"Airline workers make backup plans for future jobs"

Thursday, October 21, 2004

Airline workers make backup plans for future jobs
By Barbara De Lollis and Chris Woodyard
USA TODAY


Brian Jansen hopes his longtime employer, US Airways, can pull out of
bankruptcy-court protection again. But just in case, he has taken out a
little insurance policy on his future: a second job.

The 41-year-old airplane cleaner in Charlotte moonlights as a FedEx package
deliverer. He has to work twice as long to make the same money - about
$45,000 a year - that he earned before US Airways cut his pay. But at least
he knows he has a job, with health insurance, that he can fall back on if
his airline falls apart in bankruptcy proceedings.

The six old warhorses of the airline industry - American, United, Delta,
Northwest, Continental and US Airways - are undergoing radical
transformations as their customers flock to low-cost carriers such as
Southwest and JetBlue. Since 2000, their last profitable year, the airlines
once known as the Big Six have shed 109,000 jobs, cut nearly a quarter of
their seats and chopped workers' pay and benefits in a desperate attempt to
stem losses of $28 billion over the past 31/2 years.

It has hardly helped. Two carriers, United and US Airways, are operating in
bankruptcy protection, and others could follow soon with more losses
expected. A glamorous industry that once provided secure, sought-after jobs
is evaporating, leaving behind heartache, uncertainty and downsized
expectations.

Jansen is one of many U.S. airline workers who are taking second jobs,
launching side businesses or heading back to school. They're hedging against
the economic turmoil gripping their industry. Their first love may be
aviation, but they say they now need to be realistic about their futures.
(Related profiles: Airline workers branch out to make ends meet) 

"I thought it would be a means to an end until US Air got back on its feet,"
Jansen says of his delivery job. "But now, going through a second
bankruptcy, it's beginning to look like that might be where I have to retire
from."

Delta Air Lines mechanic Greg Schalk, 43, of Atlanta and his two brothers,
Chuck and Glenn, who are mechanics at American Airlines and a major
international carrier, are also thinking about the future. All of the
brothers are supplementing their incomes outside aviation; one also returned
to college.

"I can't count on the airline industry anymore," Schalk says. He recently
earned his real estate license to join his wife, Cheryl, a longtime agent,
when he's not in the hangar.

American Airlines, the world's largest, said Wednesday that it needs another
round of deep cuts to survive. Even before the announcement, pilots union
chief Ralph Hunter advised members lacking seniority to think about bolting.

"If they have viable alternatives now that may disappear, they should
seriously consider leaving," Hunter said Monday in a message to pilots.

Historically, unionized airline workers tended to stay at one carrier until
retirement. It's still common to find people with 30 or more years with
their airline. Switching made no sense under union rules. It meant forgoing
the perks that seniority earns: fatter paychecks, better schedules and
vacation time, generous pensions and job protection.

US Airways flight attendants Randy and Lina Brooks hope to continue flying
until retirement. But if they can't, they plan to turn interests - such as
18th-century war re-enacting and interior decorating - into income. In the
past, Randy Brooks, 49, has consulted on documentaries and films, such as
Mel Gibson's 2000 movie, The Patriot. They say more than half of their
friends are considering new careers.

"There's no security in aviation right now," says Lina Brooks, 57. 

Shrinking payrolls 

But the grim reality of the industry's losses - $5 billion expected this
year - and the push to get more work from fewer people for less pay are
prompting workers in peak earning years to abandon hope of an airport
retirement party. "Anybody who has not been thinking about their future has
probably been hiding in a hole," says Richard Chaifetz, CEO of ComPsych, a
Chicago counseling provider facing a rising tide of unhappy airline workers.

Payrolls at the Big Six have been steadily shrinking, reflecting the growing
market share of discount airlines, where costs of labor and operations are
much lower. Employment at the Big Six stands at about 332,000 people, down
25% from 2000. More layoffs are expected as struggling airlines shed
airplanes, lengthen work days and outsource jobs.

How many more jobs may disappear depends on hard-to-predict factors such as
fuel prices, says Michael Allen of industry consulting firm Back Aviation
Solutions. Oil prices in the mid-$50 range per barrel are wreaking havoc on
airlines' turnaround plans, which assumed prices in the $40s, he says.

Once offering the best-paying jobs in the industry, most of the old-line
airlines have been seeking - or making - significant pay cuts to bring costs
in line with the discounters'.

Last week, a bankruptcy judge gave US Airways permission to impose emergency
pay cuts of 21% while acknowledging that the cuts may lead to home
foreclosures and personal bankruptcies. That follows two rounds of pay
concessions by workers during an earlier US Airways bankruptcy filing. In
that bankruptcy reorganization, the company replaced the pilots' traditional
pension plan with a less-generous plan that the company still thinks is too
rich. 

Meanwhile, US Airways' management continues to press labor for permanent
cuts when its court authority for the emergency cuts expires. Sharon Levine,
a lawyer for the mechanics union, told the court that the proposed cuts
would drag her members' onetime $50,000 pay to $20,000. Daniel Akins, a
consultant for the flight attendants union, said the cuts would bring flight
attendant wages to 1982 levels and make them 22% lower than average pay at
low-cost carriers.

Pensions at risk 

United, American and Delta have also cut wages, though to a lesser extent.
Northwest is seeking a first round of cuts. On Tuesday, Continental CEO
Gordon Bethune said for the first time that the airline is considering
asking for concessions.

The carriers in bankruptcy protection are also threatening pensions. United
and US Airways have already skipped pension fund payments and signaled
intent to freeze or terminate plans. If either goes ahead, pressure builds
on competitors to follow. 

If carriers eliminate traditional pensions, they would be taken over by the
Pension Benefit Guaranty Corp., the government agency that insures private
traditional pensions. The PBGC caps yearly payments to workers who retire at
65 at about $44,000. Pilots would collect less than $29,000 - because they
retire at 60 - a fraction of the $110,000 that some senior pilots now expect
from their traditional plans.

United flight attendant Dale Cassady of Arlington, Va., doesn't expect she
would lose a large percentage of her pension. Any cut would hurt, she says.

"Every penny that's taken away from me is a meal," says Cassady, who sold
her United stock for $228 after the airline filed Chapter 11 nearly two
years ago. At the peak, her stock had been worth $40,000.

In the past when a big airline such as Pan Am, Braniff or Eastern shut down,
other airlines were healthy enough to absorb many of their workers. But if
one goes out of business now, moving to another big carrier would be
impossible.

"I'm 55. I really can't go to another airline and start over again in the
lifestyle of a 20-year-old. I don't have the stamina," says Cassady, who has
flown for United for 31 years under nine CEOs.

Making this period tougher than past cycles:

.Record furloughs. Few workers furloughed after the 9/11 attacks have been
recalled. The Air Line Pilots Association says fewer than 28% of its 10,750
members furloughed since 9/11 have been recalled. If US Airways or another
big carrier shuts down, the workers seeking a job with another big carrier
would get in a long line of workers awaiting recall.

.Older workers. The first wave of workers let go after 9/11 were mostly
younger. They had little seniority and worked at lower pay rates. Now, for
instance, US Airways' average flight attendant has 19 years on the job,
nearly three times the tenure of the average private-sector worker in the
USA.

The people who have held on tend to have higher expectations and greater
financial commitments. These experienced workers are paying for braces,
college and homes. Some will retire soon.

.Fewer high-paying jobs. It's going to be a lot harder to make $300,000 a
year flying an airplane, as the most veteran pilots flying international
routes on jumbo jets can do today. At discounters such as Southwest, which
is adding planes and continuing to hire, starting pilots make about $45,000.
They top out at about $200,000.

Across the board, salaries and benefits are falling. US Airways just reduced
its average salary to $47,000 from about $60,000. That's less than all of
the other big airlines and even some discounters. 

The biggest opportunities are at regional carriers and at discounters, where
pay is lower but benefits can be greater. Newer airlines pay less. At
JetBlue, which launched in 2000, the most veteran pilots make about $120,000
a year.

The changes at the Big Six also affect those working at the commuter
airlines, traditionally springboards to the big leagues. Pilots make $20,000
to $100,000 at the commuters. In the past, young pilots justified taking the
low salaries by thinking about their next step to a major carrier. Now, with
the majors virtually not hiring, they have to rethink that strategy.

Some workers avoided the tough decisions by bowing out when they had the
chance. Carlos Soto, 41, of San Francisco took a five-year voluntary leave
that Northwest offered shortly after 9/11. He had been a customer-service
agent for nearly 16 years and was making $42,000 a year.

"I saw what state the industry was in and which way it was going," Soto
says. "It's not where I want to retire." He joined a San Francisco ad
agency, initially taking a pay cut. He has since surpassed his former
salary.Northwest will guarantee his job for two more years, but he doubts
he'll go back.

Many current and former airline workers are starting or expanding small
businesses. United pilot Eric Brown, 46, of Atlanta started a home-repair
business last year, while his wife, Barbera, a Delta flight attendant, works
more hours. 

Continental Express pilots Chad Pensiero, 30, and Jason Foley, 28, both of
East Stroudsburg, Pa., launched a community newspaper, skeptical they'll
ever fly for a major carrier. US Airways maintenance utility worker Barry
Hamel, 39, of the Charlotte area, launched a lawn-service business that he
expects to grow.

For pilots, second careers are nothing new. Federal law requires that they
retire at 60, and they work about 16 days a month. Now, Jim Stainbrook of
Columbus, Ohio, an investment adviser for pilots, says more are returning to
college, anticipating earlier retirements and smaller pensions.

During past airline business cycles, enrollment for an aviation MBA at
Embry-Riddle Aeronautical University in Daytona Beach, Fla., swelled while
workers awaited the next upswing. Not so this time, says Dean Petree, dean
of the Embry-Riddle business school. Says Petree: "A lot of employees are
beginning to prepare themselves for life after airlines." 

Even workers who landed posts at upstart JetBlue, which appears to be one of
the most secure airlines, remain cautious.

Brian Nastovski, a pilot furloughed from American after 9/11, joined JetBlue
in January. He says he's never felt so secure, knowing the airline plans to
hire 350 pilots next year. Yet he's keeping his exotic-animal taxidermy
business going until he gains more seniority. He also has obtained his
Florida insurance sales license. 

"When your heart's been broken ... your guard's up," says Nastovski, 37.
"I've got to pinch myself to believe this is real." 

Attached Photo:

American Airlines mechanic Chuck Schalk is working construction jobs on the
side in order to finance his return to school.

career-schalk2.jpg