Letter #1 To Jake Brace
Mr. Jake Brace
Executive Vice President
& Chief Financial Officer
United Airlines-WHQPO
P.O. Box 66100
Chicago, IL 60666
FAX: 847-700-6788
Dear Mr. Brace:
I proudly represent 268 dedicated Flight Attendants domiciled at PHLSW. This is our home. Over the last few weeks it has come to my attention specifically from the Onboard Service Division, plans may be in the immediate works to close our domicile effective with the September 2003 schedule. It has been communicated to me from Onboard Service in two separate meeting at WHQSW that PHLSW is no longer a viable domicile financially. I find this conclusion to be fundamentally and financially flawed both logically and ethically.
Concentrating on the logical perspective, PHLSW generates an operational savings (based on the May 2003 schedule only) of $325,481 (the numbers I’ll be referencing were provided by Onboard Service and included in the attachments). During the May 2003 schedule, we only utilized 89 Lineholders. Based on static aircraft scheduled departures and overnights, our economies of scale were severely compromised in May and these figures fail to accurately represent our true financial viability historically and in the future. Information I received during our meetings suggest our optimum active population should be near 200 flight attendants considering the aircraft schedule in place and the proposed increase on June 12, 2003.
Mr. Brace I’m confident you would agree as additional flight attendants return to active status from ANP and the possibility we could receive surplus transfers from MIASW, our economies of scale increase thereby enhancing and strengthening our financial commitment to the success of United Airlines. In addition, the personnel expense of $393,077 noted on the attachment fails to consider any cost savings initiatives currently in place.
In June, we will furlough an additional supervisor reducing personnel expense. Also, our Interim Domicile Manager is only on a temporary 4-month assignment. Subtracting this salary greatly enhances our fixed costs over time thereby again solidifying our financial viability. To go further, our facilities expense to the airport authority is static with or without the leased SW space. No financial benefit will be realized by our closure.
During our collaboratively joint meetings, we identified several key cost saving objectives that would allow PHLSW to remain financially viable. The company as well as AFA provided input and created a prototype to reduce operating expenses while maintaining the company desired domicile structure of lineholders, relief lineholders and reserves. Our prototype or some variation of it provided the necessary reduction in fixed costs that would generate savings. I specifically commented on a model that would employ a clerical/coordinator(s) and one supervisor, which would report to a Domicile Manager in an established and larger domicile. The response I received was what I find to be most illogical and disturbing. It was agreed the proposed PHLSW model would be cost effective and in line with current cost saving initiatives, however it (the model) may fail to be cost effective at other domicile locations.
Mr. Brace here is why I continue to be completely puzzled. I am well educated. I hold a BS in Business Management from Indiana University and minored in Economics. Any way I turn the page, the result continues to be the financial viability of PHLSW and our commitment to the success of United Airlines. I fail to understand how any company’s CFO, especially one in bankruptcy, could endorse a closure plan that would drain the immediate and future revenues to the tune of an estimated one million dollars over a 5-year period. This may even prove to be a conservative estimate with the continued success of our code share with USAirways and higher yields. As you know, currently no major low cost carrier operates in our immediate market reducing our share.
Domiciles, landing fees, leases, catering, contracts and a myriad of other airline business functions are rarely completely uniform in their entirety from the revenue or cost side. Each one must be reviewed on its own merits and contribution to the bottom line. PHLSW has an established history of contributing financial savings to United’s bottom line and will continue to do so with your assistance and the collaborative efforts of AFA and Onboard Service.
From an ethical perspective, closing a financially viable domicile and uprooting the lives of 268 Flight Attendants and their families strictly on the misguided premise the viable PHLSW model may fail to work elsewhere is counterproductive, senseless and lacks sound business principles. It may serve only to drive a deeper wedge in the employee/management relationship. United management should be willing to leave no stone unturned in their quest for financial stability and to improve employee moral and commitment to service and our customers. This closing would prove to be financially and emotionally destructive to United as a corporation and its dedicated employees.
Mr. Brace I challenge you to do the right thing, both financially and ethically, for United and PHLSW by allowing us to remain a productive and viable company asset. I truly do view this as a numbers game and from where I sit, numbers are your game! Our futures will untimely rest in your hands, and your hands alone.
Sincerely,
Terry Knoy
President Council 23 PHL
Attachments
VIA FACSIMILE
