C
chipmunn
Guest
Nobody likes the turmoil airline employees have endured since September 11, but during the ratification process I believe it’s important for all of us to non-emotionally view what’s at stake if the TA’s are not ratified and US Airways ceases to exist as an on-going business entity.
US Airways and the other mature carriers are struggling with plans to combat their number one threat: low cost competitors. In the case of United and US Airways, these two airlines have sought court protection, with both airlines teetering on converting their formal reorganizations into a liquidation proceeding. US Airways is much further along in its restructuring with an end in site, but the Arlington-based airline is also closer to a Chapter 7 liquidation unless three objectives are obtained: ratification of remaining union TA’s, reaching an acceptable pension restoration funding solution with the PBGC; both of which are expected to qualify the company for further DIP/ATSB backed financing and an equity investment.
We have discussed why ratification of the TA’s are important for those who may be furloughed in the future. Ratified agreements would provide those who may be laid off in the future severance pay, medical/dental benefits, COBRA, continued retirement funding, travel privileges, recall rights, and if desired, “jet for job†opportunities. But, if a TA is rejected by the rank-and-file, none of these benefits would be available. In addition, for those who remain they would have continued pay and benefits as an option while they pursue other employment alternatives, if required.
However, if the TA’s are rejected employees may see their last pay check this week and immediately lose their medical insurance for themselves and their family members.
If US Airways is forced into a enterprise ending liquidation as early as January 2003 by any union rejecting a TA, here’s my understanding of what would occur:
1. Active Employee Pay – Would immediately cease with no payment made for worked already performed.
2. Furlough Pay - Would cease immediately, no further payments would be made, and there would be no income for these displaced employees.
3. Medical – There would be no COBRA coverage or ability to buy medical insurance through the company, thus some families could be without coverage whatsoever.
4. Term Pass – This benefit would be eliminated. Commuters would be stranded, there would be no free travel for job searches, and no free leisure travel. To some of our employees, the loss of this perk whether active or employed would be significant.
5. Life Insurance - Once the premium payment ends, the coverage stops. Employees would be able to convert to more expensive personal policies.
6. Long Term Disability Insurance – As with Life Insurance, LTD would stop. The only protected employee groups would be the pilots. Whose benefit would last for an additional 12-months due to VEBA. My understanding regarding the FAS is that the money is ear marked for this purpose but is not protected from Creditors.
7. Flexible Spending Account - These moneys are not held in trust; therefore, money held in these accounts could become general assets and once again employees could lose this money.
8. Salary Continuance (OJI) - These additional payments would cease, but the statutory benefit should continue.
9. Defined Contribution Retirement Plans - As long as the Company has made the employee and company contributions the moneys should be protected in the Fidelity Trust. However, if some of the contributions have not been made then EE's will become creditors and employees possibly losing some of this money as well.
10. Defined Benefit Retirement Plans – The PBGC will take over the plans and determine the best course of action. The Non-Qualified Plans, SEDC, and ESOP, which are very complicated, but these monies could be lost as well.
Obviously, this whole situation is unpleasant and is down right bad, but US Airways employees have their backs against the wall. Either US Airways obtains ratified labor accords and finds an acceptable retirement plan restoration solution or the airline dies, which would be bad for active, future furloughees, and furloughed employees alike.
Chip
US Airways and the other mature carriers are struggling with plans to combat their number one threat: low cost competitors. In the case of United and US Airways, these two airlines have sought court protection, with both airlines teetering on converting their formal reorganizations into a liquidation proceeding. US Airways is much further along in its restructuring with an end in site, but the Arlington-based airline is also closer to a Chapter 7 liquidation unless three objectives are obtained: ratification of remaining union TA’s, reaching an acceptable pension restoration funding solution with the PBGC; both of which are expected to qualify the company for further DIP/ATSB backed financing and an equity investment.
We have discussed why ratification of the TA’s are important for those who may be furloughed in the future. Ratified agreements would provide those who may be laid off in the future severance pay, medical/dental benefits, COBRA, continued retirement funding, travel privileges, recall rights, and if desired, “jet for job†opportunities. But, if a TA is rejected by the rank-and-file, none of these benefits would be available. In addition, for those who remain they would have continued pay and benefits as an option while they pursue other employment alternatives, if required.
However, if the TA’s are rejected employees may see their last pay check this week and immediately lose their medical insurance for themselves and their family members.
If US Airways is forced into a enterprise ending liquidation as early as January 2003 by any union rejecting a TA, here’s my understanding of what would occur:
1. Active Employee Pay – Would immediately cease with no payment made for worked already performed.
2. Furlough Pay - Would cease immediately, no further payments would be made, and there would be no income for these displaced employees.
3. Medical – There would be no COBRA coverage or ability to buy medical insurance through the company, thus some families could be without coverage whatsoever.
4. Term Pass – This benefit would be eliminated. Commuters would be stranded, there would be no free travel for job searches, and no free leisure travel. To some of our employees, the loss of this perk whether active or employed would be significant.
5. Life Insurance - Once the premium payment ends, the coverage stops. Employees would be able to convert to more expensive personal policies.
6. Long Term Disability Insurance – As with Life Insurance, LTD would stop. The only protected employee groups would be the pilots. Whose benefit would last for an additional 12-months due to VEBA. My understanding regarding the FAS is that the money is ear marked for this purpose but is not protected from Creditors.
7. Flexible Spending Account - These moneys are not held in trust; therefore, money held in these accounts could become general assets and once again employees could lose this money.
8. Salary Continuance (OJI) - These additional payments would cease, but the statutory benefit should continue.
9. Defined Contribution Retirement Plans - As long as the Company has made the employee and company contributions the moneys should be protected in the Fidelity Trust. However, if some of the contributions have not been made then EE's will become creditors and employees possibly losing some of this money as well.
10. Defined Benefit Retirement Plans – The PBGC will take over the plans and determine the best course of action. The Non-Qualified Plans, SEDC, and ESOP, which are very complicated, but these monies could be lost as well.
Obviously, this whole situation is unpleasant and is down right bad, but US Airways employees have their backs against the wall. Either US Airways obtains ratified labor accords and finds an acceptable retirement plan restoration solution or the airline dies, which would be bad for active, future furloughees, and furloughed employees alike.
Chip
