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Airline Division News, Week Ending February 24, 2017

TMC Negotiations Update

After a three-month hiatus over the holiday season, negotiations for the TMC pilots Collective Bargaining Agreement (“CBA”) resumed on Tuesday, February 7, 2017. 

Union representatives began the week preparing new proposals for Sections 8 (Vacations) and 24 (Insurance Benefits). At the conclusion of November’s session, all open sections held by the Union representatives had been passed back to the Company, awaiting management’s responses. 

After reading through each of them, management’s reaction was reported to be dismal, at best. In a message to the pilots, the union said: “That is understandable, given the major changes and increased costs these two proposals would bring to bear on the Company’s bottom line.”  

The Union also sent management a formal information request regarding TMC’s place in the parent company’s corporate structure, including relationships between the parent, subsidiaries, affiliates and investors. They have requested a complete organization chart of the corporate executives.  Once that information is received, the Union will develop an initial proposal for Section 1.  

The next scheduled bargaining session is scheduled for March 21-24, 2017. 

Atlas Air returns Florida West Certificate to DOT 

In last years acquisition of Southern Air Holdings by Atlas Air Worldwide Holdings, the company also acquired the assets and Operating Certificate of Florida West Airlines, a small cargo carrier based at Miami International Airport.  

While concern had been raised that it might be operated as a non union carrier, Atlas announced last week that they have returned the certificate to the Department of Transportation and Florida West was ceased all operations. In its filing to the SEC, the company also revealed that it had been trying to sell Florida West, the airline it acquired with Southern Air and noted: “In February 2017, management determined that a sale was no longer likely to occur and committed to a plan to wind down the Florida West operations. The wind-down of operations is expected to be completed during the first quarter of 2017.”

Airline Division, Local 284 reach out to NetJets Customers

The Teamsters Airline Division and Local 284 are contacting NetJets customers as part of an effort to publicize their escalating labor dispute over subcontracting critical maintenance and wages. 

The International Brotherhood of Teamsters, Teamsters Airline Division and Local 284 represent mechanics, maintenance control, aircraft fuelers, aircraft cleaners and stock clerks.  The Columbus-based business jet operator is owned by Warren Buffet’s Berkshire Hathaway (BRK.A and BRK.B). 

“The majority of NetJets customers don’t want a race to the bottom when it comes to who performs critical maintenance on their aircraft or how much they get paid to do it,” said Chris Moore, Chairman of the Aviation Mechanics Coalition. “NetJets Aviation, Inc. and NetJets Sales, Inc. employ a mere 111 mechanics to work on its fleet of approximately 400 aircraft. Compare that to a major airline that employs over 7,000 mechanics to service its fleet of approximately 700 aircraft. To make the subcontracting problem worse, mechanics and support employees at NetJets haven’t received a wage increase in more than five years.” 

Union letters have been sent to NetJets aircraft owners in the finance, retail, manufacturing and higher education sectors of the economy. The letters state, “We are searching for ways to compromise with an obstinate management, but we categorically reject the idea that we must compete against lower cost vendors for maintenance work … we are already compensated below that of our peers at major airlines. In our opinion, a race to the bottom doesn’t serve anyone’s best interests in aviation – not yours and not ours.” 

The union says it wants to schedule in-person meetings with customers and other members of the public to provide additional information and answer questions about the labor dispute. Union leaders will send more letters this week in combination with phone calls to customers. 

“We believe maintenance subcontracting at NetJets needs to be reined in for the good of everyone,” said Mark Vandak, President of Local 284. “The union isn’t trying to stop all subcontracting, but we are trying to contain it by increasing the number of NetJets employees who do the work compared to vendors. So far, management is only offering us crumbs, and that won’t cut it.” 

“The union’s proposals form the basis for an agreement that brings the labor dispute to a successful conclusion for everyone,” said Capt. David Bourne, Director of the Teamsters Airline Division. “The customers pay for a premium service. Making sure that NetJets mechanics and support workers are used to perform critical aircraft maintenance on its jets and that the workforce receives an industry-leading wage is consistent with the high level of service customers expect.  The Teamsters Airline Division will support these workers no matter how long it takes to meet their subcontracting and wage goals.”

Airline Industry News

Governmental and Regulatory 

David Bronczek of FedEx Corp., who leads the NextGen Advisory Committee, is urging the Federal Aviation Administration to focus its NextGen air-traffic control improvements on the New York area. Bronczek said it makes sense to focus on New York because 78% of airline delays start in that region.

Airlines, Industry and Labor 

A host of US passenger and cargo airlines have been recognized among the world's most admired companies. Among the list for 2017 are Southwest, FedEx and UPS.

Atlas Air has been awarded a contract by Asiana Cargo to operate a trans-Pacific route using one of its Boeing 747-400 freighters. "Asiana takes pride in providing reliable, high-quality service, and we are very pleased to be chosen to manage an important part of its international network," said William Flynn, Atlas Air Worldwide's president and CEO.

Stock analysts say Berkshire Hathaway could seek to buy a major airline, citing the company's 2016 investments in American Airlines, United Continental Holdings and Southwest. "We view a full-scale acquisition of an airline by Berkshire as a possibility and not worth dismissing, particularly if the stocks weaken," said Morgan Stanley analysts led by Rajeev Lalwani.