Negotiating Update (11/5/2024)

Fellow Allegiant Pilots,

Since the Columbus sessions in August, the parties have been engaged in supposal bargaining in an attempt to close out Sections 14, 15, 16, and the PBS LOA. Previous to this, the company had been making extreme requests, well outside of industry standards (including unstacking provisions over three times (3x) the industry standard, significant changes to the Bloch award arbitration (first Must Work Day Arbitration), nearly unlimited cancelation and reassignment rights, etc.). These extreme requests would allow management to greatly increase flexibility, pilot productivity, utilization, and profits, without any offsetting gains to the pilot group. Not only would this be an unfair trade, but it would also be detrimental to pilot seniority and quality of life.

At the start of supposal negotiations, it was made clear to management that your NC would only entertain a package deal that accommodated both management’s request for industry-leading flexibility and pilot productivity AND off-setting gains and improvements in Sections 14, 15, 16, and the PBS LOA for our Pilots. The company agreed to that process. We offered the company the provisions they requested. The company failed to deliver on their end of the bargain.

At the end of bargaining on Thursday, October 31, Allegiant management abruptly ended the supposal negotiation without notice, and attempted to “lock in” the conditional agreements, which heavily favored the company. They refused to close out the remaining open items in Sections 15, 16, and the PBS LOA in an equitable manner for the pilots. Management’s new position is that any remaining work rules, including those with no economic impact, must now be traded for reductions in Scope, Compensation, Insurance, and Retirement.

Had the NC accepted the company’s formal proposal on Thursday, it would have become the new “table position,” from which it would be nearly impossible to back out of. The message has been crystal clear to management from the start – industry-leading flexibility and increased productivity/profits would not be free. Our pilots must be equitably rewarded for any management gains, especially those that result from terms that are significantly outside of industry standard and/or those that generate massive profits at the expense of your seniority rights or quality of life. Furthermore, any suggestion that management will get industry-leading flexibility and utilization while the pilots get nickel-and-dimed for basic work rules is unacceptable.

Management squandered a massive opportunity to rebuild labor relations, settle these sections, and bring a close to these negotiations that are long overdue. Instead, they reverted to their tried-and-failed bait and switch tactic, which only serves to erode the little remaining trust that pilots had in this management group. As you are aware, the next phase in their playbook is generally to put a comprehensive offer in front of you directly, then falsely claim that “we want to pay you, but the union is holding up your contract” for simple things. The truth is that the company failed to uphold its end of the bargain and reversed several months of significant progress in the process.

Question 1: Why did this “package deal” process begin?

Until the Columbus sessions in August, management’s uncooperative stance resulted in stalled progress. They avoided any action that would expedite these negotiations, including joint problem-solving, PBS testing, collaboration on costing, scheduling meetings with the PBS vendor, agreeing to meet outside of mediation, and even responding to information requests. The company’s attitude towards negotiations prior to these sessions could best be described as obstructionist.

At the Columbus sessions, new personnel joined the management negotiating team and your NC Chairman made it clear that we would not settle for substandard improvements in working conditions. Any operational flexibility or productivity gains for management that are significantly above industry standard would require equitable gains for our pilots.

Industry leading flexibility and pilot productivity is not free, especially when it results in hundreds of millions of dollars in gains and efficiencies for the company. Management’s new position was that if the NC was willing to accommodate the company’s desired flexibility, they would resolve the Union’s remaining outstanding issues in Sections 14, 15, and 16 as part of a package deal. The company gets “X,” the pilots get “Y.” The company would gain increased utilization, much-needed relief from the Must Work Day arbitration (which the Union won), and industry-leading operational flexibility leading to greater profits while our pilots would receive the necessary protections and improvements in the remainder of those sections. In other words, these issues had to be resolved as a package deal, as both parties previously agreed, that would provide fair and reasonable offsetting improvements in response to the significant gains and efficiencies the company would realize.

We should not understate the significance of management’s asks, although they are likely to heavily downplay the impact when they speak to you in ground school and upgrade classes. They will go so far as to try to convince you that the operation will not survive without these well beyond industry standard items that they asked for – and therefore they should come without cost. Management’s request for extremely high unstacking, enhanced reassignment and cancelation rights, and a significantly more flexible, in-house scheduling system (aka “CBI 2.0”) is any airline’s dream scenario, especially Allegiant. These changes would allow sweeping flexibility to maximize pilot productivity and utilization with the potential to generate significant gains in earnings.

The company’s ask should be quantified — each hour of additional aircraft utilization during peak periods is worth nearly $100 million in earnings. We are more than willing to do our part in increasing and maintaining Allegiant’s industry-leading and record high profitability. If this is to occur, the pilot group must be equitably rewarded, especially if those results come at the expense of our seniority rights and quality of life. This includes among other things a functioning, tested, commercial PBS system – not a home-grown system. Giving the company the ability to earn hundreds of millions of dollars more in profits and cost savings through increased efficiencies, only for management to demand that we trade work rules for economics is ludicrous. This is even more ridiculous considering that the company has refused to share any costing on these issues, or any joint costing whatsoever with the Union since August.

Question 2: What Happened on Thursday?

To recap, in Chicago, for the first time, we had joint problem-solving sessions where management actually collaborated with us to address the remaining open issues. This resulted in closing out all remaining outstanding items in Section 14. Leaving Chicago, the company was to review the remaining open items that the union required for reaching an agreement on Scheduling and Reserve, then either agree to them, or, if unable to agree, present a strong case through operational or financial analysis demonstrating why the company couldn’t agree. Again, it was made clear that for such extreme and industry-leading operational flexibility that simply “saying no” and not agreeing would not be acceptable to this pilot group.

During the following session in Las Vegas, the NC conditionally agreed to a few items in good faith assuming that the company would continue collaborating as progress was being made. After those agreements however, management then abruptly ended the collaboration and demanded that the Union make proposals on Scope, Compensation, Insurance and Retirement before they would have further discussions about the remaining open Reserve and Scheduling items.

Question 3: We now know the company is asking for massive gains and changes; is the union being reasonable? We heard rumors in training that the union is “asking for Delta” and terms that will bankrupt the company.

Virtually all of our requirements to settle Sections 14, 15, 16, and the PBS LOA are in line with our peers and exist as standard provisions in other industry contracts. There are a limited number of reasonable, one-off terms that we proposed in response to management’s request for provisions well outside of industry norms. There are no terms that we proposed that will “bankrupt” the business model or are remotely close to the level of protections that legacy or even some national carriers enjoy. Every term is more than reasonable, especially when considering them in the context of the massive gains, improvements, and efficiencies that the company would have received in return. Here are some of the more common rumors:

Rumor 1: I heard that the union proposed that reserves can never leave their base or do overnights.

False. Our position remains that we do not want the reserve system becoming the new involuntary TDY. Additionally, we don’t want reserves to be sent from base to base to flatten the flying (e.g., reduce open time, VFNs, etc.) or reduce the vacancies and/or headcount in another base. Why would the company grow PIE or SFB when they can simply send a reserve pilot from SAV, BNA, or CVG, at no additional cost, to cover the flying? Our terms allow for overnights like any other carrier, with limited protections for pilots who bid for single-day RAPs. For example, when reserves can be used to cover out-of-base flying, when they must be returned to domicile, and if/when they must be compensated with additional pay.

Rumor 2: I heard in the training department that the union wants Delta long call with a full 18-hour call out and they are holding the contract up for that.

False. The company claims to be industry-leading in all areas, except how it treats pilots. The Company, not this NC, proposed long call reserve (LCR). Without the necessary pilot protections, LCR is more harmful than helpful to this pilot group. With long call reserves the company can drastically flatten flying or reduce headcount across other bases, while Allegiant gains massive increases in utilization during peak periods. Management’s proposal will result in a massive increase in utilization and profits for Allegiant with minimal, if any, gain for the pilot group.

Our terms for LCR call out are straight forward and responsive to Allegiant’s business model i.e. a 14-hour call out period for LCR with an industry-leading provision (for management) that reduces the call out time to less than 14 between LCR assignments. During the slowest months of the year, the call out for the first day only is increased to 18 hours, while still maintaining the same reduced call out time between LCR assignments as above. As we previously discussed with management, this captures our willingness to make a minor gain for pilots during the periods where Allegiant can most afford to do it.

This was a more than reasonable ask, especially considering the massive gains the company would realize through long call reserve. We assume that the company’s leak of “Delta 18-hour long call” had none of these details or context. We also assume that they didn’t share that our terms were responsive to Allegiant’s business model.

Rumor 3: The company needs to see our economics before they can agree to anything else in scheduling.

False. Many of the open items have absolutely no economic impact whatsoever. Consider that management has made proposals in Sections 15, 16, and the PBS LOA without being constrained by the supposed “cost” of the language that they put on the table. Reminder, the company has refused to do joint costing with the Union. Most importantly, terms with economic provisions are subject to “cost-and-defer,” just like in any other pilot contract negotiations. You close out the non-economic portions, and cost-and-defer where applicable.

Allegiant doesn’t need to see our disability benefit proposal before it can agree to limiting RAP shifts and call out times. They also don’t need to see it to agree to a dispute resolution process for PBS implementation. This isn’t about “costing”. The company’s real agenda is clear – if pilots want quality of life, they need to pay for it with less money in compensation and benefits. If pilots want compensation and benefits, they need to give up quality of life protections. This is even after they get massive gains in pilot productivity and utilization – and drive massive profits as a result.

When it comes to Allegiant’s finances, consider the following management talking points:

“Allegiant has outperformed the next best airlines by ~33% in pre-tax margin over the last 18 years” – Management Presentation.

“Allegiant stands out with a revenue premium close to brand carriers like Delta, American, and United…” -Greg Anderson, 2024

“[Allegiant] drives higher margins than Delta, Alaska, JetBlue, Southwest, and Frontier.” -Greg Anderson, 2023

You work for an industry-leading company that wants to nickel-and-dime your contract. Allegiant doesn’t have a money problem; they have a philosophical one. It’s not that they can’t afford work rules or that what we are proposing will destroy “the model”; they just don’t want to give them to you. They simply believe you’re worth less, they have said as much to us multiple times in the room, and would rather step over a dollar of productivity to save a dime in any area of the contract that benefits you. If you have any doubts about how the rest of the industry values its pilots, refer to our contract comparison.

Question 4: Where Do We Go from Here?

At this stage of the game, and with this many potential gains in the company’s favor on the table, we are not going to trade work rules for money. Accepting the company’s table position on Thursday would have given the company massive gains in unstacking, significantly expanded reassignment and cancelation rights, hundreds of millions in increased productivity, all without addressing the remaining issues in the package as they said they would. This would have locked in Allegiant’s bargaining power on those issues, making it nearly impossible for the union to revisit those terms later.

It is ridiculous that management wants to nickel-and-dime this pilot group on working conditions and pay when Allegiant has dumped hundreds of millions of dollars into Sunseeker, despite mounting losses, and other projects. We will not let that happen. You will get a fair contract; your new CBA will not subsidize Sunseeker losses.

Our strike vote has never been more critical than it is now!

The company has essentially erased months of progress and significantly extended these negotiations. If the company is unwilling to honor its original commitment to working collaboratively with the Union to solve critical issues, then they have undoubtedly set us on a direct course to an impasse.

Scheduling Future Mediation Sessions

Today, the Union spoke with the Director of Mediation Services of the National Mediation Board regarding scheduling the next round of mediation, the process, and the agenda for meeting with the company in mediation. We will provide an update next week.

Thank you for your continued unity and support.

In Unity,

Captain Joshua Allen
Negotiating Committee Chairman

Captain Jay Killen
Pilot Negotiator

Captain J.R. Lynch
Chief of Staff

Captain Jim Cole
Recording Analyst