Qantas pilot accord stalls

[B A Lert]

I'm surprised that this story from last week did not make it to PPRUNE so here it is"

Qantas pilot accord stalls

* Steve Creedy, Aviation writer
* February 09, 2007

ENTERPRISE bargaining negotiations between Qantas and its international pilots have stalled after the airline said an analysis of a union proposal showed the cost was 10 times more than the savings. Qantas wrote to its pilots on Wednesday to tell them it had suspended negotiations on the long-haul enterprise agreement pending discussions with their union, the Australian & International Pilots Association, about their EBA claim. It said an analysis by the Seabury Group had concluded that the five-year union proposal would save $61 million.


But it would boost salaries by $244 million, increase superannuation costs by $187 million and bolster training costs by $246 million.

"As it currently stands, the position put by AIPA is too expensive, too complex and not sustainable," Qantas executive general manager, people, Kevin Brown said in the memo.

The parties are due to meet again today to discuss the assumptions underpinning the Seabury analysis. AIPA general manager Peter Somerville said the union would be questioning the assumptions and was disappointed its consultants had not been included in the calculation of the costings.
Mr Somerville said Seabury was the consultant that Qantas had used to slash costs in its maintenance division.

He said the union's consultants had already highlighted issues with the Qantas costings.

The new figures, for example, set pilot on-costs such as leave, superannuation and payroll tax at 16 per cent when they had estimated it at 40 per cent when it suited them in deals with short-haul pilots.

"We want to make sure that what we're putting on the table is verifiable and justified," Mr Somerville said.

He said it was "a bit rich" for Qantas to get its own costing done and then write to the pilots.

"It's all about systematic marginalisation of the union," he said.

"We want to play the game co-operatively, constructively; and we want to have good negotiations done quickly and privately. We're aiming at being responsible negotiators."


The story just about speaks for itself and is proof perfect that pilots should be left to fly the aeroplanes and management be left to run the airline. Someone needs to tell Mr Somerville that Qantas would know best about its cost base, nor AIPA , its members or its consultants.

[lowerlobe]

Yes BA the pilots are more wronger.......you must work in the office

[noip]

BA

From what I've been able to work out .... the newspaper story is Management propaganda. If not, then why did they not do AIPA the courtesy of explaining why AIPA's costings were in error.

Nothing new, more of the same. Disappointing, really.

N

[Jetsbest]

You've forgotten that there are at least two sides to every story. AIPA's response was (note: the links won't work):

9 February 2007

AIPA's Proposal to the CEO

By now, many of you will have received a memo from Kevin Brown, Executive General Manager People Qantas, titled Discussions with AIPA. For those of you away on service, the memo can be accessed HERE.

In the memo, Mr Brown seeks to advise you of the discussions that have recently taken place between AIPA and the Company in relation to the APA bid for Qantas. He also includes a number of figures that have been used to cost various parts of proposals put to the Company by AIPA. In the interests of ensuring honest dissemination of information, some comments should be made regarding the contents of the memo.

The actual proposal including the “demands” made by AIPA can be accessed HERE.

The Seabury Group was commissioned by Qantas to cost the proposals. AIPA proposed a 10% increase in productivity from Long Haul flight crew. This means that whilst a flight crew member working 10% more would have his/her remuneration similarly increased by 10%, the Company would gain by saving 10% of the “on cost”. On costs are the less tangible costs that go to make up the total cost of flight crew to Qantas, for example: leave, superannuation, cyclical training and uniforms. There are a myriad of items that can be included, but in general terms it has traditionally been accepted that on costs for the flight crew group amount to approximately 40% of the total flight crew cost. In fact, this is the figure that has been used by both the Company and AIPA throughout numerous EBA negotiations, including the recent Short Haul EBA negotiations. Curiously, the Seabury Group used a figure of 16% for their calculations of the on costs.

To put a dollar figure on this, and I stress that these are approximate figures, the total mainline flight crew cost is in the order of $450 million per annum. At 40%, this gives a figure of $180 million per year for on costs. The 10% saving to the Company is on this figure and is approximately $18 million per annum. Over the 5 year term proposed, this would accumulate to $90 million (not allowing for any inflationary effects).

AIPA proposed an annual CPI increase to wages (basically 3%) which in real terms adds nothing to the actual costs as this figure is offset by inflation and thus earnings revenue increases at the same rate. AIPA proposed a “real” increase to wages of 1% on top of the CPI increase. This increase would not necessarily take the form of a wage increase but could be offered in another form, superannuation being one suggestion. The total wage cost for mainline flight crew (Long Haul, Short Haul and AOWL) is approximately $450 million per annum. This would have led to real wage cost increases to Qantas of $4.5 million for year 1, compounding to total $23 million over 5 years. A one off 5% catch-up signing bonus for Short Haul and AOWL was included, adding another $4.5 million.

Thus, the figures of:
increased salary of $244 million; and
increased superannuation of $187 million
given in the memo are totally fallacious when comparing apples with apples. The figures should have been closer to:
increased salary of $23 million through increased superannuation or otherwise; plus
one-off 5% signing bonus of $4.5 million.
This gives a total real cost increase of $27.5 million over 5 years. This increase would be offset against the 10% real savings of on costs of $90 million, giving Qantas a real saving in the order of $64 million over 5 years. Yes, AIPA proposed paying Qantas in excess of $60 million in real terms to ensure that mainline flight crew had secure futures for at least the next 5 years. As stated, these are approximate figures, but even allowing for an error both ways of 25%, the savings to the Company would still be in excess of $30 million real dollars over 5 years.

The memo also includes an additional $246 million for training costs associated with the introduction of a Group Opportunity List and the ability for flight crew to transfer between the various subsidiaries. When training costs are largely contained within on costs, and the total current on cost for mainline is approximately $240 million per annum, of which training is only a small part, it is beyond belief that training costs could escalate to the degree considered in the memo. A Group Opportunity List could in fact save training costs if implemented correctly. For example, we currently have surplus A330 crews fully trained but doing little flying and Jetstar is recruiting (with great difficulty) crew to fly A330s. AIPA offered to fly the Jetstar A330s at reduced rates. This would have meant a saving of all training costs to Jetstar whilst also ensuring mainline did not incur the costs of surplus flight crew. This alone indicates the figures given in the memo are somewhat suspect.

Whilst the figure of $61 million given as the savings offered by AIPA might be reasonable, the projected increase in costs of $677 million is totally ludicrous. Based on reasonable figures, the proposal is anything but too expensive. There is no doubt that simplifying the 3 current EBAs and putting in place an agreement that would last 5+ years is complex, but it is also certainly achievable. As for unsustainable, the reason for having an EBA is to ensure certainty for both parties and preclude any large excursions from the terms agreed.

I will finish by stating that AIPA is also committed to negotiating fair industrial agreements for our members, but not when all the costs are borne by one side and all the savings are made by the other.


Authorised by AIPA’s Secretary, and released by AIPA Communications.


So, more talk to come I imagine... or should that be stalling and stone-walling while giving the appearance of talking?:rolleyes:

[DutchRoll]

You are absolutely right, B A Lert.

Qantas Management would know best what its cost base truly is.

And it would also know best how to misrepresent, obfuscate, deceive, manipulate, and fudge its cost base figures to suit its own argument, just as it knows very well how to hide a $1 million invoice for Jetstar International away-base servicing/parts in Qantas (non-Jetstar) accounts. Qantas Management knows how to do a lot of things, Lert - not all of them entirely honourable.

[B A Lert]

Qantas Management knows how to do a lot of things, Lert - not all of them entirely honourable.

You won't get an argument from most of us here. How long has it taken for the penny to drop?