Just another little tidbit for those that haven't seen this from the ALPA Website...
Fellow Pittsburgh Pilots:
It appears we have been cursed, for we are indeed living in interesting times. The past few months have been turbulent and trying for us all. I will try to briefly construct the time line for us to study.
Through the spring and summer management and ALPA negotiated the restructuring agreement. This agreement was presented to us and the public as necessary in order to restructure our basic operation and to allow USAirways to remain a viable company and return to profitability through a spirit of cooperation to our mutual benefit. As the negotiations progressed, Dave “labor friendly†Siegel constantly stepped up the rhetoric and increased the demands coupled with veiled threats that if the employees did not do as management asked the company may be forced to restructure administratively through the legal system. ALPA finally caved in to the demands of management. Our advisors thought the give back was the only way to avoid bankruptcy and sure disaster as no one would be willing to give USAirways Debtor in Possession (DIP) financing, because our company was in such poor shape. Three days after ALPA and the rest of the employees restructured their agreements, management filed for the dreaded bankruptcy protection with DIP financing in place. I have previously given my reasoning for opposing the August 2002 agreement and will not recount them now. Only to say that I have not changed my views on the matter, even now in light of recent events.
Six weeks after our new agreement, management came to the pilots, once again, asking for relief on the “Jets for Jobs†protocols. Remember, these were the gains we recieved for giving up the “no furlough†clause in our contract. This brings us to November 2002, and just 2 ½ months after this pilot group ratified our largest concessionary contract in the history of the airline, we are once again asked to give further concessions in order to narrow “the gap†between costs and revenue. The following six-week negotiation consisted of nothing more than an overreaching management team grabbing at our entire working agreement. Asking for and eventually receiving concessions and changes in our working agreement that they have been asking for and trying to get for the last 30 years. This kick them while they are down attitude, coupled with the cram down style of negotiations has further eroded any confidence we may have had in a “labor friendly†restructuring.
The culmination of this negotiation came during the week of December 9-13. As you know, ALPA was presented with a deadline to agree to do things the “Company†way by the 13th of December or face “other alternativesâ€. This not so veiled threat of liquidation came not only from management but also from our “savior†RSA. When David Bronners’ comments were reported in the news, Dave Siegal said he was surprised. If Mr. Siegel truly was surprised he has not been doing his job.
After many final offers passed back and forth, a TA was brought to the MEC on Wednesday, December 11. The negotiating committee, (having once again negotiated with concepts and no written language) then explained it to the MEC, on Thursday and Friday of that week. Very late on Friday, December 13, the MEC voted to accept the tentative agreement by a vote of 10-2. I was one of the dissenting votes along with Paul DiOrio of Boston.
I will explain my reasoning behind voting NO. However, I must first say that it was an extremely difficult decision. It would have been much easier for me to just “go along†with the other members of the MEC and vote yes, rather than face the possibility of being wrong with a no vote. I did not and still do not think my vote was wrong. First, public statements aside there was no verifiable indication that RSA wanted to get out of the deal. In fact, many of their actions portrayed just the opposite. Second, with so few hard assets available at our airline, the most value to be gained for anyone was and is to continue USAirways as an ongoing concern. Third, and perhaps the largest reason for my NO vote was the pension modifications. The “pension problem†is one of funding liability. The funding liability could not and would not be fixed by changing our plan accruals and percentage cap. The funding problem was created by the stock market downturn, low interest rates and the company not making any contributions to our pension fund since 1998. While the booming market alleviated the company’s legal requirement to make contributions the pension fund was under funded even during good market conditions. Many companies, even some airlines, made significant pension contributions when they were not strictly required to do so. The contribution requirement we now face are for the already accrued benefits, benefits that are not affected by the changes that your MEC agreed to make to our pension plan on December 13th. The forth reason for my no vote is that once again we have no language defining our agreement. The tired old “there wasn’t enough time†argument once again rules the day. There is not even good language on many of the concepts. Let alone any details of the concepts.
I told the MEC I was willing to be accountable for my vote. That accountability is to you, the pilots of Pittsburgh.
This management has shown themselves to be GREEDY, DISHONEST, and DISHONORABLE people. Management has shown all along that they are not participants in this reorganization, although they have tried to tell us otherwise. Their small and meager givebacks this summer were then turned into “retention bonusesâ€. They have received a much higher per capita percentage of equity in the restructured company than any other employee group. Management was to originally receive 10%-11% of the equity, once we emerge from bankruptcy. Their share in now down to 8 ½%. However, the normal equity share for a management team that restructures a company is 1%-2%. This shows how management treats their career employees, the employees who are tied to the viability of USAirways, and shows their true colors as the carpetbagger managers that they are.
As If any more evidence were needed as to the honesty and integrity of our management; on Thursday December 17, 2002, a mere 4 days after this MEC approved the Restructuring Amendment, the company came to the MEC and asked for further relief on the Jets for Jobs protocols at Midway Airlines. Only one of two things can explain this. Either they are so inept at their jobs they don’t have any idea what they are doing running an airline, or they see this MEC and Pilot group as the biggest group of fools, who will not say NO. What’s next, we pay them to fly their airplanes?
To quickly recap my reasons for voting “NOâ€:
I do not believe the company’s threat of liquidation was a credible reason to further erode our working conditions or to change our pension. I am not saying that liquidation could never happen. However, this is something that is out of our control. The pilots cannot keep liquidation from happening nor would our action or inaction cause it to happen. The inability to trust this management at any level, to me, means not trusting their statements about the possibility of liquidation. I believe that the only reason to even mention the possibility of liquidation was to pressure the employee groups and especially this pilot group into further concessions. The lack of any contract language or anything other than concepts seems to suggest that we will end up in the grievance arena for the entire length of this agreement at best. At worst, is that management has no intention of living up to any area of the agreement. The contractual concessions we gave the company supposedly total $101.5 million. In actuality, I believe that our concessions are far in excess of that number. And if as I predict, we end up arguing over what was agreed to, your guess is as good as mine as to the pilots total contributions. Make no mistake; this was a very calculated move on management’s part. They played this MEC and pilot group like a fiddle and we LOST.
ALPA’S BOARD OF DIRECTORS SEAT:
As you know the MEC has been struggling for months to reach agreement on the policies to appoint our BOD member. I wrote to you earlier about my feelings and the necessity of having our member be an apolitical appointee. I also wrote about my belief in an independent BOD member. I still feel strongly about both issues and believe the pilots, other employees, shareholders, creditors and most importantly the management of this company would benefit if the pilots appointed a board member that has experience in; bankruptcies, as a BOD member, and airline management in particular.
The MEC has the opportunity to appoint someone to the board of this company that may be able to influence the direction of the company. However, they are not going to. Instead, they are going to squander this opportunity and make this issue a political football.
The MEC received numerous briefings on this issue. There was one common thread that ran through all those that spoke with us. There is an absolute need for the BOD member to have the trust of the entire MEC. We do not want to polarize the election. It appears that this advice has gone unheard by the MEC. When we finally enacted policies, many MEC members who spoke eloquently and persuasively, initially, changed their minds when they saw they had an opportunity to impose their candidate on us. We have not yet elected our BOD representative. However, the crucial votes on a secret election process and other policies imply that one fraction of the MEC many impose their will on the other. I voted not to have our BOD member elected by secret ballot, as did Tim Baker. However, after we lost on that issue, Tim voted for policies allowing for a secret ballot election. Had Tim voted no on the proposed policy language, (which needed a 2/3 vote for approval) perhaps further work could have ensured a more open procedure and election. Ask the MEC members who voted for a secret ballot if they are afraid to be accountable to their pilots for their votes. Is this secret ballot a way for Tim Baker to vote for a board member that would not be acceptable to the pilots of Pittsburgh, and then hide behind his secret ballot?
THE PILOTS DEFINED BENEFIT RETIREMENT PLAN:
The pension fund changes that this MEC agreed to, do not help the companies under funding problem at all. This is evident by the letter that was sent to all our homes from Mr. Siegel. He is now asking that we terminate our pension fund, or again we may not emerge from bankruptcy!! When will we say enough is enough? We did not receive 1 dime of credit for our changes in accrual rates or percentage cap reduction. We did it because Mr. Siegel said it would be easier to get restoration funding if the benefits were lower at age 60. We did it with no quid pro quo. Mr. Siegel failed to mention in his letter to the other employees of this company that the pilots have just given over $80 million dollars a year in concession just from our retirement plan. All he stated was that the liability to pilot pension funds puts all employees at risk. I have been saying all along that we were not fixing the under funding problem by changing our pension plan. Now we are faced with the request to terminate our pension fund.
WHAT DO WE DO ABOUT THE PENSION ISSUE?
The company wants us to mutually agree to terminate our pension plan. Why? Because if we agree to allow plan termination, management does not have to deal with their under funding problem. In a mutual termination or a PBGC initiated distress termination; the benefit levels are the same. The PBGC historically does not take over a pension plan of a company that is still in business. The company can not just hand over the pension plan to the PBGC and relieve themselves of their funding liabilities. If the company would ask the Bankruptcy Court for relief from our contract there are many questions and unresolved issues going forward. These include but are not limited to:
In August, the company agreed not to ask for any changes to our working agreement in bankruptcy with the 11-13 protection letter. If they ask for relief in the area of pension liability does this then make all the changes we’ve agreed to null and void? We have some advisors who think this is the case.
Why has Dave told the other employee groups that their pensions are not a problem and ours is?
Can a bankruptcy court terminate a pension fund or limit the accrued benefits, or is the PBGC the only body that can do this?
If the company is in fact liquidated, what moneys are taken and from whom to fund the pensions. TWA was told by the PBGC that they were going to liquidate the company and take all the proceeds to fund their pension if they did not come up with a solution. What position would this place RSA and management in if they got this same warning from the PBGC, would they find the money to fund the pension or would they “try harder†to achieve restoration funding?
What is our benefit if we agree to mutually terminate our pension plan?
It is likely, depending on how much money is left in the fund that everyone would receive benefits at the PBGC level when they reach age 60. A 52-year-old pilot, with 25 years of service with this company would see his retirement benefit deteriorate from approximately $111,000/yr at age 60 to $17,000/yr at age 60, under the PBGC benefit, which is what the company is asking us to agree to. The company states that they would consider replacing our defined benefit plan with a defined contribution plan. How can they possibly contribute enough money to another plan to make up for the serious reduction? Can you save enough money in the next 8 years to make up for this reduction?
We can not control the PBGC nor the bankruptcy process. We can control whether we mutually terminate the pension plan. We need to tell management we will not terminate our pension plan and that they must find a way to meet their funding obligations.
Remember the value to both RSA and management is in having USAirways going forward. They must fix their problem; we have contributed more than enough. All of the elected MEC Representatives need to hear from their pilots on this issue, that we will not give up our pension plan.
Please call or contact me with your comments and suggestions.
Fraternally,
John M. Brookman
First Officer Rep, Council 94
