Pilots picket outside Alaska Air Group's shareholder meeting

Employees request pay raise in contract negotiations

Posted: Wednesday, June 13, 2007

ANCHORAGE - Dozens of pilots dressed in dark blue uniforms and caps formed picket lines Tuesday outside Alaska Air Group's annual shareholder meeting, being held this year in Anchorage to mark the company's 75th anniversary.

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Two years ago, the pilots were forced to take an average 26 percent pay cut. Now that Alaska Air Group is making money, the pilots contend it is time the company gave back.

"We are two years into a contract that was imposed," said pilot Sean Cassidy, 42, of Tacoma, Wash., vice chairman of the Air Line Pilots Association. "Since then, we haven't had as much as a cost of living increase."

Alaska Air Group wants to reach a contract with the pilots that won't increase costs.

"We want a deal that basically keeps costs where they are today," chairman and CEO Bill Ayer said in a meeting with reporters. He declined to predict when the company might make an offer.

Alaska Air Group's approximately 1,500 pilots took pay cuts ranging from 19 percent to 34 percent. The company argued successfully for the pay cuts, which were imposed by an arbitrator. On May 1, the contract became amendable.

Pilots and management began negotiating in January. However, several major contractual issues, including pay and retirement benefits, remain unresolved, according to the union.

Cassidy said the "cost-neutral" contract the company wants means that even if pilots are offered more money, they will have to take concessions elsewhere, most likely in work rules, retirement plans, health benefits or job security.

"We are not in the position of giving up all these things that we have worked so hard for," Cassidy said. "We feel the way we've been treated since 2005 is not right, it's not fair."

Two groups of about 30 pilots each formed picket lines on both sides of a downtown hotel where shareholders were meeting inside. One female pilot carrying a baby held a sign that read, "We love our company but we love our families more." Another sign read, "Alaska Airlines - Record Profits. Our Pain, Their Gain."

Pilot David Campbell, 39, of Seattle, who also is with the Air Line Pilots Association, said the company's stance is disheartening.

"Our company just had its most profitable year ever," he said. "We played an important role in that. Despite those recent profits ... they are not willing to share that success."

For the first time last year, Alaska Air Group's total revenue exceeded $3 billion, contributing to an adjusted net profit of $137.7 million, according to the company's 2006 annual report.

Chief financial officer Brad Tilden said that he expects 2007 also will be a profitable year.

Ayer said Alaska Air Group, with 14,000 employees, is in the middle of a transformation to make it more efficient and capable of competing both with low-cost carriers and legacy carriers. The problem is that many of the legacy carriers have emerged from bankruptcy with much lower costs after shedding their retirement plans, Ayer said.

Alaska Air Group's pilot costs continue to be on the high end, Ayer said. Pilots make an average $118,000 a year with 59 percent making more than $100,000, according to company officials.

Pilots, who make up about 15 percent of the work force, account for 60 percent of the company's pension costs.

While the company needs to look at all its costs, Ayer said Alaska Air Group and the pilots would have to agree to any changes concerning pensions and retirement plans.

"We think those obligations stand until we agree mutually to do something different," he said.

Ayer said the transformation the company is undergoing is most apparent in Alaska Airline's transition to an all-Boeing 737 fleet and subsidiary Horizon Air's move toward larger turbo prop planes. The company expects to save $130 million a year in fuel costs with the more efficient fleet. The new planes also will help the company grow its cargo business, he said.

"We are really focusing on our transformation of the company," Ayer said.

Tilden said the company remains dedicated to providing service to Alaska.

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