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7/9/04
CWA Buyout Proposal: Frequently Asked Questions
1. Why did the union take the initiative to propose a passenger service buyout? Why not wait for management to propose one?
Our experience is that management has always refused to offer a passenger service buyout (or a buyout for any other employee group for that matter), even as they furloughed 3,000 agents and reps since 9/11. If we wait for management to make a buyout offer, we'll wait a long time.
2. Management claims it needs to cut passenger service salaries, benefits, and seniority by $122 million or face another bankruptcy. How does the proposed buyout fit with that?
The buyout proposal is meant to reduce company costs by having employees at the top rate (10 or more years service) volunteer for the buyout, and at the same time create an opening for an employee at the starting rate. It is voluntary, and a much better alternative than management's goal of cutting employee's salaries, benefits and seniority.
3. Why do we think the management will agree to this buyout when they never have agreed in the past?
Because it will save the company a significant amount of money and help avoid another bankruptcy. We can show them how to do that and at the same time provide an attractive buyout option for those who choose to take it. Obviously, the management will not agree to the buyout proposal if it doesn't save the company a significant amount of money.
4. What are the factors that go into the buyout proposal?
We are trying to propose a buyout plan that is fair, voluntary, and attractive enough to get volunteers, but at the same time saves the company enough money so that they will be willing to agree to it.
5. Could anyone be forced to give up their job and take the buyout proposal?
No, it would be strictly voluntary. Those who thought it was good for them could decide to take it; those who preferred to stay on the job would ignore it.
6. Why not propose a buyout just for the most senior employees?
That wouldn't make sense if we're trying to lower the overall wage costs, since everybody makes the same rate of pay after ten years, whether you have 11 years of service or 35 years of service. Anyone with ten years or more would be eligible and they can decide whether they choose to take it.
7. What is the proposed basic buyout offer?
It has been posted at www.cwa.net and distributed in the workplace. The basic offer is $1,000 per year of service, plus flying privileges. To qualify you must have at least 10 years of service.
Those already eligible for retiree medical (age 55) would, of course, keep their retiree medical eligibility. Those within 5 years of retiree eligibility (age 50) could get retiree medical buy giving up half the buyout cash ($500 per year of service). All others would receive $1,000 per year of service, or only $500 per year of service if they also choose one year of medical coverage.
8. Why not throw in retiree medical coverage for everyone who takes the buyout?
Retiree medical costs the company about $8,500 per year. If they were to provide that for anybody who left the company, regardless of age, until they reach age 65 that would wipe out any cost savings for the company, making it likely they would reject the buyout proposal.
For example: an employee who is age 45 with 20 years' service would receive a buyout of $20,000 ($1,000 per each year of service). If you add retiree medical that would be another $170,800 worth of medical benefits ($8,500 annual retiree medical costs until age 65 – that's 20 years). That would be a $190,000 buyout. It is hard to imagine management would agree to that.
Another example: an employee who is age 30 with 10 years' service would receive a buyout of $10,000 ($1,000 per each year of service). If you add retiree medical that would be another $299,000 worth of medical benefits ($8,500 annual retiree medical costs until age 65 – that's 35 years). It is hard to imagine management would take that proposal seriously.
9. How did CWA come up with the buyout proposal?
Your elected CWA representatives studied the Southwest Airlines buyout proposal, discussed the idea, debated it, asked for members' input and feedback, asked CWA research analysts to cost-out the savings and the benefits of the plan, and then proposed it to management.
10. How has management responded to the buyout proposal?
They insist they are open to the idea and are considering our proposals. However, we haven't received any specific agreement, feedback or counterproposal from management.
