Sunday, March 24, 2002

Recovery pitfalls linger for Comair

Scars remain from pilot strike

By James Pilcher
The Cincinnati Enquirer

        ERLANGER — Roughly a year after the Tristate's nastiest recent labor dispute started, Comair is flying about as many routes as it did before the 89-day strike that nearly put the regional airline out of business.

        It has about the same number of planes and employees. Comair even has more pilots on the payroll now than when those same pilots walked out on last March 26. It's hiring an average of 30 more a month.

  • To Delta: $500 million-plus (lost revenue, continued operational costs during the strike; startup costs).
  • To Comair employees: 2,000 layoffs, including 1,600 local workers for nearly half the strike, and longer, as startup resumed. More than 90 percent of those laid off because of the strike chose to return to work at the airline.
  • To Comair pilots: $14 million in lost salary.
  • To the Air Line Pilots Association national membership: $4 million for operational costs; $4.4 million from strike assessments to union members at other airlines.
  Sources: Delta Air Lines, Comair, Air Line Pilots Association
        But while the company's operational recovery is complete, a question lingers from the strike: Have the company and its workers recovered psychologically from such a battle, one that has the potential of rearing up again?

        And if things are better, how long can that last in the cutthroat world of the airline industry — especially with another potential labor showdown looming?

        Those who were on both sides of the strike say yes — things are better, or at least on their way to improving.

        “The first time we sat down after the strike, we said that the company's management needed to change and deal differently with everyone,” says J.C. Lawson III, chairman of Comair's branch of the Air Line Pilots Association, who led the strike. “And it went way beyond just the strike, it was something that had been going on for five, 10 years. And at this point ... they are trying to do that.”

        Company officials say the effort to recreate the company's family atmosphere began several years before the labor strife bubbled over, although the strike was a major setback.

        “When you cut through it all, we beat (the competitors) up in the early 1990s with a better airplane and a better facility: we just had better stuff,” Comair president Randy Rademacher says. “That advantage is gone. ... So the only way we're going to be competitive is to have better service. And the only way you see that is with better motivated people.”

Short-lived goodwill?

        This new spirit of cooperation is already being challenged.

        Comair's 600-member flight attendant union last week expressed frustration over the state of its three-year contract negotiations.

        The International Brotherhood of Teamsters went as far as to say it wanted to be released from talks by the National Mediation Board, a move that could begin a 30-day countdown toward a strike.

        Talks were expected to be lengthy, because this is the first contract to be crafted. In addition, no negotiations were held during the pilot strike.

        But flight attendant union negotiators and company officials say that out of the hundreds of items that were on the table, only six or seven remain. All are economic.

        Only the mediation board, which oversees labor relations in the airline and railroad industries, can release the two sides to the cooling-off period.

        The senior mediator in charge of the case has resigned to take a job with a new airline, meaning the likelihood that the union will get its wish is slim, since a new mediator will have to get caught up on the talks. No new talks have been scheduled.

        Mr. Rademacher remains unconcerned, saying “we feel we are close and that we can resolve this.”

Lesson learned

        The company couldn't afford another walkout, which would most certainly cause another shutdown. The pilot strike cost Delta Air Lines, which had purchased Comair in January 2000, more than $500 million.

        The strike caused Comair to lay off about 1,600 local workers, although more than 90 percent of those workers have chosen to return to the airline.

        As it progressed, Delta officials began to think the unthinkable: disband the same company they just bought for more than $1.9 billion.

        “I can't say for sure that Delta would have pulled the plug if the thing hadn't gotten settled, but there sure were very serious discussions going on,” says David Siebenburgen, who was then president of Delta Connection, Inc., which oversees Delta's regional network including Comair.

        That's in stark contrast to Comair's current status. Mr. Rademacher says that Comair could be profitable in March, the first time that the carrier — once known for double-digit profit margins — would be in the black since before the strike. He would not provide specific details, saying that those are incorporated into Delta's overall bottom line.

        Given the events of Sept. 11 and its devastating impact on the entire airline industry, Comair is treating the possibility of slicing through the break-even point as a major milestone.

        Mr. Rademacher credits the comeback to the company's employees, admitting he has put renewed emphasis on keeping morale up following the strike.

        “If I could make one difference here, it's to make a difference in our relationship with our people,” he says.

        Mr. Lawson and others credit Mr. Rademacher with reaching out to employees since the strike, an effort that experts say was needed.

        “The Comair culture has al ways been one of innovation and growth,” says Jim Parker, an Atlanta-based regional airline analyst for the brokerage firm Raymond James & Associates. “But as they became a big company, they kind of lost sight of employee relations.”

        The efforts have included a barnstorming tour of the airline's system that has included 30 stops so far. Mr. Rademacher also meets with the leadership of both the pilot and mechanic unions at least once a month, to discuss issues. Mr. Lawson says that even the most minor disagreements over scheduling are treated differently than before the strike.

        The efforts may be paying off. Despite the increases in labor costs brought on by the new contract, Comair's cost per passenger is down because other costs were trimmed and people are working more efficiently.

        In addition, the airline is performing better — arriving on time more frequently, completing more flights, and losing fewer bags — than it has in years, Mr. Rademacher says.

        “The toughest thing I ever had to do was make the decision to furlough those people a year ago during the strike,” he says. “Now I am committed to doing right by those same people who stood by us so they can do right by our customers.”

View from cockpit

        As for the pilots, Mr. Lawson says there was some initial grousing about the new deal, but that “if neither side is completely happy with it, it must be a good deal.”

        He also says the pilots got what they wanted: a contract that made Comair a place a pilot could spend their entire career.

        “We feel that we succeeded in that, and that the strike absolutely, unequivocably had to be done,” Mr. Lawson says.

        The pay increases were worth about $50 million, while pilots lost $14 million in salary over the strike.

        “Like it or not, we are married with no chance of divorce, so we have to live with each other,” Mr. Lawson says. “That process is a lot easier now than before.

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