The record profitability of US airlines is creating a new set of dynamics for management–labour relationships of those companies. As various management teams work to stress their respective airlines are now run like high-grade industrial companies, and they aim to bolster shareholder returns, labour groups understandably believe that some caution needs to be exercised in capital deployment. Drivers of that logic include putting the theory of a transformed industry to the test during the next down cycle, and restoring employee pay rates to acceptable levels.
The new reality is that while management teams urge stakeholders, including labour, to embrace new industry paradigms, some airline employees are still feeling reverberations from concessions agreed during the last 10 to 15 years when most major US airlines reorganised under Chapter 11 of the US Bankruptcy Code. Memories of those sacrifices still run deep, and some employees feel they need to recapture fully what was lost in order to enter a new phase of labour-management relations.
In the meantime, many labour groups at various US airlines remain lodged in years-long negotiations with management teams, attempting to craft collective bargaining agreements to withstand the perpetual cyclicality in the airline business.
Until 2014 Turkey was one of the most reliably fast-growing air traffic markets in Europe. In 2015 passenger numbers levelled off, and in 2016 traffic is set to decline. The impact of geopolitical events, including a series of terrorist attacks, the civil war in neighbouring Syria and the failed coup attempt in Jul-2016, has weighed heavily on demand for international travel to/from Turkey.
Foreign airlines switched capacity away from Turkey in summer 2016, but the country's two largest operators – Turkish Airlines and Pegasus Airlines – continued to grow. However, following years of double-digit growth by both, Turkish Airlines and Pegasus Airlines are taking unusual steps this winter. According to data from OAG, Turkish looks set to implement year-on-year capacity cuts, while Pegasus appears to be planning flat capacity for the period from Nov-2016 to Mar-2017. It seems likely that both airlines will again cut their growth targets for 2016.
Moreover, Pegasus is seeking wet-lease customers for six of its current fleet of 73 aircraft. Perhaps more significantly, Turkish is to reschedule 165 aircraft deliveries planned for 2018-2022, cutting its planned fleet size in 2021 from 439 to 400.