To: All Flight Attendants
From: Doug Steenland
Date: July 31, 2006
The Tentative Agreement reached between the AFA and NWA on July 17, 2006, has
failed to be ratified by a majority of flight attendants. Unfortunately,
circumstances now dictate that the Company reject the existing Flight
Attendant Agreement and impose the March 1, 2006, Tentative Agreement as
authorized by the Bankruptcy Court on June 30, 2006. This change becomes
effective today, July 31, 2006.
I wanted to provide you with some context for this rejection decision, and
also update you on what you can expect over the next several days.
First, this was a result that the Company hoped to avoid. Throughout the
negotiating process, first with the PFAA and then with the AFA, our goal
remained to reach a consensual agreement and thereby avoid rejection of the
contract. However, after two failed Tentative Agreements, it is clear that
there are no easy or quick ways to reach this goal and at the same time
achieve the total labor cost savings which NWA needs to successfully emerge
from bankruptcy. These surrounding circumstances, and the Court’s ruling, now
require implementation of the March 1st Tentative Agreement for the following
reasons.
After filing Chapter 11 in September 2005, the Company set specific labor cost
reduction targets for each employee group, including management. These labor
costs savings totaled $1.4 billon annually; the amount determined by the
Company, and agreed to by the Bankruptcy Court, to be a necessary part of a
viable five year business plan.
Management experienced two rounds of cuts, first in December 2004, and then in
December 2005, hitting the necessary target.
The Company also negotiated with each of its unions to achieve their targets
through voluntary agreements. In November 2005, it reached permanent ratified
agreements with ATSA, NAMA and TWU. As those agreements became effective on
November 16, 2005, the Company also implemented emergency temporary relief
measures with the IAM, ALPA and PFAA. The temporary relief, however, provides
only 60% of the necessary savings amount.
Negotiations continued into 2006, before, during and after trials in New York
City on the Company’s motions to reject its labor agreements. As of June 9,
ratified agreements had been reached with ALPA and the IAM which provide the
targeted savings. Those agreements, however, contain language that prevents
the Company from implementing the agreed-to savings until the necessary
savings targets have been achieved from all groups, including the flight
attendants.
The need to proceed with restructuring, and to realize the savings which have
already been delayed, means that the Company must now go forward with
unilateral imposition of the March 1 Tentative Agreement pursuant to the
Court’s order. Vice President – Inflight Services, Suzanne Boda, will provide
you with specific information regarding initial changes within a few hours.
The ALPA and IAM agreements will also be implemented today.
Some things will not change, however. Bidding will still be accomplished
through the use of seniority. Reductions in force, when necessary, will still
take place in reverse seniority order. Many other work rules will also remain
in place.
I regret that we were unable to resolve the required flight attendant savings
through a consensual agreement at this time. I know there is a great deal of
tension and uncertainty on the line. I have personally observed, however,
that the circumstances have not affected the level of service you provide to
our customers, and I thank each of you for your continued professionalism.
Although imposition is necessary now in order to secure the successful
restructuring of the airline, we will continue to make every effort to reach a
new agreement with your elected representatives as quickly as possible.
