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DHL has come under fire from American pilots claiming the German company’s influence and control over US airlines is too strong, and could be breaking foreign control requirements.
As a result, Atlas Air and Southern Air pilots are holding a strike authorisation vote on Wednesday, launching what could be a lengthy process.
The issue has come under the spotlight following the acquisition of Southern Air, a DHL Express operator, by Atlas Air, also contracted by DHL, a 49% shareholder in Atlas’s Polar Air subsidiary.
Atlas Air had planned to place the Southern and Atlas pilots under the same contract, as they are in the same union – the Airline Professionals Association Teamsters Local 1224.
An announcement by the union this week shied away from directly criticising Atlas, but focused on its major customer instead, raising concerns over foreign control of the airlines.
Atlas noted in its recent earnings call that some 27% of its revenue, after the Southern takeover, would derive from DHL. Southern Air has operated exclusively for DHL since 2014.
In its announcement, Local 1224 claimed the reliance on DHL was “putting the two American companies further under the control of a foreign entity”.
In the earnings call, Atlas CEO Bill Flynn said the acquisition would be “less complex” than some, adding: “In terms of labour, both of our pilot groups are represented by the Teamsters, the same Local 1224.
“So in terms of airlines coming together, we don’t have different representation groups, it’s the same, it’s the IBT and it’s Local 1224, so that’s a good thing … Our goal is to merge Southern in to Atlas … and at the end of that process there will be one collective bargain agreement and all pilots will be Atlas pilots.”
The pilots, however, are not so keen, and claim Atlas’s contracts are “grossly below standard”.
However, on a website called Atlasfacts.org, created by pilots, there is a comparison table of US pilots’ contracts and, while Atlas lingers near the bottom of many tables, “grossly below standard” appears to be a slightly unfair representation. There is no comparison, for example, of Centurion/SkyLease contracts. In cargo airline terms, on average, Atlas seems to have better contracts than Kalitta and worse contracts than ABX.
However, for ‘DHL’ pilots, the contracts are clearly inferior to rivals UPS and FedEx.
Atlas pilot Captain Mike Griffith said: “There is no reason why a US pilot flying over the same routes for a foreign shipping company should be paid less than a pilot working for UPS or FedEx.”
The pilots argue that DHL reported €59.2bn in increased consolidated revenue last year, of which the express division was the most profitable. Adjusted net income attributable in 2015 to Atlas’s common stockholders totalled $125.3m on revenue of $1.8bn.
Local 1224 noted: “Despite these gains, [parent] AAWW and its subsidiary carriers, Atlas Air and Polar Air, are trying to force pilots at both AAWW and Southern into an “amalgamated” contract that will have a devastating impact by suppressing wages and lowering quality of life issues for pilots at the two companies and throughout the industry.”
Most concerning for DHL is the focus on the German company’s influence on the carriers.
“DHL customers and shareholders should be concerned about the company’s disregard for experienced pilots,” said Robert Kirchner, an Atlas pilot and executive council chairman of APA Teamsters Local 1224.
“Pilots have sacrificed to help DHL-contracted airlines succeed. We are helping DHL grow its business in the United States and building profits for all companies involved.
“A strike is a last resort, but our families are not going to stand by while this German company tries to further undermine our profession and American labour standards throughout the industry.”
He added: “DHL’s … impact and influence on the airline’s management is strong. We can’t allow a foreign company like DHL to use its influence to drive down standards … DHL makes billions of dollars a year based on our pilots’ hard work.
“Pilots … are gravely concerned about the influence that DHL has over these two airlines and the possible overreach in its US-operations. As major equity partners and the sole customer for Southern Air, DHL’s reach may be against legal regulations that require US cargo airlines to show ‘US citizenship’ of company owners and operations.”
Atlas Air said in a statement: “We especially recognise the importance of our pilots and value the strong relationship we have with them.
“The Southern Air acquisition is very good for Atlas Air and Southern Air pilots. The transaction will provide increased pay, more job security and growth opportunities for all of our pilots. In fact, Local 1224’s leadership recognised these benefits by endorsing the transaction when it was announced.”