In The Matter Of: PREMERGER PILOTS OF CONTINENTAL v. PREMERGER PILOTS OF UNITED SENIORITY INTEGRATION Vol. 7 May 12, 2013 Original File 0512131aalpa01.txt Min-U-Script® 1544 BEFORE THE ARBITRATION BOARD ARBITRATORS DANA E. EISCHEN, ROGER P. KAPLAN, AND DENNIS R. NOLAN - - - - - - - - - - - - - - - - - x In the matter of the seniority : integration between : THE PRE-MERGER PILOTS OF : CONTINENTAL AIRLINES : AND : THE PRE-MERGER PILOTS OF : UNITED AIRLINES : - - - - - - - - - - - - - - - - - : In re: SENIORITY LIST INTEGRATION: - - - - - - - - - - - - - - - - - x VOLUME 7 MAY 12, 2013 The hearing in the above-entitled matter recommenced on the 12th day of May, 2013, at 9:04 a.m., at The Mandarin Oriental Hotel, Gallery Room, 1330 Maryland Avenue, SW, Washington DC 20024. BEFORE: ARBITRATOR DANA E. EISCHEN, CHAIRMAN ARBITRATOR ROGER P. KAPLAN ARBITRATOR DENNIS R. NOLAN Inabnet Court Reporting (703) 331-0212 1545 1 2 ON BEHALF OF THE PRE-MERGER PILOTS OF 3 CONTINENTAL AIRLINES, 4 DANIEL M. KATZ, ESQ. 5 Katz & Ranzman, P.C. 6 4530 Wisconsin Avenue, NW, Suite 250 7 Washington, DC 20018 8 (202) 659-1799 9 [email protected] 10 ON BEHALF OF THE PRE-MERGER PILOTS OF 11 UNITED AIRLINES: 12 JEFFREY R. FREUND, ESQ. 13 ROGER POLLAK, ESQ. 14 OSVALDO VAZQUEZ, ESQ. 15 Bredhoff & Kaiser, PLLC 16 805 Fifteenth Street, NW 17 Washington, DC 20005 18 (202) 842-2600 19 [email protected] 20 21 22 Inabnet Court Reporting (703) 331-0212 1546 1 2 ALSO PRESENT: 3 GREG SHOEMAKER, ESQ. - CAL 4 GRANT MULKEY, ESQ. - CAL 5 CAPTAIN JIM BRUCIA - CAL 6 CAPTAIN TONY MONTALTO - CAL 7 CAPTAIN SCOTT BUTCHER - CAL 8 FIRST OFFICER NEAL SCHWARTZ - CAL 9 CAPTAIN WILLIAM BALES - UAL 10 CAPTAIN STEPHEN GILLEN - UAL 11 FIRST OFFICER DAN MADRUGA - UAL 12 FIRST OFFICER JEFFREY RUARK - UAL 13 COURT REPORTER: JOSEPH INABNET 14 INABNET COURT REPORTING (ICR) 15 9250 Mosby Street, Suite 201 16 Manassas, Virginia 20110 17 (703) 331-0212 18 [email protected] 19 20 21 22 Inabnet Court Reporting (703) 331-0212 1547 1 2 WITNESSES 3 DANIEL AKINS: 4 Direct examination by Mr. Pollak 1549 5 Cross-examination by Mr. Katz 1682 6 DAVID SMITH: 7 Direct examination by Mr. Freund 1691 8 Cross-examination by Mr. Katz 1738 9 KIRK KOENIG: 10 Direct examination by Mr. Vazquez 1760 11 Cross-examination by Mr. Katz 1792 12 DANIEL MADRUGA: 13 Direct examination by Mr. Freund 1826 14 E X H I B I T S 15 EXHIBIT MARKED AND ADMITTED 16 UAL Akins, Pages 1 through 89 1548 17 UAL Smith, Tabs 1 through 13 1696 18 UAL Koenig, Tabs 1 through 4 1762 19 CAL X-9 1797 20 CAL X-10 1817 21 22 Inabnet Court Reporting (703) 331-0212 1548 1 P R O C E E D I N G S 2 ARBITRATOR EISCHEN: At the outset, let's 3 say thanks and sorry to all the moms that are here 4 today. 5 Happy Mother's Day. 6 MS. RANZMAN: Thank you. 7 ARBITRATOR EISCHEN: Back off the record. 8 (A discussion was held off the record, and United 9 Akins Exhibit, Pages 1 through 89, were marked for 10 identification and received into evidence.) 11 MR. POLLAK: Good morning. 12 The United pilots are going to call Daniel 13 W. Akins to the stand. 14 Good morning, Dan. 15 THE WITNESS: Good morning. 16 MR. POLLAK: Dan's resume can be found at 17 the outset of his exhibit book. 18 Dan is familiar with Dan. 19 MR. KATZ: Can I? 20 MR. POLLAK: Sure. 21 MR. KATZ: While he's straightening that 22 out, I think that since we have so many Dans in the Inabnet Court Reporting (703) 331-0212 1549 1 room, including Dan Madruga, that we are just 2 Mr. Akins and Mr. Katz, here. 3 ARBITRATOR EISCHEN: All right. 4 MR. KATZ: The record will be clearer if 5 we do it that way. 6 ARBITRATOR EISCHEN: Yeah. 7 That's a good point. 8 Thereupon, 9 DANIEL W. AKINS 10 Called for examination by counsel for the 11 United Pilots, having been duly sworn, was examined 12 and testified as follows: 13 DIRECT EXAMINATION 14 BY MR. POLLAK: 15 Q So, Dan, I'm going to call you Mr. Akins. 16 Tough to do after all these years. 17 A See how long that lasts. 18 Q Yes. 19 MR. POLLAK: Mr. Akins' resume is at the 20 outset of this exhibit book. He has testified in a 21 number of these seniority integration proceedings. 22 He has actually done work for counsel on both sides. Inabnet Court Reporting (703) 331-0212 1550 1 He is an expert of airline economics, 2 pilot negotiations, pilot compensation. 3 We're going to proffer him to discuss some 4 of those subjects today as an expert. And I 5 understand from -- that Mr. Katz will stipulate to 6 Dan's role as an expert on these subjects in this 7 proceeding. 8 MR. KATZ: What subjects was that? 9 MR. POLLAK: Airline economics, pilot 10 negotiations, and pilot compensation. 11 MR. KATZ: No objection. 12 ARBITRATOR EISCHEN: Thank you. 13 Good morning, Mr. Akins. 14 MR. POLLAK: Does the Panel have any 15 questions about Mr. Akins' qualifications? 16 ARBITRATOR EISCHEN: Gentleman? 17 (Panel replied no.) 18 BY MR. POLLAK: 19 Q Mr. Akins, this part is going to be the 20 most difficult piece of this. All right. 21 Mr. Akins, have you prepared some 22 materials to discuss with the Panel today? Inabnet Court Reporting (703) 331-0212 1551 1 A Yes, I have. 2 Q And do you want to summarize the three 3 areas that you're going to testify about? 4 A I want to talk about, essentially, three 5 subjects. 6 The first of which is pilot compensation 7 and what sort of constitutes pilot compensation, how 8 it's measured, how companies view pilot 9 compensation, which includes other things besides 10 wages. 11 Pilot contracts are thick for a reason. 12 The wage piece is a couple of pages. 13 The second part is to discuss the 14 operation retirement of B-737s by both United and 15 Continental and the subsequent flying of B-737s 16 after the merger. 17 The third part is just an overview of 18 international operations from each carrier trying to 19 put a little more formalized notes on what Mo 20 discussed yesterday about the differences in flying 21 between the companies. 22 You can see that in reflected on maps, but Inabnet Court Reporting (703) 331-0212 1552 1 you can also see it reflected in the types of 2 equipment that were operated on those routes. 3 And that's the third part of my testimony 4 today. 5 Q All right. Mr. Akins, in your exhibit 6 book, I believe the pages are divided into three 7 parts for the three subjects that you referenced. 8 And then the pages are numbered basically 9 1 through 89, and we will refer to them in the 10 record that way as page 1 or page 5 and so on. 11 Mr. Akins, can you turn to page 4? 12 And it's the first section of your 13 material on compensation about pay per pilot. 14 A Yes. It's a standard analytical device to 15 look at the rank of pilot pay on the average per 16 pilot head. 17 The information can be derived from the 18 Form 41 statistics collected by the Department of 19 Transportation. 20 Q What does the table on page 4 show? 21 A It's a snapshot of 2009, the last full 22 year before the merger took place. Inabnet Court Reporting (703) 331-0212 1553 1 And it shows what was pretty consistent in 2 pilot pay during this time, that Southwest was the 3 highest average paid pilot group. 4 And that the network carriers were sort of 5 just below Southwest, including Continental at 6 150,000, you will note, in the blue bars, United at 7 125,000, and then the low-cost carriers on the 8 right-hand side with lower compensation. 9 This chart is reflective of a number of 10 things, not just the wage scale, the composition of 11 the pilot group, whether they were senior or junior 12 on that wage scale, whether they flew widebody or 13 narrowbody equipment, how many hours they worked, 14 and so forth. 15 So this is generally the lay of the land 16 for pilot pay for about the last five years in 2010 17 back to 2005. 18 Q Mr. Akins, if there was a difference in 19 the number of hours that one group flew versus 20 another, would that show up here as resulting in 21 higher pay for the pilot group that worked more 22 hours? Inabnet Court Reporting (703) 331-0212 1554 1 A All things being equal, more hours would 2 mean more average pay per pilot. 3 And I think it should be pointed out that 4 this is average for everybody. You can't divide by 5 Captains or First Officers or reserves. 6 This is the average of the total pilot 7 group. 8 Q All right. As you go through the pages, 9 just note which page you're on, please. 10 A Sure. Page 5 is a similar type of 11 analysis. 12 And I think it bears some explaining that 13 the Form 41 information that describes pilot 14 compensation in general has five buckets of pay.