Allegiant Air Nears Pilot Contract: Did the Teamsters Campaign Work?

During the past year, Teamsters Local 1224 has waged an aggressive publicity campaign against Allegiant Air (ALGT) , where it became the bargaining agent in 2012 but has been unable to gain a contract. It drew attention to the slow pace of negotiations, almost pulled off a strike -- which was blocked by a last-minute court ruling -- and called out some questionable safety practices.

Until recently, it all seemed for naught.

In 2015, Allegiant grew capacity, shares rose about 12%, several analysts continued to strongly recommend the stock and the carrier generally brushed off the pilots' concerns.

Then suddenly things changed.

Last month, Las Vegas-based Allegiant staged a media day, inviting reporters to meet with executives and view the operations. Last week, in Allegiant's earnings release, CEO Maurice Gallagher said, "I am bullish about our reaching a first contract agreement with our pilots and flight attendants later this year."

Then on Wednesday, the union released a survey showing that 65% of Allegiant pilots saif they are looking or plan to look for a job elsewhere, while just 33% of the carrier's pilots said they are happy at the airline.

What was the company's response? Not what one would have expected. Rather, the company generally agreed with the survey by the union it has long battled.

"We agree that morale is low among the pilot work group, which we're confident will improve once the contract is done," the company said, in a prepared statement. "We agree that pilot pay is inadequate, which is why we have made an offer in negotiations to significantly increase pay."

And responding to the series of safety concerns the International Brotherhood of Teamsters have raised during the past year, the carrier said, "We agree that we have a shared responsibility to run our operations with the highest safety standards {and} we are working directly with the IBT safety and maintenance committees to ensure all voices and perspectives are heard in the interest of safety."

In fact, April 27, the day Allegiant released first-quarter earnings, may have been the day when it first seemed possible that the tone had changed.

When an analyst asked about media day, Jude Bricker, chief operating officer, responded, "We're trying to be a lot more active in generating positive publicity -- we're responding to an extended negative PR cycle ... which basically began when our pilots called a strike" in April 2015.

Looking at all the events in the past month would seem to lead to the conclusion that the Teamsters campaign is working, or at least, that Allegiant now realizes that at a time of a severe pilot shortage it is probably not wise to chase away the ones you have.

In the survey, about 85% of pilots said morale at Allegiant is low, while 55% said they had resumes out at other airlines. However, 32% said they want to spend their careers at Allegiant.

Of about 700 Allegiant pilots, 507 completed the survey, which was conducted online by the union between mid-March and late April. Of the respondents, 67% had between one and 10 years at Allegiant, while 26% had a year or less. Only 7% said Allegiant was their first airline employer, while 9% had worked at four airlines or more.

Dennis Tajer, spokesman for the Allied Pilots Association, which represents American  ( AAL) pilots, said Wednesday, "The issues that face Allegiant pilots are endemic to the industry. Companies that refuse to provide parity in pay, work rules and benefits are simply going to lose pilots until they correct those inadequacies."

According to the Web site Airlinepilotcentral.com, for MD-80 pilots, a 12-year Allegiant captain makes $160 an hour; a first year pilot makes $138 an hour, a 12-year first officer makes $97 an hour, and a first year first officer makes $41 an hour.

At American, on the same airplane, a 12-year captain makes $235 an hour, a first-year captain makes $215 an hour, a 12-year first officer makes $160 an hour and a first-year first officer makes $77 an hour.

Aviation consultant Bob Mann, who has worked for various pilot unions, said part of the problem with the Allegiant pilot talks rests with the slow Railway Labor Act process, "a process that is really broken.

"It's so slow," he said. "It's denominated in years not months, whether it's a first contract or modification to an existing contract. The {National Mediation Board}, which presides over this, is of very little help."

Meanwhile, Local 1224 President Dan Wells said it is important to remember that "these negotiations could be wrapped up quickly if Allegiant executives truly wanted to reach a contract with its pilot staff.

"The public words and actions of Allegiant executives contradict what they are doing to undermine the pilots and their representatives in negotiations," Wells said. "The reality is the company keeps pushing back the deadline for completing negotiations, providing intentionally misleading financial data at the negotiations table, and reneging on agreements."

 

 

 

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

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