Southwest pilots' vote on contract begins

Pact lacks union leaders' support because pay falls short of other airlines'


Southwest Airlines, long known for warm relations with its employees, has run into a cold front.

Its 4,111 pilots began voting yesterday on a contract extension that their own union leaders do not endorse because it falls short of the pay parity with other airlines that the union promised to win for its members.

A rejection by the pilots is unlikely to ground the airline, based in Dallas, because the pilots operate under a 10-year agreement that does not expire until 2004. But their discontent suggests a summer of potential labor problems for Southwest, the only profitable major airline in the United States.

On Monday, Southwest's 1,300 mechanics asked a federal mediator to try to work out a new contract with the company after they rejected an offer that included raises below those won by mechanics elsewhere in the industry. Talks are under way with Southwest's flight attendants, and the carrier will soon open negotiations with its reservations and customer service agents.

Southwest and the union representing its ground workers have yet to settle a lawsuit over the airline's use of government employee-screening data to discipline and even fire some workers.

Southwest's chief executive, James F. Parker, said in an interview that he saw no threat that the contract disputes would stifle relations between workers and management. And some analysts agree.

"It's troubling, but I don't see things getting as acrimonious as they do at other airlines," said Betsy Snyder, transportation analyst at Standard & Poor's.

Kevin C. Mitchell, president of the Business Travel Coalition, an industry group in Philadelphia that represents corporate travel departments and business travelers, said: "If this were any other airline, I'd say, `Look away and sell your stock.' Here, there is trust."

Southwest employees share directly in the airline's success, with a lucrative profit-sharing plan tied into the company's pension program - an arrangement, analysts say, that has made paper millionaires of some pilots, even with salaries 30 percent to 70 percent lower than those at other airlines.

"The average employee and union leaders alike realize the key success factor is the ability to be the low-cost airline," said Vaughn Cordle, an industry analyst who is also a pilot with United Airlines.

Southwest's pilots, spurred by the airline's success at a time other carriers were struggling, had planned to reopen negotiations last fall but put them off after the attacks on Sept. 11.

Disagreement over pay remains unresolved. The union, the Southwest Airlines Pilots' Association, argued that pilots at Delta Air Lines, for example, earned about $244 an hour flying Boeing 737 jets, which make up Southwest's entire fleet. A Southwest pilot, the union said, earns about $140 an hour.

Pay parity was the key platform plank for the current group of union leaders, who were elected in 2000 on a pledge to win significant raises. With elections again scheduled in September, the pilots' union sought to resume contract talks this spring, but in a much different competitive atmosphere. Though Southwest was profitable in 2001 and is likely to remain so, Cordle estimates that Southwest's revenue will decline 12 percent this year. Over the past 20 years, the airline's revenue has increased an average 14 percent annually.

In his latest offer to the union, Parker proposed an extension of the current contract by two years, through 2006, and raises totaling 35 percent over the next four years. But that deal did not bring the union close to the levels at other airlines. After a 27-hour meeting last month, the union's board deadlocked on recommending the offer to the pilots.

"As a matter of principle, I think we can do better," said Jonathan Weaks, president of Southwest's pilots union. The union leaders said they nonetheless sent the offer to the members for a vote because they thought that the pilots should have a chance to express their opinions directly. Weaks said he favored a complete overhaul of the contract.

Analysts say Parker can afford to pay Southwest's pilots the same rates as at other airlines, given the carrier's financial strength and labor productivity. Southwest pilots, for example, fly an average of 80 to 90 hours a month, compared with about 50 hours a month at other major airlines.

Southwest also can turn planes around more quickly than its competitors, and its maintenance costs are lower because it focuses on just one type of aircraft. Its low fares attract budget-conscious fliers.

Southwest wants to do everything it can to protect that advantage, said Cordle. Union officials, he maintained, are accustomed to the company's history of friendly relationships and to the idea that employees' compensation is tied to the company's financial success and will not press Southwest for the last penny.

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