Despite Picketing Warren Buffett's Meeting, NetJets Pilots Hope to Avoid Strike

NEW YORK (TheStreet) -- One group that traveled to the annual meeting of Warren Buffett's Berkshire Hathaway (BRK.A) (BRK.B) in Omaha, Neb., didn't go for the food or the discounted merchandise. Some 400 pilots employed by the company's NetJets subsidiary showed up to stage a public protest.

The move by their union, the NetJets Association of Shared Aircraft Pilots, was among the latest attempts to gain an edge in contentious contract talks that started more than two years ago when NetJets CEO Jordan Hansell decided against extending the pilots' existing labor agreement.

The union, which represents 2,700 pilots, says NetJets is seeking unfair concessions on wages, work rules and health care. The parties held their first bargaining session in July 2013 but have yet to reach an agreement. The dispute prompted the union to sue last December, making allegations of labor law violations that incorporated references to some of America's best-known brands: Hostess and Twitter (TWTR). Contract talks moved into federal mediation this week.

"Our CEO has broken our trust," said pilots' union President Pedro Leroux, who was among the Omaha protestors. "The pay and the working conditions are no longer competitive."

The attrition rate for pilots has tripled during the past 18 months, and internal surveys indicate that more than 30% are looking for new jobs, he said.

That shows NetJets -- whose fractional ownership model lets customers buy a percentage of an aircraft type and use it for a specified number of flight hours each year -- is risking one of its strongest selling points, its world-class pilots, Leroux said.

NetJets management, which said the picket line outside Buffett's Berkshire Hathaway meeting was "not surprising," is disappointed by the lack of progress in contract talks.

"This sort of demonstration is a common tactic used by unions during collective bargaining," said Christine Herbert, a NetJets representative. "While it is not unusual for negotiations in our industry to be lengthy and complicated, the pace of progress to date has been frustrating to us and our team members."

The pilots' protest garnered enough attention that Buffett himself commented on it during his regular question-and-answer session, denying any regret about his $725 million purchase of the jet-leasing business in 1998.

"We have a good business, and the pilots have a good job," he said. "It's perfectly understandable that employers and employees have some differences from time to time, and we'll get it worked out, but that doesn't necessarily come in a day or a week or a month."

NetJets pays well, Buffett said, with its pilots earning an average salary of $145,000 per year. Many have the option of working a seven-days-on, seven-days-off schedule.

The union's Leroux said that's not the case for everyone and isn't as convenient as it seems.

"Even somebody on a seven-day schedule can work up to 14 hours a day, so in a seven-day period, we can work 98 hours. For the average person that works 8-to-5, that's over two and a half weeks," he said.

The comments during the meeting by both Buffett and Vice Chairman Charlie Munger indicate NetJets management hasn't fully apprised the parent company of the nature and extent of the dispute, Leroux said in a statement on Wednesday.

"Our preference is to reach an agreement without a strike, and that is what brought us to Omaha," Leroux said. "We want to inform Berkshire Hathaway and the public about what is really happening at NetJets. Without Berkshire Hathaway's intervention, we have very grave concerns about the viability of our company."

NetJets took a big hit during the financial crisis, during which Berkshire Hathaway kept it afloat by guaranteeing its $1.9 billion debt load. The Columbus, Ohio-based business has turned things around since. Its revenue increased $288 million, or 7.5%, in 2013 and climbed in 2014 as well, driven by increased flight hours and fractional aircraft sales.

While Berkshire doesn't report full financial data for NetJets, the manufacturing, service and retailing segment of which it's a part, saw its earnings increase 15% to $4.47 billion in 2014. Earnings increased 15% to $3.88 billion the year before.

In contrast, the union says the company's contract proposals to pilots are more appropriate to a company in financial straits.

In its lawsuit, the union accused the company of gaining unauthorized access to its password-protected online message boards and conducting unlawful surveillance. In February, the union amended the complaint with claims that NetJets attempted to intimidate pilots through comments on social media site Twitter as well as making references to job losses at Hostess Brands (which went bankrupt at 2012).

NetJets filed a motion to dismiss the claim in March, and the union now has until May 15 to respond. Despite the union's complaints, and the lawsuit, NetJets remains confident that it can work out a deal, Herbert said.

"Notwithstanding the union's display at the annual meeting, we hold our pilots in the highest regard and are committed to good faith bargaining with our unions," she said. "We are the leading employer of our kind and, contrary to the union's rhetoric, there is nothing on the bargaining table that would undermine that position. We believe a reasonable contract can be attained without compromising our ability to generate a reasonable return to Berkshire Hathaway."

This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.

More from Opinion

Attention 60 Minutes: Google Isn't the Only Big-Tech Monopoly

Attention 60 Minutes: Google Isn't the Only Big-Tech Monopoly

Apple Buys Tesla? Amazon Buys Sears? 3 Dream Mergers That Just Make Sense

Apple Buys Tesla? Amazon Buys Sears? 3 Dream Mergers That Just Make Sense

Amazon's Assault on Grocery Stores Will Have a Profound Impact on Many

Amazon's Assault on Grocery Stores Will Have a Profound Impact on Many

It's Dumb to Think There Aren't Already Monopolies in Big Tech

It's Dumb to Think There Aren't Already Monopolies in Big Tech

Google's EU Battles Are Hardly a Reason to Panic

Google's EU Battles Are Hardly a Reason to Panic