NetJets Inc. said today it will lay off nearly 500 pilots, as its new management deals with a prolonged economic downturn that has hit the company hard.

The company employs more than 3,000 pilots worldwide, with most of them located in the U.S. Fewer than 100 of the pilots to be laid off live in the central Ohio area, said NetJets Chairman and CEO David Sokol.

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Technorati Tags: Fractional Airlines

Tags: Fractional Airlines

The fractional provider Netjets, Inc. of Columbus, OH has informed the NetJets Association of Shared Aircraft Pilots (NJASAP) of impending furloughs due to the prolonged economic climate.  As many as 560 pilots could be affected as the state of fractional and jetcard purchases has not materialized as forecast.  NJASAP had previously proposed and the company accepted, a furlough mitigation plan which was, as the name suggests, a plan to stop any layoffs at the largest fractional provider in the United States.

NetJets Encore

Because of the longer than expected recovery timeframe, NetJets Chairman and CEO David Sokol felt that the furlough mitigation program would not be viable beyond its two year forecast.

Additionally, future furloughs could be possible because of fleet reductions in the Boeing BBJ and Citation Encore, constituting two and 17 aircraft at this time.  At the current staffing levels of five pilots per aircraft, that would be an additional 95 pilots furloughed.

The Letter to the NJASAP pilots below:

FROM THE UNION PRESIDENT

Dear Crewmember,
NetJets Chairman and CEO David Sokol characterized the furlough mitigation concepts proffered by NJASAP as his first experience with a labor advocate in more than 30 years who had come forward with a constructive strategy that had the potential to provide genuine relief in the midst of a very difficult situation. Unfortunately, the state of affairs that greeted Mr. Sokol when he arrived in Columbus in early August has made it exceedingly difficult to enter into negotiations intended to prevent a reduction in force.

Earlier in the week, the Executive Board received a letter from Mr. Sokol confirming receipt of our request to engage in furlough mitigation talks. The correspondence did not indicate whether the Company would participate in a renewed effort; however, they confirmed they were reviewing our material. The next day I placed a call to Labor Relations Vice President Mike Maratto requesting a meeting with Mr. Sokol; late Wednesday evening I received word from Mr. Maratto that he and Mr. Sokol would meet with us Thursday afternoon. Vice President of Financial Affairs Capt. Jeff Burrows accompanied me to that meeting. We were also joined by NetJets North America President Bill Noe.

During this consequential meeting, we learned the time frame for restructuring the Company is longer than anticipated and beyond the two-year timeline incorporated into our furlough mitigation strategy. According to the Sokol team, if NetJets was only responding to the economic downturn, then it was highly probable they would have engaged in renewed talks; however, Mr. Sokol explained throughout the past several years various pieces of the business model have become convoluted and that the extent and timeframe of the NetJets restructuring effort far exceed what was originally anticipated.Combined, these challenges have created an environment in which it would be almost impossible to conduct negotiations because there are too many unidentified variables.

Simply put, the Company agreed with the numbers we put forward; however, they indicated it is not feasible to engage in continued mitigation efforts due to other issues – many of which remain in flux. For example, fundamental changes that have and will likely continue to be made to the card programs and the formula for determining aircraft shares preclude NetJets from locking itself into an agreement with strict parameters. Sadly, years of impulsive decision making have taken their toll: The Company, the industry leader, finds itself in a position in which it must identify and firmly establish its baseline. It has become apparent although the previous management team agreed to the Joint Preventive Measures Campaign launched earlier this year, in the longer term, they have done us no favors.

I acknowledge this message is certainly not filled with welcome news; however, I believe Mr. Sokol and his team are endeavoring to make sound decisions intended to secure NetJets long-term viability. While his team’s direction may seem callous to those who have been detrimentally affected by the restructuring effort, they are working to ensure NetJets emerges stronger and viable in the long term. The Company has a great deal to fix and we can expect NetJets to be a very bottom-line-oriented operation for quite some time. That said, Mr. Sokol confirmed he has no intention of asking the pilot group for concessions and intends to honor the Collective Bargaining Agreement in its entirety.

To say the very least, I found Mr. Sokol’s honesty a refreshing change. Most other companies would have attempted to take advantage of our efforts, using our furlough mitigation concepts as a backdoor to secure concessions. While NJASAP is positioned to protect itself from such nefarious practices, NetJets, under Mr. Sokol’s leadership, appears to be acting ethically.

Although I was heartened by his candor, he left little room for doubt that a pilot furlough is imminent. Telling our junior crewmembers, the men and women I have been elected to serve, that they are likely to be affected by a reduction in force is a responsibility carried out with profound regret; however, I am compelled to ensure each NJASAP member is aware of and can prepare for the realities of our situation.
As airplanes are sold or placed in permanent disposal status, that reality becomes even starker. Based on information received via official information request, the Company is only contractually required to maintain a minimum staffing level of five pilots per aircraft, bringing the maximum number of pilots they could furlough to 560. This number is based on the number of aircraft currently in the fleet; however, the Encore, having been placed in disposal status late last week, and the BBJ scheduled for the same fate early next year, mean additional pilots could be affected. At that point, furloughing to minimum staffing levels is not feasible as it would be difficult to adequately cover flight operations. Whether it becomes necessary to furlough a second round of pilots in late 2010 will depend on flight demand and the success of NetJets’ reinvigorated marketing campaign. The second round, if required, is expected to affect fewer pilots than the first.

In light of these developments, NJASAP will now divide its attention between continued efforts to decrease the number of furloughed pilots and an initiative to ensure our junior crewmembers have access to the resources necessary to navigate this very difficult time. The Furlough Working Group (FWG) is currently finalizing the first phase of its efforts, which will be discussed, in detail, during the first of four teleconferences scheduled for each Wednesday in November; each teleconference will begin at 8 p.m. (ET) and pilot spouses are encouraged to participate. More information about the teleconference series is provided below.

One component of the FWG’s efforts is likely to be a voluntary campaign whereby active line pilots may contribute to a fund, via payroll deduction, that would be distributed to furloughed crewmembers. The group is currently reviewing various distribution schemas that will outline when and how these financial resources are disbursed. The Company, on Thursday, agreed to allow the deduction provided it complies with all applicable laws and regulations; additional information about the FWG’s work can be found below.

Other FWG initiatives include:

1) seven-month dues refund for active NJASAP members,
2) a FWG Information & Resource Booklet,
3) a NetJets Family Foundation letter and application,
4) aviation job service subscription information,
5) posting business aviation employment opportunities obtained through NBAA in the Pilot Employment Forum of the NJASAP Message Boards on a regular basis, and
6) instructions for submitting pilot resumes to FWG members who will upload them to a secure database that will be made available to contract and corporate operators.

While we will continue to explore every available option to keep our pilots working, the membership, as a whole, will play a critical role in the weeks and months ahead by maintaining the level of solidarity that has served us so well. Similar to the shared sense of responsibility that drove the Joint Preventive Measures Campaign’s success, supporting our furloughed pilots and hastening their return to the line will require we remain true to the pilots taking care of pilots philosophy. In addition to staying in contact with those colleagues affected by the likely reduction in force and offering whatever financial assistance you have the wherewithal to provide, NJASAP will seek to educate the pilot group about the best and most conscientious strategies we can practice relative to scheduling and extended day considerations. With our collective interests in mind, Union leaders will ensure the membership understands how their choices affect a furlough.

I want to emphasize NJASAP will not forget about its crewmembers affected by the likely reduction in force. So long as even one pilot is furloughed, we will continue to seek your return to active flying status. It is true that we will need to overcome a number of challenges; however, we have the fortitude and resources to stay the course no matter how long it takes.

When NetJets will choose to serve the furlough notice is unknown. We are scheduled to meet with Company executives on Thursday, Nov. 5, to discuss their staffing evaluation and fleet planning strategy. We should, at the meeting’s conclusion, have hard data that will allow us to more accurately plan for events going forward. In the meantime, please continue to contact the Executive Board with your questions and concerns.

Fraternally,
Capt. Mark Luthi

mluthi@njasap.com

Technorati Tags: Fractional Airlines

Tags: Fractional Airlines