Unions vote no confidence in Southwest Airlines executive leadership

Transportation Workers Union Local 555 on August 3 became the fourth union at Southwest Airlines to express no confidence in the airline’s Chief Executive Officer Gary Kelly and Chief Operations Officer Mike Van de Ven and call for a change of leadership at the top.

The Southwest Airlines Pilots Association (SWAPA) was the first union to take a no confidence vote. The SWAPA executive board on August 1 voted 20-0 for a no confidence resolution.

“After years of operational failures and a degradation of our culture that risks slowly eroding our loyal customer base, we must speak up and be catalysts for change,” said Captain Jon Weaks, president of SWAPA, explaining his union’s no confidence vote. “We are faithful to our company and its founding principles, and we feel that our CEO and COO have broken the faith with both.”

That vote was followed by similar actions by Transport Workers Local 556, whose members are Southwest flight attendants, and the Airline Mechanics Fraternal Association Local 11 (AMFA).

“Over the past several years, Southwest Airlines CEO Gary Kelly and COO Mike Van de Ven have failed to recognize and adequately fix the operational failures that continue to plague our airline,” said TWU Local 556 president Audrey Stone. “Our flight attendants, along with other front-line employees, end up bearing the brunt of these failures. Management’s failures continue to erode the morale of employees, endangering the famous culture upon which our beloved airline was founded.”

The unions say that despite record profits Kelly and Van de Ven have not made the investments needed to upgrade the Southwest’s crumbling infrastructure such as the company’s threadbare computer system and aging fleet of airplanes.

The result has been a series of gaffes like July’s mammoth computer system shutdown that caused hundreds of flight delays and cancellations that stranded thousands of passengers and ruined their travel plans.

Greg Puriski, president Local 555, whose members are baggage handlers and ground operations workers, said that the computer breakdown was the last straw for a beleaguered workforce who had to clean up the mess caused by Southwest’s system failure.

“After witnessing the recent electronic meltdown that left customers and flight crews stranded in airports (and) our members trying to pick up the pieces of delayed and cancelled flights, we will no longer remain silent but join with SWAPA, AMFA and TWU 556 in declaring our vote of ‘no confidence,'” said Puriski.

Bloomberg reports that  the company’s computer system crashed in July “after an old router and its backup system failed.”

Another Southwest computer crash that stranded thousands of passengers and flight crews occurred in 2015. That one was blamed on “outdated technology.”

Southwest’s computer system isn’t the only thing that’s old and outdated. According to SWAPA, Southwest operates the oldest fleet of airplanes in the airline industry, which also has caused flight delays and cancellations.

The unions say that instead of fixing these problem, Southwest has been using its record profits to buy back stock from investors.

Southwest spent $700 million on stock buybacks in the second quarter of its fiscal year, and $3.1 billion on buybacks during the last three years.

Southwest’s board of directors recently authorized another $2 billion for stock buybacks.

Southwest isn’t alone in spending its profits on buybacks rather than on investing in innovation and employees.

Nick Haneuer writing for the Atlantic reports that between 2004 and 2015, corporations spent $6.9 trillion on stock buybacks, and in the last ten years, corporations on the S&P 500 index have spent 54 percent of their profits on stock buybacks.

“Today, these buybacks drain trillions of dollars of windfall profits out of the real economy and into a paper asset bubble, inflating share prices while producing nothing of tangible value,” writes Haneuer, an entrepreneur and venture capitalist.

While the buybacks might not do anything to create “tangible value,” they do a lot to boost the compensation of executives such as Kelly and Van de Ven.

Much of Kelly’s and Van de Ven’s compensation is in the form of company stock. When companies buy back their stock from investors, the price of stock increases because there are fewer shares on the market.

While Kelly and Van de Ven have failed to make the capital investments needed to maintain quality service, they’ve also failed to invest in their employees.

Three of the unions, SWAPA, TWU Local 556, and AMFA have been in protracted collective bargaining negotiations with Southwest. Local 556 and SWAPA have been negotiating since 2013 and AMFA since 2012.

Since 2013, Southwest has reported net income of more than $4 billion. Each year since 2013 has been a record year for profits.

Local 556 reports that Southwest’s estimated year-to-date profits for 2016 are $1.379 billion. If Southwest continues at this rate, 2016 profits will be $2.364, another record-breaking profit year.

Despite the record profits, Southwest has been reluctant to agree to fair contracts with the three unions and negotiations have stalled

In a message to its members, Local 556 said that the computer breakdown in July had changed the dynamics of its negotiations with management.

“We have further put management on notice that the nature of these ongoing contract negotiations has changed due to this event,” reads the message. “Excuses given in the past are no longer valid; protections once taken for granted have failed the flight attendants, and that is intolerable. We expect contract language guaranteeing that we will not be abused due to inadequate staffing of reserves, that there will be solutions should there be issues with procuring hotels, and, finally, that our members are in no mood to even consider an Extended Duty Day (a company demand that if implemented would significantly reduce flight attendant’s free time).”

Local 556 members will be holding informational picket lines on August 8 at airports in Atlanta, Baltimore, Chicago, Dallas, Denver, Houston, Las Vegas, Oakland, and Phoenix.

“We’re picketing to show unity and solidarity with our union sisters and brothers,” reads an explanation of the picketing. “It’s an opportunity to have your voice heard and to fight for the contract we deserve.”

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Southwest suspends workers for attending a union meeting

Transport Workers Union Local 555 has set up a Go Fund Me account to raise money for more than 100 of its members who were suspended by Southwest Airlines for attending a union meeting.

“On December 8 and 9 Southwest Airlines issued unpaid suspensions ranging from 45 to 90 days to more than 100 of our Brothers and Sisters for attending regional union meetings in Southern California and Orlando, Florida,” reported Local 555 on its website.

Local 555 represents 11,000 Southwest Airlines baggage handlers and other ground workers.

The union and Southwest Airlines have been negotiating a new contract for four and one-half years. The two sides entered mediation in 2012 to resolve the dispute, but no progress has been made.

Despite the company’s record profits, Local 555 members have not received a raise in three years.

Local 555 called union meetings on November 18 in Southern California and November 20 in Orlando, Florida to discuss the negotiations and options for moving forward.

Some union members used personal leave time as is permitted by their collective bargaining agreement to attend the meetings.

Southwest Airlines alleges that those who used their leave time to attend the meeting were engaging in an illegal strike and suspended them.

Lou Mang, a 13-year Southwest ramp agent in Burbank, California and a union station representative, was one of those suspended.

“This 90-day unpaid suspension will devastate my family,” said Mang, who works double shift overtime twice a week to meet his family’s expenses.

One of Mang’s sons is in college, and Mang is worried that the loss of pay from his suspension will mean that his son won’t be able to return to college when the new semester begins in January.

“I feel our contractual rights have been totally violated and don’t understand why we are being punished and suspended,” said Mang. “I also don’t understand why the company is doing this cost wise; they are paying for the cost of temporary workers, hotels, etc. when we are all ready to work. We feel helpless and we feel we have done nothing wrong. It just seems very unfair.”

Eric Rosales, a 14-year Southwest ramp agent at John Wayne Airport in the Los Angeles area, said that he was surprised when he was suddenly pulled off the job and interrogated about use of his personal leave time. He said that the interrogation made him feel like a criminal.

Rosales and his wife have a six-year old daughter. He said that the suspension has been stressful for the whole family.

“Rent is a terrifying thing to think of, and we’ve called the bank to talk about our car payment,” said Rosales. “Thankfully, we had already bought a couple of Christmas presents for our daughter before this happened and she doesn’t ask for much; I think she knows we don’t have it right now.”

Rafael Zavala, an eight-year Southwest cargo agent in Ontario, California, didn’t even attend the union meeting, but was still suspended.

Zavala took personal time off to take care of his two children, so that his wife could attend the funeral of a co-worker.

TWU International President Harry Lombardo said that the international, which has contributed $25,000 to the Go Fund Me account, would stand behind the suspended workers.

“In this union, one local’s fight is everyone’s fight,” said Lombardo. “I’m tired of watching the airline industry get rich on the backs of working people. It’s time to fight back.”

While Southwest has avoided negotiating a new collective bargaining agreement and has frozen ground workers’ wages, the company  reported a record-breaking $584 million in profits for the third quarter of 2015.

“We are very pleased to report outstanding third quarter 2015 results marked by a 63.1% year-over-year increase in net income, excluding special items,” said Southwest’s CEO Gary Kelly to investors.

Kelly added that low fuel prices are the primary reason for the record profits.

USA reports that during the third quarter, Southwest paid $549 million to shareholders through dividends and stock buybacks.

Lombardo said that the suspensions were further proof that the current bargaining structure in the airline industry is unfair to workers.

“Companies are raking in record profits, CEOs are doing better than ever, and air travel has never been more expensive,” said Lombardo. “Yet the people who get up and go to work every day to make sure those flights get off the ground – pilots, mechanics, flight attendants, ground crews, you name it – are struggling to support their families.”

Lombardo added that under the current bargaining structure, airlines have no incentive to bargain in good faith.

“The game is rigged, and I won’t stand by and watch as Southwest Airlines – or any company – continues to exploit the hardworking men and women of this union,” said Lombardo.