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Polar Air Cargo faces strike
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September 28, 1999: 2:10 p.m. ET
Pilots says they're not scared of threats to close major Asian-U.S. cargo carrier
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NEW YORK (CNNfn) - Polar Air Cargo, a major carrier of freight from Hong Kong, Japan and other Asian points to the United States, faces a possible pilots strike starting 12:01 a.m. Saturday as a strong pre-holiday shipping season gets underway.
The airline, wholly owned by GE Capital, a division of General Electric Corp. (GE), has been financially troubled, and airline officials and officials from the company, union and analysts all agree it would not survive a long strike.
While company and officials of the Air Line Pilots Association returned to the table Tuesday afternoon under the auspices of the National Mediation Board, the union says it is prepared to strike the company no matter the consequences. Tuesday would mark the first negotiations in more than a week.
"I cannot imagine that either the pilots or Polar would let a strike happen," said Ned Laird, managing director of Air Cargo Management Group, a Seattle consultant. "The company has just become break-even on the eve of peak season. If pilots walk out, Polar Air Cargo as we know it would cease to exist. For that reason, I don't believe it (a strike) is going to happen."
But officials of the Air Line Pilots Association, which represents the 175 pilots at the company, say the pilots are fed up enough with pay and conditions that closure is no longer a serious threat for many of them.
They say about 50 percent of the pilots have found work elsewhere since the beginning of last year, and the current employees are confident they'll find jobs if Polar closes.
The union says it is seeking restoration of a 10 percent pay cut the company imposed in 1997 and pay increases of less than 3 percent annually the next two years. The union has represented pilots since Oct. 3, 1996, but is still trying to negotiate its first contract at Polar.
"The Polar crew members understand the company's financial situation," said an ALPA staff member, who spoke on the condition he not be identified by name. "They're willing to back load, not front load, the wage improvements. They're looking for simple, humane work rules and restoration of decent wages."
While Laird said there's not the demand for 747 pilots that there is for regional jet and narrow body aircraft pilots, one executive at another cargo carrier, who spoke on condition his company not be identified, said there's a severe pilot shortage at all levels right now.
"There's the greatest shortage of pilots I've seen in 25 years in the business, from Cessnas all the way to 747s," he said. "There's no big military exodus going on, so the pipeline is empty. And it's only going to get worse. Your Vietnam era pilots are getting old enough that they won't be able to fly in five years."
Polar lost $38.4 million on revenue of $309 million in 1998, leading to the departure of the co-founders in December and the buyout of the remaining stake in the company by GE early this year. In 1997 it lost $2.5 million on $343.5 million in revenue.
"It's impossible to predict the outcome" of labor talks, said Kevin Montgomery, a company spokesman. "We've always maintained we'd like an agreement that's fair and balanced. The books were opened to them so they could judge the situation and its gravity."
The airline has nine older 747-100 model aircraft and three 747-200s. It is negotiating to take delivery of another two 747-200 next month if a labor agreement can be reached, Montgomery said, to replace older planes retired since the beginning of 1998. Polar serves 15 countries, though it has cut back its service area in recent years to try to stem losses.
The shutdown of Polar's operations wouldn't make much impact on GE, the fifth-largest corporation in the world. And its closure wouldn't be a huge help to the large air express carriers that handle door-to-door shipments, such as Federal Express Corp. (FDX) or United Parcel Service. Polar handles shipments on an airport-to-airport basis, selling space to international forwarders who consolidate shipments for other customers and arrange pick-up and delivery. While FedEx and UPS do some of that business as well, it is the lower-priced freight used to fill-out aircraft.
Atlas Air Inc. (CGO), a carrier that flies 747 freighters for other carriers, primarily passenger airlines, might see its customers get more business from the closure of Polar, but it wouldn't necessarily increase the hours it gets paid to fly for those customers. A spokeswoman for the company said it would not comment on another carrier's labor relations.
The closure of Polar could cause troubles for some international forwarders. The leading firms in that sector include Air Express International Corp. (AEIC), Circle International Group Inc. (CRCLE) and Fritz Cos. (FRTZ). Officials from those companies did not comment on the impact of a possible Polar strike.
"If they ceased operations, the Hong Kong freight forwarding community would be in deep yogurt," Laird said. "You can't replace 11 aircraft between now and the end of the year."
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