Source: Denver Post
Author: Kelly Yamanouchi

The pilots union at United Airlines is forming a strike preparedness committee, saying it wants improvements to its labor contract as the company has returned to profitability and granted senior management "huge pay raises."

"We have always worked with this company under the protocol of share sacrifice," Steve Derebey, spokesman for the Air Line Pilots Association at United, told members in a recorded phone message Tuesday night. "The company has clearly signaled that they have returned to profitability by granting some senior management individuals huge pay raises. Pilots - the very group who saved this airline from the scrap heap of failed airlines - deserve the same return on our investment."

The move comes in the wake of the election of a new leader of the Air Line Pilots Association - an umbrella organization over ALPA groups at United and other airlines - who vowed to take stronger action than in the past.

"After five years of concessionary bargaining, lost pension, and battered work rules, our pilots are primed to take offensive action," said ALPA president-elect John Prater in a written statement after the October election. "This may mean a return to the hard-nosed tactics of earlier years and a grassroots mobilization of each and every one of our members."

Prater will succeed the current ALPA president, Duane Woerth.

Calyon Securities airline analyst Ray Neidl said in a report this week that labor could be a longer-term threat to the industry.

"The airline business is labor intensive, with highly skilled people that are heavily unionized. Further, as demonstrated by the United pilots in 2000, at the first sign of profitability at their companies, employees begin to demand outsized wage increases and their 'fair share' to make up for cuts previously made to turn their employers around. This is usually a sign that we are entering the tail-end of the economic cycle for the industry," Neidl wrote. "It is only fair to share the fruits of success with employees since they were part of the process, even though it may have been under threat of their job survival. However, airline management has to be diligent in continuing to control costs, particularly labor costs, and must remain conscious of continuing cost containment. It is, after all, a variable and largely unpredictable industry."