Alaska Airlines Presents Offers on Key Sections of Proposed Pilot Contract

As part of its ongoing negotiations with the Air Line Pilots Association (ALPA), Alaska Airlines last week presented counter-offers on key sections of a proposed contract. Alaska Airlines issued the following statement regarding its bargaining with ALPA to date:

"Since negotiations began, the company has been clear that we are open to a wide variety of tradeoffs, such as increasing wages and retirement security in exchange for improved productivity. However, Alaska Airlines, the ninth-largest U.S. carrier, has the second-highest pilot labor costs in the industry and is not in a position to increase the total cost of its pilot contract at a time of rapidly rising fuel prices and a deteriorating economy. Nevertheless, the company has proposed to contractually increase pilots’ current opportunity for annual profit sharing.

"ALPA’s proposals to date would burden Alaska Airlines with the highest-cost pilot contract in the industry by a significant margin. That simply doesn’t work for our customers, employees and shareholders."

  Several highlights of the airline's proposed five-year contract include:
  --  The company's wage proposal on signing would elevate top-of-scale
      Alaska Airlines captains and seven-year first officers to the
      third-highest pay rate in the industry (behind Southwest and
      American). The offer would also provide annual scale increases and a
      mechanism for additional annual increases if warranted by changes in
      market pay rates.
  --  At ALPA's request, the company kept the incumbent retirement plans
      unchanged. Alaska Airlines' counter-proposal on retirement would offer
      new- hire pilots participation in a 401(k) plan with a company
      contribution that exceeds what most other U.S. airlines offer. Closing
      the existing defined benefit plan to new pilots improves the long-term
      security of the pension fund for current participants.
  --  The company's counter-proposal on insurance would slightly increase
      pilots' monthly contribution, but would provide them with expanded
      dental and vision benefits; improved short-term disability, life, and
      accidental death and dismemberment insurance; eliminate the
      prescription drug deductible; and add a cap on annual increases in
      employee contributions.
  --  The Alaska Airlines counter-proposal does not propose any significant
      change over current language regarding code-share and contract flying.

Alaska Airlines also stated that, "Changing industry economics may affect the company’s future proposals."

Alaska Airlines’ contract with its pilots became amendable (open for negotiation) on May 1, 2007. Since January 2007, ALPA and the company have been bargaining nearly every week, often three days a week. At ALPA’s request, negotiators for both parties have discussed almost every line of the contract and agreed to innumerable improvements for pilots.

"To resolve our differences, Alaska Airlines has indicated its willingness to continue meeting with ALPA negotiators as often as needed," the company said in a statement.

Alaska Airlines and Horizon Air together serve 93 cities through an expansive network in Alaska, the Lower 48, Hawaii, Canada and Mexico. For reservations, visit alaskaair.com. For more news and information, visit the Alaska Airlines/Horizon Air Newsroom at alaskaair.com/newsroom.

First Call Analyst:
FCMN Contact: maria.koenig@alaskaair.com

SOURCE: Alaska Airlines