Third Quarter Financial Results

Author: Joint Communication Committee

Last week, United announced their 2013 third quarter financial results.  United has continued to struggle with boosting revenue compared with competitors, following their 2010 merger.

For the third quarter, total revenue was $10.23 billion, falling short of expectations and underperforming their industry peers.  United offered an array of excuses why their results were not just lackluster, but downright disappointing, but the elephant in the room remains their incomplete merger.

In 2010 United was full of promises and assurances to the government and shareholders about “synergies” and “efficiencies,” and today they’re egregiously behind schedule and adrift for any near term plan to make good on those promises.  At the heart of it all, are two core issues: bad decision making and failure to deliver on Joint Contracts.

From “website glitches” offering cheap or free tickets, to reservation system meltdowns or miscalculating ticket demand within seasonal changes; United management has proven inept at even the most basic of the transitional issues required of a merging airline.

While United’s competitors and peers: American, US Airways, Delta have reported positive and growing financial reports, United offers apologies.  This is no way to run an airline; and United has squandered valuable opportunities and the goodwill of the traveling public and most importantly of the valuable asset of their employees.

One of the biggest of these appallingly bad decisions is their approach towards negotiations.  As we consider where we are in the process, it’s important to understand the larger mosaic of United’s employee negotiations, their success, their timing and their failures.

As you know, Flight Attendants from the three subsidiaries decided to pursue and conclude our respective Section 6 Single Contract Negotiations prior to beginning our Joint Contract discussions.   In doing so, our AFA Leadership locked in improvements and protections for United Flight Attendants in anticipation of the lengthy process negotiations require and the predictable obstacles management would be throwing up to slow down the pace and progress of our Joint Contract talks.

We have been in negotiations for a Joint Contract for just about 11 months.  Our first Direct Negotiations session with management was in December 2012, and to date we’ve had 11 direct meetings over 51 days.  We’ve reported on the progress of our Negotiations after each session and the updates are available on the OurUnited website.

While our experience is frustrating, it is indicative of how United management is approaching all negotiations at our airline and the mindset of the enter operation of the carrier as well.  Slow negotiations, bad decision making and a confrontational approach towards both.

Let’s look at the larger negotiations picture at United to put into context where we are and what we’re faced with.

Passenger Service, Reservations, Ramp and Storekeepers – IAM 141
Earlier this week United Passenger Service, Reservations, Ramp Service and Storekeepers, represented by the IAM District 141 voted to ratify their second and most recent Tentative Agreement.

Single Contract Negotiations began for these work groups in 2009, when all United bankruptcy Contracts became amendable.  Following the announcement of United’s merger and a representation election, the IAM 141 entered into Joint Contract Negotiations with the company.  IAM 141 reached a Tentative Agreement in February of 2013, which failed to ratify.   The IAM 141 Agreement is the second Joint Contract to be reached at United Airlines, 3+ years after United’s October 2010 merger date.

Pilots – ALPA
The pilots all being represented by ALPA did not have a representation election.  In May of 2010, when United announced their merger, the United pilots were in the midst of their Section 6 Negotiations, their bankruptcy era Contracts having become amendable in 2009 as well.

ALPA made the decision to begin Joint Contract negotiations in 2010 following United’s announcement.  The pilots reached a Tentative Agreement in November of 2012, which ratified in December 2012.  ALPA supplied their merged seniority list to the company in September of 2013.

Following the ratification of their new Contract, the pilots have experienced a growing number of implementation issues and problems.  Their transition to a new Contract has been rife with problems with management having a different understanding of what was agreed to than that of the pilots.

The fact that management has a different opinion of what the new Contract language means, serves as a warning sign to all the rest of us in negotiations that even after they agree to something, they continue to try and turn it to their advantage at the expense of the other.  The pilots were the first group to ratify a Joint Contract at United Airlines.

Technicians – IBT
In 2010 when United announced their merger, the Technicians at United, Continental and Continental Micronesia, all represented by the International Brotherhood of Teamsters (IBT), were engaged in three separate Single Contract Negotiations.

The Continental Technicians ratified their Single Contract in November 2010.  The Continental Micronesia Technicians ratified their Single Contract in June of 2011.  The United Technicians reached a Tentative Agreement in 2011, which failed to ratify.  The collective Technicians filed for expedited mediation through the NMB, however prior to their initial meeting the United Technicians returned to their negotiations, and reached a Tentative Agreement, which ratified in December 2011.

In August of 2012 the three IBT Represented Technician groups met with United management and agreed to an expedited process, overseen by the NMB towards a Joint Contract.  The NMB established a time frame for their Expedited Mediation, with training beginning in January of 2013 and to conclude in May 2013.  Those negotiations failed to achieve an Agreement.

Dispatchers – PAFCA & TWU
Dispatchers at United are represented by the Professional Airline Flight Control Association (PAFCA).  Dispatchers at Continental are represented by the Transport Workers Union (TWU). The Dispatchers made the decision to defer their Representation Election until after they had reached a Joint Contract.

PAFCA was engaged in Single Contract negotiations when United announced their merger, and these continued through the first part of 2011, until the end of August when the parties agreed to pursue Joint Contract Negotiations. Those negotiations began in October 2011 and continued through April of 2012 when United proposed “framework” for bringing the Dispatchers to “par” with Delta and “harmonizing” work rules, based on the existing TWU Agreement at Continental.

PAFCA rejected this proposal and both PAFCA and TWO rejected the company’s proposal for expedited mediation under this same proposal.  The groups resumed Joint Contract Negotiations, which continued through September of 2013, and which failed to achieve a new Agreement.  Their negotiations remain in mediation under the NMB but no meetings have been scheduled to continue negotiations since September.

Flight Attendants – AFA
In 2010 when United announced their merger, United Flight Attendants were represented by AFA and Continental and Continental Micronesia were represented by the IAM.  The representation election resulted in AFA being the Union who would represent Flight Attendants at the new United.

Flight Attendants at all three subsidiaries elected to complete Section 6 Negotiations before beginning the Joint Contract discussion.  All three groups achieved single Contract Extensions and Single Contracts during the period of 2010-2012.  Joint Contract Negotiations began with our first Direct Negotiations session in December 2012, 11 months ago.  To date we have concluded 11 Negotiations sessions over 51 days.

Understanding the process of the other labor groups at United and the time which has been spent towards the two new Joint Contracts, as well as the three outstanding Joint Contracts provides us with a great deal of information and perspective.

As you’ve read, the process has been neither quick, nor easy for any of the employees.  Negotiations take time and effort, especially when negotiating with the mindset current United management has.  With the recent conclusion of the IAM 141 Negotiations, United should redouble their efforts and time towards making better progress on our Negotiations.  Take that time and effort and put it to good purpose, now.

As we’ve said before, and undoubtedly will need to say again, United has had an abundance of opportunity to be more successful, make better decisions and turn our company in a better direction.  Regrettably and repeatedly they choose to do otherwise. Opportunity has been squandered by their misaligned approach, but it’s not too late to turn it around.  United has only to look at current and historic airline management strategies that have been successful.  Employees that are happy result in passengers that are happy, which result in a successful airline.  Happy employees have good, industry leading Contracts at a company that is a leader among it’s peers, not making apologies to their shareholders when they’re at the bottom.