can expect no political relief for at least 18 months, actually longer since the presidential inauguration wonít be until January 2005, we must do everything here at ALPA we can in the meantime to reserve, protect and defend this union. To plan for and prepare for a future of success, so that when opportunity does arrive for us to be able to move more aggressively to take the offensive once again and put gains on the table for our members we will be ready.
Now I know every single person in this room, every pilot, didnít come here to play defense. You all came here to score for your pilots and itís extremely frustrating for you. Itís the same for everybody at this head table. Nobody up here is a defensive player Ė everybody wants to go on the offensive Ė and we will. But to be able to do that weíve got to stabilize this union so that when that chance comes we can make to the most of it. Now, some of the agenda items before you at this meeting may seem administrative, they may seem mundane, I can assure you theyíre anything but that. There isnít anything out here that hasnít been processed by the Executive Council, by the National Officers, by staff, and buy a lot of your special committees to make this union stronger, to make it better, to solve problems that have been addressed by previous groups such as yourselves and brought to the Council for resolution. We need to support this agenda and use these building blocks to make a very much stronger union. I know everybody came here wanting to make a difference and not make excuses. I know those are kind of Master Chairmen we have at this table right now and thatís why the May 2003 Board and certainly our Fall Board next year are going to be the Boards where Chairmen make the hard decisions to make sure this union is going to be the strongest airline pilots union ever for the 21st Century.
Thank you very much.