12/7 (Casey Murray, Looking Ahead)

Today’s SWAPA number is 12/7. That’s the date of the next SWAPA Informational Picket that will be held on Wall Street in New York City.
So on today’s show we talked to President Casey Murray about the state of the operation, last quarter’s financial results, and the relationship between SWAPA and the Company's new leadership.

If you have any feedback for us at all, please drop us a line at comm@swapa.org
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Transcript

Kurt Heidemann:

Today's SWAPA number is 12/7. That's the date of the next SWAPA informational picket that will be held on Wall Street in New York City.

Amy Robinson:

So on today's show, we talked to President Casey Murray about the state of the operation, last quarter's financial results and the relationship between SWAPA and the Company's new leadership.

Kurt Heidemann:

I'm Kurt Heidemann.

Amy Robinson:

And I'm Amy Robinson. And here's our interview with Casey.

Kurt Heidemann:

Casey, late last month we reported the third quarter earnings and they were very strong. But what can you tell us about your perspective on Southwest earnings last quarter?

Casey Murray:

Well, thanks for having me. I think that looking at earnings demand is still very strong. It's another record quarter, which bodes well as we move into next year. As we negotiate contracts and we concentrate on costs, we try to provide the Company with the agility to take advantage of network opportunities, and there's been lots of them.

Unfortunately, even though revenue is high, we're still struggling with the operation, and I think that's a major headwind on really what could be even greater earnings.

Kurt Heidemann:

Casey, when you say headwinds, what exactly are you talking about?

Casey Murray:

We've been struggling for 18 months. Our pilots feel it every day through the reassignments, the incredible deadhead, inflation, and just the chaos that we've seen in the operation. Southwest is hiring, and I feel very strongly and SWAPA has tried to provide data to the Company to show that we are not undermanned, we're undermanaged, and that speaks volumes as to what's holding us back from really capturing really I believe what commercial and really Andrew Watterson, I think would like to see as we move forward.

Amy Robinson:

Speaking of hiring, SWA's hiring plan for 2023 is extremely ambitious. Do you see any chances of that actually coming to fruition?

Casey Murray:

I think it's going to be a challenge. I think Southwest is going to be behind the power curve as far as being number one, and someone's number one choice is a place to go. So I do think there are some challenges and I think that there are several things that have to be addressed. The contract is one.

It is absolutely unconscionable that we are where we're at. The lack of progress on it is shocking. The operational chaos is still, I know pilots I've spoken to when we've done new hire classes, that's a concern and those are the ones in class. So what is causing people to make the choices to go to other carriers?

And something I hear from the Southwest side is, well, we can't compete with geography. Well, we have more domiciles than anyone. And I think that's a cop out. I think we have to go out there. If we had a contract to offer and being Southwest, I think we could get anyone. But right now with the state of the operation and the state of our contract, people are choosing other places to go.

Kurt Heidemann:

Casey, you say the state of the operation, and we've touched on this quite a bit. But what do you see as the real root cause of it? Or is there anything in particular that's the bottom line cause not just the symptom, I'd say?

Casey Murray:

I think Southwest has chosen to do some things that we've said please don't do. And one of those was quite a few years ago, we lost an arbitration on IROPs, and those that remember even 5 and 7 and 10 and 15 years ago, IROPs was declared, but it was few and far between. And now, we see IROPs now being declared every day, every hour.

And it's one of those things that even SWAPA said, just because you won the right to do something doesn't mean you should. And we're seeing really the ramifications of that now. The Company wants more flexibility. So they fought us on it and they won, and that flexibility is causing a lot of the issues. It's a lot of the data that we provide.

When we see 84, 94, 95 deadheads scheduled across our entire system in a day and then that number is executed and it's 900. We've seen 1,800 deadheads and that's just symptomatic of the Company reassigning, trying to get pilots back to their original pairings, and it's just creating the chaos, and it's really self-inflicted wounds.

We will continue and again, we identified this years ago, two, three, four, five years ago and we tried to write it into what we're trying to provide with scheduling. I did an interview today with the Wall Street Journal and I brought up this exact point that we have made the same presentation to the Company. And I've even said this in a podcast. We made it back in 2017 to Oliver Wyman and they provided that information to the Company.

All of this is not new, but we have given without exaggeration a half dozen or more presentations during negotiations of these exact scheduling problems that they're having. And as new people on the Company side move in and out of negotiations, there's no continuity. And that's really what's causing most of the problems with negotiations and the long drawn out process that it's become.

Amy Robinson:

Do we see anything that has come from negotiations that might make this better? I mean, awhile back we talked about LRF, and the automation of that and where do we stand with that now?

Casey Murray:

That's a good example, Amy. We codified LRF and the Company automating it. Now the Company is actually saying that they never agreed to use it, they just agreed to automate it. And that's what we deal with. We deal with these little twists on language, and even when something is black and white, they still start dancing around very, very plain language.

Amy Robinson:

So to that end, do we believe that a rewrite then is actually going to do what we hope it will do?

Casey Murray:

I think it does, and we have to stick to that goal because what our pilots are feeling out on the line on a daily basis is we can't continue with that. We can't continue with the continued reassignments. The no expectation of operating what it is you bid on, whether it's your monthly line or whether, and then we all know it.

I hear it and see it on social media. I hear it from pilots on the line that we're afraid to bid on open time because it's the bait and switch, the one leg out and a deadhead back becomes an all day event. So we have to codify and we have to help the Company correct some of the issues that on an execution basis, they're having problems with.

Amy Robinson:

Given the operational issues that you're describing, what can people expect heading into the holidays?

Casey Murray:

Let's go back to summer before this past one. The Company routinely sold more flights than they ended up operating. And that's what we want to see corrected. We want to see the Company go out and be able to sell it as many block hours, as many flights as they can, and take advantage of the opportunities that are out there. There is an incredible amount of demand.

A few weeks ago when we had earnings, that was the mantra that they were preaching is that demand is strong and we are not capturing it all. And we feel that a lot of that are really the execution of our schedule. And so we really want to see the Company take advantage of it and make as much revenue as they can. And a lot of that again is correcting some of these execution problems. We don't have a planning problem, we have an execution problem.

So moving into the holidays, I want to see them be able to take advantage of, but I fear that we are one thunderstorm, one ATC event, one router brownout away from a complete meltdown. And whether that's Thanksgiving or Christmas or the New Year, that's really the precarious situation that we're in.

Kurt Heidemann:

What you said just a few minutes ago when Amy asked you about LRF, you said that they're taking the black and white language and sort of twisting it. So I just want to turn away from operation for a second and talk about just last month, the Company came out with an RBF that rescinded our operational issues, MOU with the COVID provision that paid for COVID polls who were sick.

Since then, I know SWAPA pushed back on that and they've rescinded that at least temporarily or as we record this podcast, what is the current status of that situation?

Casey Murray:

The Company is trying to make some efforts to put a date on it. As I said in a blast a couple weeks ago, the Company made up its own COVID policy and then promptly canceled it and said, therefore the MOU is canceled. And that's not the case at all.

Fortunately for us, the mediator was privy to all of this and looked at the black and white language, looked exactly at what the MOU said. And while that's not his purview right now, he is seeing what the Company does to a lot of our language and even black and white language. I'm hoping to have a resolution to it. But as far as SWAPA is concerned, this was our intent is to cover the quarantine and the illness when somebody does in fact get COVID.

Kurt Heidemann:

Case, for years, we've made the point that the Company has eroded our current language through past practice. And now with the COVID MOU and with, say, the LRF where they said they were going to automate it but not use it, and they're starting to split those hairs, are we seeing that as a new tactic to avoid following our CBA? And if it is, what do we do about that?

Casey Murray:

I think that we identified that. I mean this comes as no shock to us. This comes no shock to the people that negotiate it. It comes as no shock to those at SWAPA that have to administer and defend our contract. So this was identified years ago. It was a reason for the rewrite. It was the reason to go through the language from start to finish to make sure the intent is exactly a meeting of the minds per se as we move forward.

One of the most important things we have to do, and I have said this before as well, is that we can't go back to a conversation that took place in the parking lot between a SWAPA and a Southwest representative in 1994. And we've actually had that in a SBOA. So we are going to have language that is agreed upon and it's all going to be transcribed and in notes that don't go past 2022. And we never have to look past 2022 for language again.

So a lot of that is going to solidify a lot of the language.

Kurt Heidemann:

If we do that, can the Company come back and say, "No, we based our decision on that 1994 conversation in the parking lot, even though we pull out three pages of notes from 2022 in the room"? Do they get to do that?

Casey Murray:

I think we're trying to do two things. We're trying to provide something concrete that we can point to and say, "No, this was agreed to on September 1st of 2022," and I'm just making up a date. And it was agreed to then. And hopefully there'll be some integrity in it as we move forward from the Company and we won't have to.

But more importantly, if we do have to go and have a third party hear it, so in arbitration, they're going to be looking at exactly what the conversation was around and they're going to be looking at September 1st of 2022.

Amy Robinson:

Casey, speaking of arbitrations, let's go ahead and talk about the instructor arbitration and what that means for our pilots.

Casey Murray:

This one was a critical one because it involves our scope. It involves our entire process, our seniority process, and we also filed a lawsuit over it and the Company argued that we weren't timely in the filing of the grievance because the lawsuit didn't toll the timeline.

So it's always a problem fighting with labor administration and we can't count on them to go by the language and then when we have a disagreement, we can't even rely on them to go by the CBA processes that we have in place. But the instructor arbitration, it was a big one for us because it is a scope issue. It is a 1(M) as well as a 3B(2) issue.

I hope that everyone in our membership understands what Southwest did. They violated a section of our scope and that's going to be a problem as we move forward and have the Company want to do more and want to go out and test things out there, whether it's code share, whether it's interline, which is already a problem because TA1 and TA2 allowed the Company to do certain things to let our pilots see how it would affect positively or negatively our entire scope provisions and our job security. And the Company hasn't been able to take advantage of those.

And then we find one that this one specifically where they chose and knew it was wrong and chose to violate it and really have no discussions with us whatsoever except to tell us at one point that they couldn't do it without our agreement and then just go ahead and do it. So this one is a big one for us. We have to realize that this is who we're dealing with now and we have to make sure that our scope is as tight as it can be and that those protections are as ironclad as we all believe they are.

Amy Robinson:

If you don't mind for our members who maybe didn't listen or haven't seen, or maybe they're new and haven't heard about what happened, can you give us a little quick rundown of what happened with that arbitration?

Casey Murray:

Even going all the way back 20 years or so, there were several in my class when I was hired 16 years ago, there were two instructors. But those instructors were hired as pilots. They were no longer instructors. They went through the entire new hire program and did OE at the same time I did, and have the same seniority number right around mine. And they're pilots and have been pilots the whole time since day one in new hire class.

And so this was different. These came in for a day, sometimes two, and then went back and sometimes on the same day of day one, they were in the afternoon giving sims and again working under 557 CBA. So a SWAPA seniority number, a SWAPA representation, working under a separate CBA doing separate CBA duties. And that's not allowed by the RLA.

Kurt Heidemann:

I can't even imagine how that would work. How would one of our reps represent if he got in trouble, say, had to go meet with, I mean, I don't know if it's his chief pilot, if he's an instructor, how do they represent him under their CBA?

Casey Murray:

Those are good questions, Kurt. And those are what we needed to discuss and have quantifiable and defined discussions with the Company about.

Amy Robinson:

In terms of seniority, Kurt, I have a question for you. I think we've AIPed that section in the contract, have we not?

Kurt Heidemann:

We did and we AIPed it. We waited until the arbitration was over and then we very clearly went through. And I don't want to discuss exactly word for word in the negotiating room, but I can say that we posed very clearly to the Company side based on this language, the instructor scheme that you guys did last year, you could not do that again. Do you agree? And we got a very clear and definitive yes from that.

Amy Robinson:

Do we feel like that language is strong enough that we were talking about them violating language even now? Is it strong enough that we feel like it couldn't be violated again?

Kurt Heidemann:

Well, I mean I think that our position was that we were in good shape, but now we're hearing just recently that they're bringing new hires in because they're overbooking new hire classes and then sending them home to come back a couple weeks later. And I think that that's something that at least raises a red flag at this point, or at least a warning flag, a caution that I think that our contract admin and SMEs are taking a look at. But I don't know if that is a bridge too far yet or not, but I think we're looking at it.

Casey Murray:

Well, and again, looking at that, this was done unilaterally. There was no discussion with SWAPA on it, and there needed to be. We understand what they're doing and why they want to do it. And they're paying those pilots and they're giving a seniority number, but we've had no discussions.

Here's an issue that we question the Company about. They're not on STD or LTD while they're doing that. And we wonder if those pilots even are aware of that and if they've been told that. But again, no discussions whatsoever. We found out through the grapevine just like most of the things that Southwest does to our CBA. But again, we could have worked through it. We weren't given the opportunity.

Kurt Heidemann:

Case, before we move on, something you said earlier just made me question something and that was, does the Company under the RLA really have an obligation to resolve a grievance based on the merits. Or can they resolve it just based on the technicality of a missed deadline or something like that? Is that reasonable?

Casey Murray:

I think the best way to put it is during a federal lawsuit, we had their attorney testify that they just needed to be in the ballpark of the contract, not even following the black and white letters. That's what they believe. They believe that if they just act somewhere and that they can tenuously connect it to the contract, then they're okay. And that is fundamentally not correct.

Remember, our CBA is signed by SWAPA and it's signed by Southwest Airlines. And it is an agreement between both parties and is a contract between both parties that both parties own. And looking back at these things that we've just been talking about, the Company has known it's wrong, but the Company instead of working with and partnering with and trying to work out some issues that they had with the language, have done all these things unilaterally.

And if we could have had some discussions, we could have had some protections for, say, these new hire pilots and LTD and STD, and what happens with someone. And I guarantee you, if someone loses their medical, the Company is going to try not to give them anything even though they are paying them and they're not at work.

So that's what we're trying to do is protect the interests but allow the Company to have the flexibility to do some things that weren't in black and white. And we could, and we've shown for many, many years the ability to do that. And again, the Company just chooses this unilateral way of doing things and lets us grieve it and spend tens of thousands, if not hundreds of thousands of dues dollars in trying to defend some of these things when several meetings and we could have had this worked out.

Amy Robinson:

So Casey, you spoke to some of the leadership failures and things in the past, but what is your take on the new leadership that's taken over this year? Let's talk from Bob Jordan to Andrew Watterson to Lee Kinnebrew. What is SWAPA's take on how they are doing so far?

Casey Murray:

Bob Jordan's been in that position for nine months. He owns that position at this point. So really any lack of diligence, anything that is not being done that should be done or anything that's being done incorrectly or things that are being done correctly, he has to own today. And he was handed a ship with several holes in the bottom from the previous regime. And I think that he's doing his best to plug a lot of holes. And I think that getting everybody to row in the same direction is one thing. But again, what about the holes?

So there's still some hope that we're going to see more and more change as his grip of the operation become stronger. And Andrew Watterson, he was given a really, really big hill to climb after Mr. Van de Ven left. And I mean the operation was in chaos. It only got worse as time went on.

I do believe very strongly that Andrew, he's not an operations guy but from our dealings with him for many years, he definitely has the aptitude to learn the operation and affect a lot of change. And we are cautiously optimistic that we're going to see that. So everything's going to flow down from Andrew.

And again, he has the reigns on the operation. So I talked leading off this podcast about a lot of the issues that we've seen and a lot of the inefficient use of all staffing. And so I do believe that there's hope and I do believe that we will see some positive change as we move into next year and the year after.

Kurt Heidemann:

Case, that's the C-suite at the Company. How's the relationship now between SWAPA and Flight Ops after what was a rough start to the year?

Casey Murray:

Well, and it continues to be rough. We've seen several things occur in the very near past, if I can say that. But I don't believe that our pilots are being represented. And I've told our vice president of Flight Ops that he has a greater duty than even I do to represent our pilots. And I mean, I hope there's questions at that level when they decide to violate our contract or hire someone and then send them home and give them a seniority number. I mean, somebody has to question that and it's really up to him.

So I hope that he's getting his feet under him and I hope that representation, his predecessor, that was our main issue with. But when the instructor thing occurred last year to the Ops MOU and the COVID CC poll, I mean, I hope that some of that gets questioned at his level as well as like I said, giving a seniority number and sending these pilots home.

Working with us is going to be a lot easier and is going to make life easier for all of us. And here's the moral of the story. SWAPA mind being told no. I mean, that happens all the time, but let's at least have the discussion.

Kurt Heidemann:

So that's the VP of Flight Ops, but what about some of the people that work for him? Are we seeing some positive movement from some of the middle managers?

Casey Murray:

Yeah, we're actually seeing some. Brendan Conlon took over scheduling and now has both pilot scheduling as well as flight attendant scheduling. And for the first time in many years, or the first time ever, there has been scheduling policies that have been shared with us that really help in our understanding as well as providing solutions to them. So we have seen some and we're optimistic and we want to see some more openness so that, again, I just got done saying it, but so that we can partner. Because again, our pilots don't succeed unless Southwest succeeds and it's critical to us, and that is really what our main focus is.

Amy Robinson:

So moving away from leadership at Southwest, let's talk a little bit about negotiations. Tell us how do you think mediation is going, Casey.

Casey Murray:

It's going better. And the reason it is going better is because there's an adult in the room. I said earlier in this podcast that we have given the same briefing a half dozen or more times as far as scheduling goes, and there's nothing being done with it. And so having a mediator in the room, having a specific section that they're going to talk about, having specific homework that the Company has to do and bring that into the room and be able to discuss it is really what we've been asking for all along.

So we are optimistic that the mediator is going to guide us to a solution. It's just unfortunate that real leadership at the upper levels couldn't have seen that before. And we could have worked it out outside of mediation and we could have a deal in a matter of months where now we're looking at well into next year and we're bound by a mediator's schedule. But again, we are optimistic and we do ultimately feel that this is going to present a better agreement once we do come to one.

Kurt Heidemann:

Case, what's your take on some of the OAL agreements or lack of agreements that have just sort of popped up in the last few weeks, whether it's the United deal that got voted down or the APA agreement that didn't go out or the Delta strike authorization vote? What's your take on some of those recent events?

Casey Murray:

I believe that it's a recognition by all the pilots out there, that there is a value, there is a demand, and that they're truly recognizing and finally recognizing how much a pilot is worth. And we're seeing United go through it, we're hearing American go through it. Delta is finally to a point where they got an incredible, incredible strike authorization vote results. And so everybody is pushing in the same direction with the same recognition of how much our value is, and I think that's very important for labor.

Kurt Heidemann:

And what do you think that means for our team, for the SWAPA team?

Casey Murray:

Well, I think it bodes well. I think that United, American, Delta ... Delta especially is going to have an agreement well before us. And recognizing their value is only going to help Southwest recognize ours. And American, United probably will come in before us, probably will come in a fair many, many months ahead of us. And with everybody recognizing their value and giving credence to how much they relied on pilots for many different reasons, but each airline is recognizing that pilot stepped up and did a lot during the pandemic and then coming out of the pandemic with the increased demand. And I'm proud of them all for recognizing that and we have to as well. And I think that it bodes well for us.

Amy Robinson:

So you mentioned Delta's strike authorization vote. I wanted to get your thoughts on what do you think it would take for Southwest to go down that road.

Casey Murray:

I think that we are headed down that road. We're seeing, like I said, just moments ago, the mediator is causing Southwest to do some work and requiring them to do some work. They should have been doing that work. So a mediator has only a limited amount of tools. The Company has to come into the room, has to be prepared and has to be prepared to recognize our value and give us an offer that we're worth. And I just don't think they're there.

And so I believe that we're going to have to go through what Alaska did and what Delta just did. And I think through education and understanding what went on with Railroad just recently is critical to us moving forward, taking a strike authorization vote and moving forward with positive results and using that leverage to force the Company to recognize what this pilot group has done, what the most productive pilot group in the world has done and their value moving forward.

Kurt Heidemann:

So speaking of forcing the Company to recognize our value, something that's pretty active these days is our informational picketing cadence. Tell us about the next one.

Casey Murray:

Well, the next one is in Wall Street, and it's again to bring our voice right to Wall Street. It's investor day, and let the analysts, let the investors as well as the public see that progress isn't made as quickly as we want. And we demand an industry leading contract to recognize what our pilots have done and what the Company's going to expect them to do moving forward.

Amy Robinson:

So Casey, we did talk about picketing and how prevalent that has become. Do we have any other initiatives coming up that you would encourage our pilots to participate in as well?

Casey Murray:

Yeah. We have a lot of family awareness events that are slated. We have some SPC Leading Edge events that people that will be taking place in the terminals that'll be coming and visiting you on the airplane as well as in the lounges. We encourage you to meet with them, to ask questions. We'll have roundups as well, and then read, get educated on the RLA, what our options are moving forward.

And I think that all of those as well as, and one of the biggest ones we're going to have in the next few months and moving into next year, are really an increase in our social media presence through all the platforms as well as many different uses that we haven't utilized before.

Kurt Heidemann:

Case, back to the picket in New York, one thing that I wanted to ask you about was a quote from a Wall Street analyst who said, Southwest Airlines or all airlines really should focus on deals before dividends. Is that something that you think the Company will follow?

Casey Murray:

I think they're going to have to. And I think that as the pandemic descended on us, the Company asked pilots to retire early. They asked the pilots to take leave at reduced pay, and many of our pilots did. And then as we came out, our pilots are asked to pick up open time. Again, we're the most productive in the world. We have done more in the past year and a half to assist this Company through this increased, this revenge travel they call it, through that period. And our pilots did it.

So I think before you reward your investors, we have to do two things. We have to reward our employees and we also have to harp back to what this Company was founded on. And that's if you take care of your employees, they'll take care of your customers, and your customers will take care of your shareholders, and we can't invert that. And that's what we've been doing for many years.

We have to get back to who we were, what a Herb Kelleher started this Company as, and recognize that all pilots, all frontline employees have really stepped up and carried a heavy burden through some very challenging times.

Kurt Heidemann:

Thanks to Casey for taking time to talk with us today. We appreciate him taking time out of his busy schedule for us.

Amy Robinson:

And as always we'd like your feedback. If you have any podcast ideas we have not yet covered or any subject matter experts we have yet to speak with, please let us know at comm@swapa.org.

Kurt Heidemann:

And finally, today's bonus number is 44. That's the number of days since Andrew Watterson took over as COO. As Casey mentioned, SWAPA is hopeful that under his leadership, the operation will finally begin to recover and our Company's negotiators will finally start making progress towards a ratifiable CBA.