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Pilot contract talks get critical
Union says it won't strike if storm in Gulf.
The threat of a strike by the unionized pilots of Lafayette-based helicopter company PHI could be stifled by looming Tropical Storm Ernesto.
For more than two years, the parties have been locked in a dispute over pilot back pay and salaries.
On Wednesday, PHI and the union began meeting for the first of five days of "Super Mediation" hearings, with the National Mediation Board in Washington in a "last-ditch effort" to reach an agreement on a new contract.
If no agreement is reached by 12:01 a.m. Monday, both the union and the company are free to pursue other measures.
For the union, that could mean a strike.
But the pilots, who today enter into what is likely to be the last day of contract negotiations with the company, have said they would not put offshore workers at risk by striking when a hurricane is in the Gulf.
On Saturday night, Steve Ragin, the pilot's union representative, said in a phone interview the two parties still were "fairly far apart," and that the company had presented its final offer to the union. Today, the union will give another proposal to the company. Ragin said the union's proposal will be a "bold move" but he isn't hopeful for a settlement.
The outcome of the negotiations will affect not only the oil and gas industry, where PHI services Shell, Exxon and BP, but also the Air Medical industry, in which PHI has grown exponentially in the past few years across the United States.
The union has prepared itself for this worst-case scenario: the picket signs are ready, a communication network has been established and housing arrangements for outsiders have been made.
The company, which has declined repeated offers for comment, has said in a statement that contingency plans are in place and that in the end it does not believe the majority of pilots would support a strike.
But how can one of the country's leading helicopter companies, which in the past few years has seen increased profitability, and its pilots, who have one of the industry's best safety records, find themselves still at odds approaching the eleventh hour?
Pilot pay
PHI is one of the three major helicopter companies operating in the Gulf of Mexico. In 2005, on an average day there are 3,591 flights transporting workers and equipment to offshore rigs and platforms.
The union, which represents 557 PHI pilots - 336 in the oil and gas industry and 221 in the air medical sector - says PHI pilots are among the lowest paid in the industry.
Part of the union's hopes is to make their salaries and benefits comparable to those of PHI competitor Air Logistics.
However, PHI maintains it has offered a pay package that would bring it above the published pay rates of its major competitors in both the oil and gas sector and the air medical division.
"After over two years of bargaining, the OPEIU (the union) has regrettably persisted with unreasonable and irresponsible economic demands - demands that have no justifiable competitive basis," a PHI representative said in a statement.
Ragin said the company has grossly overstated the union's demands.
"They overestimate the economic impacts of our demands and while it's possible that their proposals are roughly equal to the stated pay schedules. In terms of total compensation they still aren't close," Ragin said, referring to their competitor's benefits and bonuses.
Ken Bruner, president of the Air Logistics pilot's union, said the tactics PHI are employing are similar to those Air Logistics used a couple of years ago during their union's contract renewal.
"It's the company's last big effort to try and break the union. It didn't work with us and I'm sure it won't work with PHI," Bruner said.
PHI's record of profitability
Many in the industry believe PHI management will be able to avoid a strike by the pilots. Al Gonsoulin, the CEO of PHI, is well-regarded in the industry for his business know-how.
In 2001, Gonsoulin paid roughly $32 million to Carroll Suggs, the former CEO and majority stockholder, for a 52 percent share in the company. Suggs' husband Bob founded the company.
Before buying PHI, Gonsoulin successfully founded and sold Sea Mar, an offshore marine transportation company, for more than $100 million.
Suggs said she admires Gonsoulin's business sense and thinks he will do the right thing for the shareholders.
"I love PHI. I never want to see it fail ever," Suggs said.
Even before Gonsoulin took over in September 2001, the company was undergoing change and had begun an overall rate increases. The most drastic increase in a decade occurred in May 2001, according to the company's annual report.
In February 2001, before the sale to Gonsoulin was finalized, the company slashed 161 employees, 120 of whom were terminated through a restructuring.
In December 2001, Erroll Babineaux, vice president of Acadian Ambulance's Air Medical division, which then leased five helicopters from PHI for its Air Medical Division, received a call from Gonsoulin.
Babineaux said Gonsoulin gave him an ultimatum: either pay 45 percent more for their services or find another operator. He gave them two weeks to decide.
"He left us with no choice. We could not afford to pay the 45 percent increase," Babineaux said, citing that 65 percent of the company's income came from patients on fixed incomes. Acadian Ambulance contracted with Shreveport-based Metro Aviation.
"If Metro Aviation had not come to our rescue, we would have been out of the Air Medical industry," Babineaux said.
To Babineaux, it marked a change from the old administration, described as "good corporate citizens" to one that put profit margins first.
But Gonsoulin's vision bore fruit and within a short time, the company's stock began to climb from approximately $11 a share to more than $30 where it has remained.
"He's a good businessman and a good businessman makes a profit anyway he can," Babineaux said.
Even Gonsoulin's pilots are quick to point out how his leadership has benefited the company.
"The market share of the EMS segment has been growing exponentially in PHI under the stewardship of Al Gonsoulin," said Tim Kolysko, an EMS pilot for PHI and spokesman for the EMS segment of the union. "We must recognize that Al has done a tremendous job at adding value to the company and bringing PHI back to profitability."
Industry reaction
Some in the industry say even if the pilots were to strike, other companies would pitch in to help keep traffic running to the rigs.
"It is an industry of survivors. They'll work it out .... In a crisis, they'll all work together," Suggs said.
Rodger Bagwell, CEO of RotorCraft Leasing, another helicopter company operating in the Gulf, said his company has not been called on to help but would if needed.
"We've got extra equipment and pilots available in case customers get in bind," he said.
The Air Logistics' union, however, has said it will stand in support of PHI pilots.
Mike Suldo, president of Air Logistics, is familiar with union negotiations and said he hopes both sides reach a fair resolution.
"Sometimes it makes wounds that are hard to heal," Suldo said.