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.”

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  • Christopher

    April 01, 2016 at 2:27 pm

    Your comment about no pay comparison between Atlas and Centurion/SkyLease crosses well beyond the border of ludicrous. Centurion/SkyLease has one operating airplane and no long term business. Kalitta has an ongoing pilot drain because of managements refusal to negotiate in good faith and they also have taken a strike authorization vote. Further, the question of long term operation once Connie Kalitta steps away; for whatever reason, is an unknown whereas Atlas’ survivorship is well established.

    Smart business moves and more importantly, the hard work and dedication of the Atlas pilots; even through bankruptcy, have made Atlas the industry juggernaut that it is. The prudent move now would be to engage the pilots in prompt, meaningful discussions that address their long simmering issues, bring their pay to equivalency with FedEx and UPS, and allow the juggernaut to grow. The risk of losing current, qualified pilots to UPS, FedEx and legacy carriers is not rhetoric, it is real and occurring. Too many other jobs are out there for a pilot to not consider other options. Atlas must fix the problem before they become known for killing their own goose that is laying golden eggs.

    • Alex Lennane

      April 01, 2016 at 2:42 pm

      I realise that Atlas and Centurion/SkyLease are different beasts – but Centurion/SkyLease do seem to have about seven aircraft on the books, and more than one operating. It has been in business for a long while, and seems to survive whatever. However, I am sure Atlas would prefer to be compared to the likes of FedEx and UPs rather than Centurion. As you say, with an upcoming pilot shortage, it may pay to be prudent now.

      • Jim

        April 03, 2016 at 3:06 pm

        What Centurion has “on the books” and what is real are two different animals. They have twenty pilots on the payroll; enough to crew one airplane. To compare them or assume that Atlas wage comparisons should include Centurion to put things in perspective is analagous to saying that a student pilot in a Cessna 152 is qualified to fly the Space Shuttle because they are both underpowered and have wings.

  • Disgruntled Atlas Pilot

    April 02, 2016 at 5:03 pm

    The bottom line is it is the pilots that make this place successful and it is time the company recognizes our hard work. The company can certainly afford to pay industry standard wages.

    Q4 stock comparison results 2015
    AAWW / UPS / FDX
    Gross Profit Margin (TTM)
    27.2% / 15.81% / 24.08%
    Operating Margin (5 year average)
    12.48% / 10.12% / 6.76%
    Revenue Per Employee
    $0.91 / $0.13 / $0.16
    Net Income Per Employee
    $3,647 (Legal Costs & Fines) / $11,136 / $3,580

    The problem with this management team is corporate greed and their ego. They seem to think that they can continuously hire and train their way out of this pilot shortage. They have come out and stated that they will attempt to hire guys that are not desirable to other airlines to try and stop the attrition. We have guys that have finished training more than three months ago that are sitting around waiting to start OE (line qualification training). That is how backed up they are and the training department simply cannot handle it.

    All the pilots want is industry standard wages, work rules, and to be recognized for our hard work. Why would a pilot come here and stick around when they could get the 747 type rating and then go to UA, AA, or DL and fly a narrow body for more money, better quality of life, and not be gone for up to 17 days at a time? Widebody FO’s at UA, DL, AA, FX, and UP are making more than our 747 Captains. We do not have basic work rules such as pay protection. You can bid for and be awarded a 80 hour pay credit line, and due to the inefficient crew scheduling department you can be rerouted and end up with the minimum 62 hours for the month.

    Times are changing. The company is only as successful as they are due to the hard work and flexibility of the pilots. No more. The philosophy out on the line now is SHOP (stop helping out Purchase, NY). That means no more picking up the slack when other departments (ie scheduling, travel, etc) drop the ball. This management team needs to realize that a happy and motivated pilot group will be key to their success. If not, they will be on their way to destroying a great, successful company due to their corporate greed.