The pilots who fly your Amazon Prime packages just suffered a major loss in their 3-year quest for a new work contract
- Pilots who fly your Amazon Air packages have been negotiating with their employers for years to secure a new labor contract.
- One of those employers is Atlas Air, which acquired another air cargo company called Southern Air in 2016.
- On August 26, an arbitration board ruled that Southern and Atlas pilots must merge their seniority lists.
- Atlas Air said the decision was a win for the company, while its pilots said the legal choice "will do nothing to restore shareholder confidence or more importantly, pilot morale."
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The pilots who fly your Amazon Prime packages all over the United States just weathered another loss in their quest to secure a new labor contract.
These pilots do not work for Amazon but they are employed at cargo carriers including Atlas Air Worldwide Holdings and ATSG. They have appeared at Amazon shareholder meetings and at the e-commerce behemoth's upcoming air hub to protest against their working conditions, a fight that has been ongoing for the last 3 1/2 years.
- On Aug. 26, an arbitration board ruled that Southern Air and Atlas Air pilots must merge their seniority lists.
- Southern Air is an air cargo company that Atlas acquired in early 2016.
- Combining seniority lists, pilots say, would hurt their ability to create a new contract as it would lead to further negotiations to occur under arbitration. Atlas leaders say the merging is necessary for "a new, competitive contract with enhanced pay and benefits."
- A federal ruling in July determined that the Atlas and Southern pilots were engaging in an illegal work slowdown, telling those workers to stop calling in sick "excessively" and refusing overtime work. Atlas claimed same-day sick calls from pilots jumped by 42% since union negotiations began.
The reaction from Atlas and pilots
Atlas said in a press release on August 27 that Teamsters Local 1224, which represents Southern Air and Atlas Air pilots, was violating its collective bargaining agreement by insisting that the two pilot groups remain separated.
"Now, with these decisions behind us, the path forward is clear and we are positioned for real progress," Atlas Air Worldwide CEO William Flynn said in a press release.
The pilots' Teamsters leadership, on the other hand, denounced the ruling. Captain Robert Kirchner, who is a recently retired Atlas Air pilot and the executive council chairman for Atlas Air pilots of Teamsters Local 1224, said in a statement sent to Business Insider that the union will continue to pursue any additional legal avenues to avoid arbitration, which is a condition of combining the pilot groups.
"(T)his is a company in complete turmoil, and this ruling will do nothing to restore shareholder confidence or more importantly, pilot morale," Kirchner said. "Atlas Air has waged a vicious legal battle with its pilots for more than three years and squandered opportunities of reaching a reasonable agreement through direct, good-faith negotiations."
Flynn emphasized that Teamsters had to hand over the integrated seniority list of Southern and Atlas pilots. "In order to advance negotiations and provide our pilots with the new contract they deserve, the Union has important responsibilities as part of this process," he added in the statement.
Here's the implication for your Prime packages
Amazon, which is not a direct employer of these pilots, does not customarily comment on labor battles. Atlas Air pilots fly for Amazon, as well as the US military, DHL Express, Nippon Cargo Airlines, and other customers.
But the e-commerce giant has a larger control of Atlas than that might imply. Amazon, which is mentioned 33 times in Atlas' most recent quarterly earnings statement, has a warrant to acquire a whopping 30% of Atlas' stock. These stock warrants have not been exercised, though Atlas issued them to Amazon as."incentives for future growth of the relationship."
Amazon leases 19 of Atlas' 111 aircraft, and is also authorized to lease an additional 15 planes by 2021. (Amazon previously leased 20, but one Amazon Air plane crashed in February, killing all three pilots on board.)
The National Transportation Safety Board is investigating that fatal crash as one caused by pilot error, according to a March Wall Street Journal report. Atlas Air pilots Capt. Ricky Blakely and First Officer Conrad Jules Aska, as well as Mesa Airlines Capt. Sean Archuleta, who was riding in the jump seat, died in the crash.
Meanwhile, pilots who fly for Amazon Air, including Atlas pilots, told Business Insider in the weeks before the crash that an accident was inevitable. They alleged that Amazon has put pressure on Atlas and its other subcontractors to hire more pilots and move more packages; eleven pilots said training standards have eroded.
Capt. Daniel Wells, an Atlas Air pilot and the president of Teamsters Local 1224, told Business Insider in January that the check airmen - who oversee new hires for training and safety - are forced to work at "full speed or over speed."
"I can honestly say, if you had all the check airmen in the room and we've done this, saying, who believes that it's likely that there would be an accident in the next year," Wells said, describing a hypothetical situation, "nearly 100% of the people will raise their hands."
The labor unrest at Atlas and ATSG, which manifested in protests and even a strike, has not gone unnoticed at Amazon. The labor relations are so shaky that Amazon has threatened to cut its business with Atlas. That's because ongoing pilot issues could cause disruptions in your Prime package delivery.
"If it ends up that the service level becomes inconsistent because you can't find the labor to fly the planes and you're constantly having labor-disruption issues, that's going to have a direct impact on their ability to provide that two-day delivery," Marc Wulfraat, the president and founder of supply-chain consultancy MWPVL International, told Business Insider.
One Atlas pilot who spoke on condition of anonymity agreed.
"Right now, they're barely keeping it together," the person added. "And when I say 'barely,' it's right there. They're going to run out of people."
