For crying out loud: WE GET IT! Enough!
Southwest Airlines Co. (LUV) told pilots it would keep operating newly acquired AirTran Holdings Inc. (AAI) as a stand-alone carrier if union members don’t agree to combine seniority lists.
Southwest briefed pilots on a “Plan B” for “separate and unintegrated” operations after that union declined to hold a membership election on a seniority proposal, according to an AirTran union summary obtained by Bloomberg News. Pilots at both airlines are now voting until Nov. 7 on a new agreement.
Keeping AirTran flying on its own would run counter to the goal of folding the discount carrier into Southwest, the biggest low-fare airline. Dallas-based Southwest paid $1 billion in cash and stock in May to buy AirTran, winning access to fly into Atlanta, home of the world’s busiest airport.
“I’m sure that’s not what management planned when they acquired AirTran,” said Hunter Keay, a Wolfe Trahan & Co. analyst in New York who recommends holding Southwest. “It probably is to some degree a negotiating tactic.”
Pilots’ approval of one seniority list would give Southwest a timeline to blend workforces and fleets, and set union members’ rankings for pay, schedules and the types of jets they fly. For AirTran pilots, ratification will mean “certainty of integration,” Southwest said in a Sept. 22 letter to union members.
Staying Flexible
Southwest has met with pilots to explain “what that vote is and what it does,” Beth Harbin, an airline spokeswoman, said in an interview today. “Absent approval, we have to think about, ‘Where is the flexibility?’”
Harbin declined to discuss the AirTran union summary or what options Southwest would consider if pilots don’t accept the new seniority agreement.
“I’m certainly not going to go into any detail about what that flexibility is,” Harbin said. “Our focus is going to be on getting the deal with the pilots done quickly because that really does set a good momentum for the rest of the integration.”
Jim Morris, a spokesman for the Air Line Pilots Association at AirTran, declined to comment, as did Jacob North, a spokesman for the Southwest Airlines Pilots’ Association. AirTran has about 1,700 pilots, while Southwest has more than 6,000.
Southwest rose 2.3 percent to $8.15 today in New York trading. The stock has fallen 37 percent this year for the third-worst decline among 10 carriers in the Bloomberg U.S. Airlines Index.
Pilot Balloting
The seniority agreement now being voted on by pilots was crafted after AirTran’s union decided against sending the original version to rank-and-file members. Under the new plan, current Southwest pilots’ seniority rights would be protected, and AirTran pilots would get pay raises.
“The company believes this proposal strongly merits your support,” Southwest said in the Sept. 22 letter.
If the ratification vote falls short, Southwest executives have developed “Plan B” as a contingency, according to the AirTran union summary. Details of that strategy were completed on Sept. 20, the summary said.
“Plan B calls for AAI and SWA to remain separate and unintegrated,” according to the summary, using abbreviations for AirTran and Southwest.
Savings, Revenue
A stand-alone AirTran would provide the same savings and revenue benefits because it would keep collecting $200 million a year in fees for checked bags, and AirTran’s Boeing Co. (BA) 717s wouldn’t be blended into Southwest’s fleet, the summary said. Southwest flies only Boeing 737s.
“It’s certainly a valid strategy,” Keay, the Wolfe Trahan analyst, said in an interview.
Southwest has said it expects that full integration of the airlines would take about two years after receiving regulatory approval to operate as a single carrier in 2012’s first quarter. Pilots’ failure to agree on an integration plan can scuttle mergers or keep airlines from operating as a single carrier after a tie-up.
Southwest’s 2009 bid for Frontier Airlines Holdings Inc. faltered when the carriers’ pilots couldn’t agree on seniority. US Airways Group Inc. (LCC) pilots are still feuding over seniority after the carrier’s creation in the 2005 merger of its namesake predecessor and America West Holdings Corp., forcing management to follow separate work agreements with two unions.
Tuesday, October 11, 2011
Recall complete
What a shame it came to this, a better turn out for the recall then there was for the election...
Looking forward to putting this ugliness behind us.
Looking forward to putting this ugliness behind us.
Friday, October 7, 2011
Voting is open. The choice is clear.
October 6, 2011
Fellow Pilots,
Today marks the eve of what may be the most important vote of your career at AirTran Airways. There is little doubt that the question of the Seniority List Integration has been debated and at the forefront of the minds of AirTran pilots over the past several weeks. Realistically, the question asked of each of us is this: Do you approve of the Seniority Integration Agreement reached between the merger representatives of the AirTran and Southwest pilots, and between their respective managements? The answer to that question becomes ours to make starting tomorrow at 1:00 p.m. EDT.
While the answer may not be easy, I believe the choice is clear.
As we all know by now, the management of Southwest Airlines, in their constant effort to keep Southwest profitable, value one asset above all others – their culture. In practical terms, that means that Southwest employees and their contributions to the company receive more consideration than Southwest’s stockholders or even Southwest’s own customers. It’s also no secret that Southwest will go to great lengths to guard a culture that has made them not only the most successful airline in America, but one of the most admired corporations in the world. Of course, management wants the company to remain profitable; however, they have figured out that their culture is one of the key ingredients, if not THE key ingredient, in their success.
Southwest officials have repeatedly expressed their view that an arbitrated SLI decision will threaten the culture they intend to defend. In addition, since the beginning of SLI negotiations, Southwest officials, as well as members of the AirTran and Southwest merger committees and pilots of both airlines, have clearly expressed their preference for a negotiated SLI agreement between our two pilot groups, because as they correctly note, only a negotiated agreement, ratified by the pilots themselves, gives AirTran and Southwest flight deck crewmembers ownership of the ultimate solution to the question of how to best integrate our two groups.
So where does that leave us? Since the middle of May, our Merger Committee, later joined by our Negotiating Committee and counsel, worked to negotiate a seniority integration agreement acceptable to the pilots of AirTran. Their goals, as directed by the MEC, have been to secure the future career prospects of AirTran pilots, and to eliminate remaining threats to a complete integration of AirTran pilots into SWA.
If the Seniority Integration Agreement is ratified by AAI and SWA pilots, these goals will have been achieved. The overall agreement, one which guarantees that every AirTran pilot will soon take their place as a full-fledged member of the Southwest Airlines family, is not only one with which I’m prepared to live, it is an agreement I believe we each can and should support.
What are our alternatives? If this agreement is not ratified, we will proceed to arbitration, a process in which we are fully prepared to engage. Although there are no guarantees, we might, in fact, secure a list in arbitration that would offer most AirTran pilots several percent greater seniority than the list we have before us.
Afterward, however, we are more likely than not to face an uncertain period; one which will likely be marked by the continued separate operations of Southwest and AirTran, and the possibility of prolonged litigation in an effort to force an integration of the two carriers through enforcement of the provisions of our scope clause and of the Transition Agreement. Litigation is also an option for which we are ready. But given length of time it may take to secure a final, enforceable award, and, even then, given the uncertainty of the outcome, is this the wisest choice?
Although the answer may not be easy, the choice is clear.
And so with the opening of the vote on whether to approve Seniority Integration Agreement, we have it within our power to safeguard our futures as pilots for the most secure and profitable airline in America. Then, as we start to make our way over to the “Southwest side,” we also have it within our power, and I’m confident that we will, show our new co-workers that we are an asset, that we contribute, and that AirTran pilots are doing their part to secure the culture of Southwest Airlines, so that its next forty years are as exciting, profitable and fun as its first forty.
Still, this is not a decision to be made lightly. But I’m proud to say that to date, the pilots of AirTran, their Merger and Negotiating Committees, counsel, and MEC representatives have, in spite of the turmoil and anxiety, approached the prolonged integration process with diligence, patience, and thoughtfulness. I have also been impressed by the willingness of the vast majority of AirTran pilots to listen to arguments on either side of the question, without giving in to the rancor and pettiness that have characterized similar debates at other carriers.
I will close by urging you to continue to uphold the high personal and professional standards that made AirTran such an attractive partner for Southwest; to continue to remain informed, engaged, and considerate of our coworkers; and to join me in ensuring our future at Southwest Airlines, by supporting and voting for the Seniority Integration Agreement.
In service,
Linden Hillman, Chairman
ATN Master Executive Council
ALPA: The Pilots Union
Fellow Pilots,
Today marks the eve of what may be the most important vote of your career at AirTran Airways. There is little doubt that the question of the Seniority List Integration has been debated and at the forefront of the minds of AirTran pilots over the past several weeks. Realistically, the question asked of each of us is this: Do you approve of the Seniority Integration Agreement reached between the merger representatives of the AirTran and Southwest pilots, and between their respective managements? The answer to that question becomes ours to make starting tomorrow at 1:00 p.m. EDT.
While the answer may not be easy, I believe the choice is clear.
As we all know by now, the management of Southwest Airlines, in their constant effort to keep Southwest profitable, value one asset above all others – their culture. In practical terms, that means that Southwest employees and their contributions to the company receive more consideration than Southwest’s stockholders or even Southwest’s own customers. It’s also no secret that Southwest will go to great lengths to guard a culture that has made them not only the most successful airline in America, but one of the most admired corporations in the world. Of course, management wants the company to remain profitable; however, they have figured out that their culture is one of the key ingredients, if not THE key ingredient, in their success.
Southwest officials have repeatedly expressed their view that an arbitrated SLI decision will threaten the culture they intend to defend. In addition, since the beginning of SLI negotiations, Southwest officials, as well as members of the AirTran and Southwest merger committees and pilots of both airlines, have clearly expressed their preference for a negotiated SLI agreement between our two pilot groups, because as they correctly note, only a negotiated agreement, ratified by the pilots themselves, gives AirTran and Southwest flight deck crewmembers ownership of the ultimate solution to the question of how to best integrate our two groups.
So where does that leave us? Since the middle of May, our Merger Committee, later joined by our Negotiating Committee and counsel, worked to negotiate a seniority integration agreement acceptable to the pilots of AirTran. Their goals, as directed by the MEC, have been to secure the future career prospects of AirTran pilots, and to eliminate remaining threats to a complete integration of AirTran pilots into SWA.
If the Seniority Integration Agreement is ratified by AAI and SWA pilots, these goals will have been achieved. The overall agreement, one which guarantees that every AirTran pilot will soon take their place as a full-fledged member of the Southwest Airlines family, is not only one with which I’m prepared to live, it is an agreement I believe we each can and should support.
What are our alternatives? If this agreement is not ratified, we will proceed to arbitration, a process in which we are fully prepared to engage. Although there are no guarantees, we might, in fact, secure a list in arbitration that would offer most AirTran pilots several percent greater seniority than the list we have before us.
Afterward, however, we are more likely than not to face an uncertain period; one which will likely be marked by the continued separate operations of Southwest and AirTran, and the possibility of prolonged litigation in an effort to force an integration of the two carriers through enforcement of the provisions of our scope clause and of the Transition Agreement. Litigation is also an option for which we are ready. But given length of time it may take to secure a final, enforceable award, and, even then, given the uncertainty of the outcome, is this the wisest choice?
Although the answer may not be easy, the choice is clear.
And so with the opening of the vote on whether to approve Seniority Integration Agreement, we have it within our power to safeguard our futures as pilots for the most secure and profitable airline in America. Then, as we start to make our way over to the “Southwest side,” we also have it within our power, and I’m confident that we will, show our new co-workers that we are an asset, that we contribute, and that AirTran pilots are doing their part to secure the culture of Southwest Airlines, so that its next forty years are as exciting, profitable and fun as its first forty.
Still, this is not a decision to be made lightly. But I’m proud to say that to date, the pilots of AirTran, their Merger and Negotiating Committees, counsel, and MEC representatives have, in spite of the turmoil and anxiety, approached the prolonged integration process with diligence, patience, and thoughtfulness. I have also been impressed by the willingness of the vast majority of AirTran pilots to listen to arguments on either side of the question, without giving in to the rancor and pettiness that have characterized similar debates at other carriers.
I will close by urging you to continue to uphold the high personal and professional standards that made AirTran such an attractive partner for Southwest; to continue to remain informed, engaged, and considerate of our coworkers; and to join me in ensuring our future at Southwest Airlines, by supporting and voting for the Seniority Integration Agreement.
In service,
Linden Hillman, Chairman
ATN Master Executive Council
ALPA: The Pilots Union
Tuesday, October 4, 2011
OUCH!
wiki on BATNA ...
In negotiation theory, the best alternative to a negotiated agreement or BATNA is the course of action that will be taken by a party if the current negotiations fail and an agreement cannot be reached. BATNA is the key focus and the driving force behind a successful negotiator. BATNA should not be confused with the reservation point or walkaway point. A party should generally not accept a worse resolution than its BATNA. Care should be taken, however, to ensure that deals are accurately valued, taking into account all considerations, such as relationship value, time value of money and the likelihood that the other party will live up to their side of the bargain. These other considerations are often difficult to value, since they are frequently based on uncertain or qualitative considerations, rather than easily measurable and quantifiable factors.
The BATNA is often seen by negotiators not as a safety net, but rather as a point of leverage in negotiations. Although a negotiator's alternative options should, in theory, be straightforward to evaluate, the effort to understand which alternative represents a party's BATNA is often not invested. Options need to be real and actionable to be of value,[1] however without the investment of time, options will frequently be included that fail on one of these criteria.[citation needed] Most managers overestimate their BATNA whilst simultaneously investing too little time into researching their real options.[citation needed] This can result in poor or faulty decision making and negotiating outcomes.
BATNA was developed by negotiation researchers Roger Fisher and William Ury of the Harvard Program on Negotiation (PON), in their series of books on Principled negotiation that started with Getting to YES, unwittingly duplicating a game theoretic concept pioneered by Nobel Laureate John Forbes Nash decades earlier in his early undergraduate research.[citation needed]
In this example, other offers that illustrate the difficulty of valuing qualitative factors might include:
TranStar began as Muse Air amid the 1982 air traffic controllers’ strike. By the end of 1984 the company was still struggling, and actively looking for a merger to keep it afloat. At the end of the year, Harold Simmons, president of the Amalgamated Sugar Company offered the airline the money to continue, on the condition that Lamar Muse return as CEO. Despite the new influx of cash and new leadership, the company was not able to generate a consistent profit despite its use of non-union labor and competitive fares.
In 1985, Southwest Airlines acquired Muse Air. The Muse pilots were initially unrepresented so negotiations ensued between Southwest Airlines and the Southwest Airlines Pilots Association (SWAPA). Complicating the always-contentious issue of seniority list integration was the large disparity in pay at the two companies. The difference was so large that the Muse Air operation was unable to support the Southwest Airlines pay scale.
SWAPA pursued a strategy of integrating the Muse pilots to the bottom of the list, with pay parity in five years combined with a card campaign to represent the Muse pilots. This strategy was rejected by the company on the basis of Duty to Fairly Represent and SWAPA agreed to a one time, temporary waiver of their scope clause. This allowed Muse to be run as a separate operation with numerous caveats and protections including a 1:4 growth ratio.
Muse became TranStar and chose independent representation through the TranStar Pilots Association (TPA). Perceiving the dangers inherent in a wholly owned subsidiary the pilot groups attempted to negotiate a combined master seniority list. In November 1986 an agreement was reached.
This agreement placed a pilot hired in Jun of 1982 by Southwest senior to a TranStar pilot hired in January 1981 and improved the relative seniority of all Southwest Airlines pilots. The agreement included fences, Captain seat protections and brought the TranStar pilots to pay parity no later than December 1990.
The TPA Board of Directors rejected the proposed Integrated Seniority List(ISL), apparently believing that such rejection would create more leverage for their Merger Committee to obtain a more favorable ISL.
What followed was a breakdown in negotiations and an angry exchange between union presidents.
"I can only conclude that your inner circle objects to the seniority settlement and engaged in a last minute search for reasons to sabotage the agreement and rationalize the action within your organization. This indicates a lack of good faith, which precludes any further dealings between our two unions." SWAPA President Gerald Bradley to TPA President Captain Golich
"I have waited a few days to respond to your recent letter addressing our unsuccessful negotiations. As you can imagine, it was difficult not to be angered by your groundless accusations, blatant threats and misleading statements." Captain Golich to Captain Bradley.
Negotiations were never resumed and TranStar was operated as a wholly owned subsidiary until the 9th of August 1987 when it closed its doors forever. 146 pilots who had seniority numbers at Southwest Airlines, seat protection, and (eventually) substantial raises now had no jobs. Excerpts from a letter Captain Golich wrote to Herb Kelleher on August 2:
"As you know, the TranStar pilots are in their darkest hour … I therefore request first right of hire, subject to Southwest’s normal screening, in seniority order, for the TranStar Pilots … … request some form of assistance be provided relative to the requirement for a 737 type rating … … the TranStar pilots will provide their own ground school."
The TPA BOD assessed their BATNA as superior to the agreement their merger committee was able to negotiate. Unfortunately for the pilots they represented this was a gross overestimation, and the actual BATNA turned out to be inferior not only to the negotiated agreement, but even to SWAPA’s opening position of staple.
Unfortunately the mistakes made by the TPA Board of Directors are not unique. The Airline industry is littered with examples of misapplied or overestimated BATNA. BATNA isn’t a walk away position or an assessment of the lowest acceptable offer. It is a tool to assess the certain gains presented in a negotiated agreement against the uncertain risks of the alternative. The uncertainty of those risks can lead to outcomes that are surprising and devastating.
In negotiation theory, the best alternative to a negotiated agreement or BATNA is the course of action that will be taken by a party if the current negotiations fail and an agreement cannot be reached. BATNA is the key focus and the driving force behind a successful negotiator. BATNA should not be confused with the reservation point or walkaway point. A party should generally not accept a worse resolution than its BATNA. Care should be taken, however, to ensure that deals are accurately valued, taking into account all considerations, such as relationship value, time value of money and the likelihood that the other party will live up to their side of the bargain. These other considerations are often difficult to value, since they are frequently based on uncertain or qualitative considerations, rather than easily measurable and quantifiable factors.
The BATNA is often seen by negotiators not as a safety net, but rather as a point of leverage in negotiations. Although a negotiator's alternative options should, in theory, be straightforward to evaluate, the effort to understand which alternative represents a party's BATNA is often not invested. Options need to be real and actionable to be of value,[1] however without the investment of time, options will frequently be included that fail on one of these criteria.[citation needed] Most managers overestimate their BATNA whilst simultaneously investing too little time into researching their real options.[citation needed] This can result in poor or faulty decision making and negotiating outcomes.
BATNA was developed by negotiation researchers Roger Fisher and William Ury of the Harvard Program on Negotiation (PON), in their series of books on Principled negotiation that started with Getting to YES, unwittingly duplicating a game theoretic concept pioneered by Nobel Laureate John Forbes Nash decades earlier in his early undergraduate research.[citation needed]
Contents[hide] |
[edit] Examples
The following examples illustrate the basic principles of identifying the BATNA and how to use it in further negotiations to help value other offers.[edit] Selling a car
If the seller of a car has a written offer from a dealership to buy the seller's car for $1,000, then the seller's BATNA when dealing with other potential purchasers would be $1,000 since the seller can get $1,000 for the car even without reaching an agreement with such alternative purchaser.In this example, other offers that illustrate the difficulty of valuing qualitative factors might include:
- An offer of $900 by a close relative
- An offer of $1,100 in 45 days (what are the chances of this future commitment falling through, and would the seller's prior BATNA (the $1000 offer from the dealership) still be available if it did?)
- An offer from another dealer to offset $1,500 against the price of a new car (does the seller want to buy a new car right now, and the offered car in particular?)
[edit] Purchasing
Buyers are often able to leverage their BATNA with regards to prices. This is done through buying from the lowest cost or best value seller.[edit] More complex example
It is easy to overestimate BATNA and invest too little time to research real options. This can lead to poor or faulty decision making and negotiating outcomes. 1987 saw the conclusion of a complex series of negotiations between Southwest Airlines and two different pilot groups: Southwest pilots and Muse/Transtar pilots. The Muse/Transtar pilots failed to properly analyze their BATNA: their missteps and misfortune offer valuable lessons for anyone exposed to the risks of negotiating in a volatile industry.TranStar began as Muse Air amid the 1982 air traffic controllers’ strike. By the end of 1984 the company was still struggling, and actively looking for a merger to keep it afloat. At the end of the year, Harold Simmons, president of the Amalgamated Sugar Company offered the airline the money to continue, on the condition that Lamar Muse return as CEO. Despite the new influx of cash and new leadership, the company was not able to generate a consistent profit despite its use of non-union labor and competitive fares.
In 1985, Southwest Airlines acquired Muse Air. The Muse pilots were initially unrepresented so negotiations ensued between Southwest Airlines and the Southwest Airlines Pilots Association (SWAPA). Complicating the always-contentious issue of seniority list integration was the large disparity in pay at the two companies. The difference was so large that the Muse Air operation was unable to support the Southwest Airlines pay scale.
SWAPA pursued a strategy of integrating the Muse pilots to the bottom of the list, with pay parity in five years combined with a card campaign to represent the Muse pilots. This strategy was rejected by the company on the basis of Duty to Fairly Represent and SWAPA agreed to a one time, temporary waiver of their scope clause. This allowed Muse to be run as a separate operation with numerous caveats and protections including a 1:4 growth ratio.
Muse became TranStar and chose independent representation through the TranStar Pilots Association (TPA). Perceiving the dangers inherent in a wholly owned subsidiary the pilot groups attempted to negotiate a combined master seniority list. In November 1986 an agreement was reached.
This agreement placed a pilot hired in Jun of 1982 by Southwest senior to a TranStar pilot hired in January 1981 and improved the relative seniority of all Southwest Airlines pilots. The agreement included fences, Captain seat protections and brought the TranStar pilots to pay parity no later than December 1990.
The TPA Board of Directors rejected the proposed Integrated Seniority List(ISL), apparently believing that such rejection would create more leverage for their Merger Committee to obtain a more favorable ISL.
What followed was a breakdown in negotiations and an angry exchange between union presidents.
"I can only conclude that your inner circle objects to the seniority settlement and engaged in a last minute search for reasons to sabotage the agreement and rationalize the action within your organization. This indicates a lack of good faith, which precludes any further dealings between our two unions." SWAPA President Gerald Bradley to TPA President Captain Golich
"I have waited a few days to respond to your recent letter addressing our unsuccessful negotiations. As you can imagine, it was difficult not to be angered by your groundless accusations, blatant threats and misleading statements." Captain Golich to Captain Bradley.
Negotiations were never resumed and TranStar was operated as a wholly owned subsidiary until the 9th of August 1987 when it closed its doors forever. 146 pilots who had seniority numbers at Southwest Airlines, seat protection, and (eventually) substantial raises now had no jobs. Excerpts from a letter Captain Golich wrote to Herb Kelleher on August 2:
"As you know, the TranStar pilots are in their darkest hour … I therefore request first right of hire, subject to Southwest’s normal screening, in seniority order, for the TranStar Pilots … … request some form of assistance be provided relative to the requirement for a 737 type rating … … the TranStar pilots will provide their own ground school."
The TPA BOD assessed their BATNA as superior to the agreement their merger committee was able to negotiate. Unfortunately for the pilots they represented this was a gross overestimation, and the actual BATNA turned out to be inferior not only to the negotiated agreement, but even to SWAPA’s opening position of staple.
Unfortunately the mistakes made by the TPA Board of Directors are not unique. The Airline industry is littered with examples of misapplied or overestimated BATNA. BATNA isn’t a walk away position or an assessment of the lowest acceptable offer. It is a tool to assess the certain gains presented in a negotiated agreement against the uncertain risks of the alternative. The uncertainty of those risks can lead to outcomes that are surprising and devastating.
[edit]
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