A wounded industry struggles back from the effects of Black Tuesday

Air Line Pilot, November/December 2001, p.12
By Chris Dodd, Staff Writer

Within hours of the September 11 terrorist attacks on New York City and Washington, D.C., economists were asking whether the already weakened U.S. and Canadian economies could recover from an assault on their aviation systems. So the symbolism was obvious when, within days, the line snaking through Terminal A at Reagan National Airport was not passengers, but job seekers at a temporary employment center set up by the city of Arlington, Va.

The shops and restaurants along the airport’s gleaming concourse sat idle while federal agencies and other interested parties, including ALPA, debated the wisdom of reopening an airport in the front yard of the White House and Congress. But the shuttered businesses that depended on the airport conveyed a message few could mistake: as aviation goes, so, largely, goes a nation’s prosperity.

Reagan National, to the relief of most, reopened for business with limited operations on October 4, but the U.S. and Canadian aviation systems are far from fully recovered. Whatever the economic prognosis, ALPA members will feel the effect, through layoffs or perhaps more permanent changes to their carriers.

Airline industry analysts have projected layoffs throughout the industry to reach 100,000 as a result of the attacks of September 11, with a proportional number coming from the pilot ranks. ALPA’s vice-president–administration, Capt. Jerry Mugerditchian, who helps coordinate ALPA services for furloughed pilots, said in mid-October that the exact layoff numbers were still uncertain. But they could number several thousand.

"Those of us who’ve been in the U.S. airline industry for some time know that it has always had economic turns —highs and lows," Capt. Mugerditchian said. The industry might have been in a downturn before September 11, but, he said, "it’s in freefall now."

ALPA departments that steeled themselves to help members cope with the industrial fallout from September 11 saw countless carriers scrambling to adjust to the new landscape. "It’s just basic, raw survival," Capt. Mugerditchian commented.

ALPA is no stranger to layoffs (see chart, page 13). But, until earlier this year, the U.S. airline industry, along with the rest of the country, had been enjoying almost unprecedented prosperity. Since January 2000, ALPA had seen only a small number of carriers (primarily cargo carriers) furlough pilots or go out of business entirely (see chart, page 14). Shortly after September 11, one airline (Midway) became a casualty, and since then, more than half of the ALPA-represented carriers have at least discussed layoffs.

"I think every airline is changing its furlough projections on a daily basis," Capt. Mugerditchian said in mid-October. "They don’t really know how the industry will be affected. They’re trying to understand how to control their capacity, costs, and cash flow. I believe that’s why we have so much uncertainty in terms of furlough numbers. We hear major airlines project large numbers, and then the number is reduced. They haven’t sorted it out yet. They’re just trying to stay aloft with their cash flow problems while trying to determine what their capacity should be."

Many veteran ALPA pilots are familiar with the industry’s mood swings and know firsthand the pains of a layoff, Capt. Mugerditchian said. A pilot for TWA, Midway, and then United, he has been furloughed twice for a total of more than 11 years. But, he added, "I’ve never seen anything like this."

The U.S. carriers also lobbied the Administration and Congress for a financial bailout, which also figured into their equation for survival.

After much haggling, U.S. lawmakers agreed to provide $15 billion —$5 billion in grants and an additional $10 billion in loan guarantees.

One of the criteria to obtain preferential consideration for the latter was for carriers to demonstrate they had at least tried to obtain concessions from employees and other stakeholders.

In Canada, following much prodding from ALPA and other advocacy groups, Transport Minister David Collenette said that the government would provide $160 million (Canadian) to help the airlines, with $100 million (Canadian) of that expected to go to Air Canada.

In the weeks after the attacks, while the U.S. and Canadian airline industries continued to sort through the chaos of changing security measures and depressed passenger loads, ALPA’s response was well-prepared, measured, and professional.

Close on the heels of establishing a Security Task Force, the Association set up a Task Force on Collective Bargaining to address the representational issues that were sure to grow out of an industry in crisis.

ALPA Director of Representation Seth Rosen was tapped to head the Collective Bargaining Task Force on the staff side.

Task Force members, scattered all over North America while the air transportation system was still locked down, held their first conference call on September 14 and their first conference call with pilot representatives of the largest carriers ALPA represents 3 days later, Rosen notes. "The idea was to put together a task force similar to the one that was working on security because, while security was the first thing we had to deal with, we knew the ramifications on the industrial side were going to be immediate. We could hear it from some of the calls we were getting from some of the larger carriers—Delta and Continental, for example. Management was a little bit panicked, uncertain."

The Task Force has worked on four tracks—larger carriers, express and smaller carriers, cargo and miscellaneous carriers, and Canadian carriers —to monitor the issues specific to each sector.

Weekly conference calls among ALPA contract administrators, pilot group negotiators and representatives, and staff members from the Economic and Financial Analysis, Representation, Retirement and Insurance, Legal, Government Affairs, and Communications Departments, as well as ALPA’s outside counsel, Cohen, Weiss and Simon, gathered and analyzed extensive data.

The "intelligence gathering" was critical, Rosen says. This effort worked "to facilitate information exchange among the various pilot groups on airline-specific plans to respond to the industry crisis, including requests for contractual relief."

The aim was to prepare the Association’s pilot groups in case those requests for relief occur. As an example, "we made sure everyone understood ALPA’s policies" on crisis and concessionary negotiations, Rosen notes.

The policies were those that ALPA’s Collective Bargaining Committee developed during the post-deregulation era and further honed during the recession of the early 1990s. "We’ve put these guidelines and policies into place over time; and most carriers know that we’re not just going to provide concessions without analysis and direction."

Some exceptions cropped up, of course—US Airways management, for instance, demanded that the pilots agree to an immediate pay cut to avoid furloughs. Management at CCAir, Mesa, and Sun Country "came at the pilots hard" for contractual relief, Rosen says, while management at Champion, whose pilots are still seeking their first ALPA contract, unilaterally cut pilots’ pay and monthly guarantee.

In Canada, the situation was complicated by the ongoing merger discussions among the airlines making up Air Canada Regional Airlines. Pilots of Air Canada (represented by an independent union) had furlough protection in their collective agreement.

The smaller airlines in Canada have limited furlough protection. At press time, Air Canada Regional was expected to furlough approximately 260 pilots. Air Transat and Calm Air had also announced furloughs, and a likelihood of furloughs existed at Canada 3000.

By pulling together an overview of what was going on at all of ALPA’s carriers, Rosen notes, "We were able to see our ‘trouble spots’ right away, to see where we might need resources and could deploy teams immediately."

Many business students learn that the Chinese ideogram for "crisis" incorporates the symbol for "opportunity." The Task Force has worked to make sure that management actions during a period of possible risk to pilot contracts were met with an effective, coordinated response.

All of its work has been "very focused," Rosen says. "We’ve dealt with what’s happening on the operations side, what’s happening with furlough plans, the companies who had invoked ‘force majeure’ [to avoid giving proper furlough notice or pay in lieu of notice]. We had some issues with probationary pilots being fired, which we cleared up."

In those instances in which ALPA believes the crisis has been unduly twisted to provide opportunity, particularly on the invocation of force majeure, "We’re collecting all the correspondence, because we could undoubtedly take some legal action," Rosen says.

On the legislative side, too, ALPA went full throttle to try to ensure, in the financial scramble to shore up the carriers, that displaced airline workers might get some sort of lifeline, too.

Along with other unions, ALPA pressed hard for legislation to extend government help to the pinkslipped workers who were, in the words of Association of Flight Attendants President Patricia Friend, "the economic victims of the attacks." They fought hard to have included as part of the aviation security bill a bill that Sen. Jean Carnahan (D-Mo.) introduced to extend the duration of unemployment benefits for laidoff airline and airport employees, extend COBRA insurance for eligible displaced workers, and make some employees eligible for retraining.

On October 3, a contingent of pilots, flight attendants, mechanics, reservations agents, and other union members from an array of AFLCIO unions—ALPA, the AFA, the Communications Workers of America, the International Association of Machinists, and others —rallied at the Capitol to demand "fairness for workers" and lobby Congress not to neglect airline workers in the rush to extend financial first aid to the airline industry.

ALPA’s president, Capt. Duane Woerth, noted the "patriotic fervor" that followed the attacks on the World Trade Center and Pentagon and urged that the contributions of the hundreds of thousands of workers in the U.S. airline industry, many of them facing layoffs, not be discounted. "This industry has fought for America," he declared.

As of this writing, the Carnahan amendment did not become part of the Senate’s final aviation bill, but ALPA was pushing to ensure that some form of help for displaced workers be included in other legislation or as part of the Administration’s economic stimulus package. Aviation security issues, economic relief for the industry, and help for airline workers are "our total focus right now," says a spokesperson for ALPA’s Government Affairs Department.

Meanwhile, the Association has deployed staff resources from the Membership Services and Communications Departments to provide meaningful assistance to pilots who have received furlough notices. The unique circumstances of the airline industry since September 11 have forced ALPA to rework its traditional furlough package, Capt. Mugerditchian added in mid-October.

"In the past, when we’ve worked with furloughed members or those who worked for carriers that had ceased operation, we provided job fairs or regional meetings because jobs were available," Capt. Mugerditchian said. "In this downturn, in the wake of September 11, we’re not seeing opportunities in flying that we have had in the past. Some corporate opportunities may exist, or foreign opportunities with some nonscheduled carriers (though foreign carriers are laying off pilots, too).

"But what we’re facing in most of these situations," he said, "is that carriers will take you as a new-hire only if you agree to resign your current seniority number," which would make a new-hire less likely to "jump ship" if the industry were to improve and he or she were recalled.

Avolar, the business jet subsidiary that United Airlines has established, was one of the potential employers reportedly imposing that condition, as well as type-rating requirements, on applicants, Capt. Mugerditchian noted. ALPA was cautioning job seekers to know all the conditions attached to an offer before accepting new employment.

That this would be a very different ballgame, with very different rules, was clear to the Association, Capt. Mugerditchian said. Many services that ALPA had offered to furloughed pilots in the past "were not really applicable to the current situation."

Consequently, the Association’s Communications Department developed a Furlough Resource website that Association members can reach through their ALPA Intranet personal home page.

Updated daily, the furlough web page includes links to all 50 states for information on unemployment benefits, tips on information on buying short-term major medical insurance and consolidating debt, and a list of current job opportunities (along with some of the caveats in the current climate).

"This is the first time we’ve used the web for this purpose, and we’ve found it’s the most valuable, timely tool to use in this rapidly changing situation," Capt. Mugerditchian added.

The U.S. and Canadian airline industries may take a couple of years to reach some degree of normality after Black Tuesday, ALPA veterans agree. But the industry will undoubtedly be very much altered—and not just in terms of passenger screenings or fortified cockpits. "We may see further consolidations through mergers or fragmentation," says Rosen. Some carriers may not survive, or may sell off assets, as in the industry reconfigurations in the mid1980s and the early 90s.

History does indeed repeat itself, particularly in aviation, "and we will likely get through it again," says Rosen, despite the horrific events that triggered the replay this time.