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.