MYTHS AND FACTS
August 10, 2007
This issue’s topics:
1. Joint Negotiations
2. East / West MEC Issues
3. Transition Agreement
4. Company Financial Condition
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1. JOINT NEGOTIATIONS
MYTH: The Company can run separate operations forever or at least for a long time.
FACT: Last week during JNC talks, management clearly stated that this was not their intent. Doug Parker reiterated that message yesterday at the Crew News session in PHX. Management will likely continue to state this when they speak with East and West crewmembers.
FACT: Senior management has stated that they will gain at least $10 million more a year in synergies with perhaps more to be gained in the area of intangibles by merging operations. A single FAA certificate is expected by September 25, 2007.
FACT: We believe that the Company’s ability to obtain favorable financing for another airline merger is likely influenced by the ability to successfully complete this merger.
FACT: Senior management has stated publicly that it is their goal to eventually obtain a joint agreement, even though they know that will increase their costs significantly.
MYTH: The Company supports re-negotiation of the Nicolau Award.
FACT: The Company has repeatedly stated publicly that if the seniority list that is presented to management meets the criteria agreed to in the Transition Agreement, they will accept it. Management does not have any intention of getting involved in the complex legal dispute underway. They see this as an ALPA matter.
MYTH: The Rice Committee supports a separate operations path for negotiations.
FACT: Although the Rice Committee suggested that separate operations is one of three potential options for the America West and US Airways pilots to explore, the Committee is only interested in exploring “consensual approaches.†The America West MEC does not consider the permanent or long-term separate operations path “consensual†at this time. We are in concurrence with management that permanent separate operations is not a stated goal of, nor permissible under, the Transition Agreement that all three parties agreed upon.
FACT: Senior management has stated that they will not reach a separate operations agreement with the US Airways MEC without the concurrence of the West. Management further indicated that if all parties entered into such an agreement, it would be for a limited time, not permanent as some have suggested.
FACT: The Rice Committee can only make suggestions, and cannot unilaterally impose any agreement on either MEC.
MYTH: The America West MEC approached management and relayed that the America West pilots would be outraged if the East pilots were granted parity thus generating a lot of ill will between the pilot groups.
FACT: In a recent Chairman’s Message, AWA MEC Chairman John McIlvenna stated, “When it had come to our attention that the US Airways MEC directed their officers to contact management in order to obtain immediate contractual parity with us, we immediately ensured that management understood that the West pilots would be outraged if the East was granted parity while continuing to hold us hostage over the seniority list.†This myth is nothing more than an attempt by some to purposefully take Captain McIlvenna’s comments out of context and spin them to suit their own political agenda, protect their own political interests, and sow dissent.
FACT: Both MECs agreed, in writing through the Transition Agreement, that East parity would be supported through joint negotiations. The America West MEC has always supported (and continues to support) East parity “plus†through a joint contract as opposed to their right to enter Section 6 negotiations in December 2009.
FACT: The costs of the two pilot groups to the Company are similar when measured on a cost per block hour basis. The disparate pay scales are offset by the disparate average longevity. Therefore, if the East pilots were paid America West narrowbody rates, the America West pilots would now become the “B-scale†group, creating potentials for whipsawing.
FACT: All parties to the Transition Agreement are bound to negotiate a single agreement or an America West Section 6 agreement. Presently, management has stated repeatedly that they want a consensual three-way agreement. Until such time as either all parties agree to abandon the single agreement requirement or we enter into our own Section 6 negotiations, no party has the right to discontinue that process.
FACT: The US Airways MEC continues to adopt hard-line, unworkable approaches such as permanent separate operations, and when they are unable to gain traction, they try to put political pressure on our pilots and on our leadership to discover weaknesses in our resolve.
FACT: The AWA MEC has always recognized that both MECs and pilot groups have maintained their rights to ratify any joint agreement. We will continue to work with management, the Rice Committee, and anyone else to find ways to achieve a consensual approach to securing a Tentative Agreement that we can present to our pilots for successful ratification.
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2. EAST / WEST MEC ISSUES
MYTH: The US Airways MEC means no harm to America West pilots or the America West MEC.
FACT: The US Airways MEC continues to insist upon a date-of-hire seniority integration. This integration method would essentially staple most America West pilots (including many captains) below their furloughed pilots who had no expectation of a career absent this merger. This approach would also provide the US Airways pilots with most of the promotional opportunities and protect all US Airways pilots from furlough at the America West pilots’ expense.
FACT: The America West MEC sacrificed time, money, and our negotiating pace to support the East MEC’s fight over space positive travel for union officials. The Company recently tendered a Settlement LOU that satisfies every request made by the US Airways MEC. The US Airways MEC refused the proposal and sent back a counter proposal that, among other things, excluded the America West MEC from obtaining similar benefits.
FACT: The US Airways MEC passed a resolution to prevent America West pilots from reserving jumpseats on our own aircraft.
FACT: The US Airways MEC passed a resolution to maintain permanent separate operations in an attempt to upgrade and grow at the West’s expense.
FACT: The US Airways MEC filed a lawsuit against the America West MEC.
MYTH: The America West MEC intends harm to the US Airways pilots.
FACT: The America West MEC took a tremendous amount of political heat from the America West rank-and-file pilots for not pursuing a “staple job†integration method. It would have been easier politically for the America West MEC to adopt a hard-line “staple†position and then blame the arbitrator when it didn’t materialize in the arbitration award.
FACT: The America West MEC recognizes that the majority of benefits of ANY joint contract will fall to the East pilots. Under the current pay proposal of the Joint Negotiating Committee, more than 80 percent of the pay increases will go to the East pilots.
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3. Transition Agreement
MYTH: The Company is in violation of the TA in that they are now having the East perform "cross-country" type of flying.
FACT: The TA is specific in that the Mississippi River is only a wall for flying as it pertains to Hawaii, Europe, and the Caribbean. The specific language in Section II.B.4.e. states:
The current and announced flying, as of the effective date of this agreement, between points west of the Mississippi River and the State of Hawaii will be flown by America West pilots. The current and announced flying, as of the effective date of this agreement, between points east of the Mississippi River and Europe or the Caribbean will be flown by US Airways pilots. Notwithstanding the above, up to two daily round trips to Europe, up to two daily round trips to the Caribbean, and one daily round trip to Hawaii may be flown by pilots of the other airline.
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4. COMPANY FINANCIAL CONDITION
MYTH: LCC’s second quarter results demonstrated once again that US Airways is providing the profits and covering the losses of America West.
FACT: Those reported figures are not necessarily representative of the actual independent revenues and costs of each side of the operation.
FACT: It’s usually important to the Company (and investors) that the surviving side of the operation show good financial performance.
FACT: From the SEC 10-Q filing:
The operating expenses of AWA reflect expenses for certain services shared with US Airways. During the first six months of 2007, in anticipation of merging to a single operating certificate, operations of AWA and US Airways continued to be integrated, including the migration to a single reservation system in early March. During the second quarter and first six months of 2007, shared services included reservations, technology and data processing services and corporate functions such as tax, legal, compliance.
FACT: The Company’s recent filing has nothing to do with our collective objective of securing a fair contract for all America West and US Airways pilots.
August 10, 2007
This issue’s topics:
1. Joint Negotiations
2. East / West MEC Issues
3. Transition Agreement
4. Company Financial Condition
--------------------------------------------------------------------------------
1. JOINT NEGOTIATIONS
MYTH: The Company can run separate operations forever or at least for a long time.
FACT: Last week during JNC talks, management clearly stated that this was not their intent. Doug Parker reiterated that message yesterday at the Crew News session in PHX. Management will likely continue to state this when they speak with East and West crewmembers.
FACT: Senior management has stated that they will gain at least $10 million more a year in synergies with perhaps more to be gained in the area of intangibles by merging operations. A single FAA certificate is expected by September 25, 2007.
FACT: We believe that the Company’s ability to obtain favorable financing for another airline merger is likely influenced by the ability to successfully complete this merger.
FACT: Senior management has stated publicly that it is their goal to eventually obtain a joint agreement, even though they know that will increase their costs significantly.
MYTH: The Company supports re-negotiation of the Nicolau Award.
FACT: The Company has repeatedly stated publicly that if the seniority list that is presented to management meets the criteria agreed to in the Transition Agreement, they will accept it. Management does not have any intention of getting involved in the complex legal dispute underway. They see this as an ALPA matter.
MYTH: The Rice Committee supports a separate operations path for negotiations.
FACT: Although the Rice Committee suggested that separate operations is one of three potential options for the America West and US Airways pilots to explore, the Committee is only interested in exploring “consensual approaches.†The America West MEC does not consider the permanent or long-term separate operations path “consensual†at this time. We are in concurrence with management that permanent separate operations is not a stated goal of, nor permissible under, the Transition Agreement that all three parties agreed upon.
FACT: Senior management has stated that they will not reach a separate operations agreement with the US Airways MEC without the concurrence of the West. Management further indicated that if all parties entered into such an agreement, it would be for a limited time, not permanent as some have suggested.
FACT: The Rice Committee can only make suggestions, and cannot unilaterally impose any agreement on either MEC.
MYTH: The America West MEC approached management and relayed that the America West pilots would be outraged if the East pilots were granted parity thus generating a lot of ill will between the pilot groups.
FACT: In a recent Chairman’s Message, AWA MEC Chairman John McIlvenna stated, “When it had come to our attention that the US Airways MEC directed their officers to contact management in order to obtain immediate contractual parity with us, we immediately ensured that management understood that the West pilots would be outraged if the East was granted parity while continuing to hold us hostage over the seniority list.†This myth is nothing more than an attempt by some to purposefully take Captain McIlvenna’s comments out of context and spin them to suit their own political agenda, protect their own political interests, and sow dissent.
FACT: Both MECs agreed, in writing through the Transition Agreement, that East parity would be supported through joint negotiations. The America West MEC has always supported (and continues to support) East parity “plus†through a joint contract as opposed to their right to enter Section 6 negotiations in December 2009.
FACT: The costs of the two pilot groups to the Company are similar when measured on a cost per block hour basis. The disparate pay scales are offset by the disparate average longevity. Therefore, if the East pilots were paid America West narrowbody rates, the America West pilots would now become the “B-scale†group, creating potentials for whipsawing.
FACT: All parties to the Transition Agreement are bound to negotiate a single agreement or an America West Section 6 agreement. Presently, management has stated repeatedly that they want a consensual three-way agreement. Until such time as either all parties agree to abandon the single agreement requirement or we enter into our own Section 6 negotiations, no party has the right to discontinue that process.
FACT: The US Airways MEC continues to adopt hard-line, unworkable approaches such as permanent separate operations, and when they are unable to gain traction, they try to put political pressure on our pilots and on our leadership to discover weaknesses in our resolve.
FACT: The AWA MEC has always recognized that both MECs and pilot groups have maintained their rights to ratify any joint agreement. We will continue to work with management, the Rice Committee, and anyone else to find ways to achieve a consensual approach to securing a Tentative Agreement that we can present to our pilots for successful ratification.
Back to top
--------------------------------------------------------------------------------
2. EAST / WEST MEC ISSUES
MYTH: The US Airways MEC means no harm to America West pilots or the America West MEC.
FACT: The US Airways MEC continues to insist upon a date-of-hire seniority integration. This integration method would essentially staple most America West pilots (including many captains) below their furloughed pilots who had no expectation of a career absent this merger. This approach would also provide the US Airways pilots with most of the promotional opportunities and protect all US Airways pilots from furlough at the America West pilots’ expense.
FACT: The America West MEC sacrificed time, money, and our negotiating pace to support the East MEC’s fight over space positive travel for union officials. The Company recently tendered a Settlement LOU that satisfies every request made by the US Airways MEC. The US Airways MEC refused the proposal and sent back a counter proposal that, among other things, excluded the America West MEC from obtaining similar benefits.
FACT: The US Airways MEC passed a resolution to prevent America West pilots from reserving jumpseats on our own aircraft.
FACT: The US Airways MEC passed a resolution to maintain permanent separate operations in an attempt to upgrade and grow at the West’s expense.
FACT: The US Airways MEC filed a lawsuit against the America West MEC.
MYTH: The America West MEC intends harm to the US Airways pilots.
FACT: The America West MEC took a tremendous amount of political heat from the America West rank-and-file pilots for not pursuing a “staple job†integration method. It would have been easier politically for the America West MEC to adopt a hard-line “staple†position and then blame the arbitrator when it didn’t materialize in the arbitration award.
FACT: The America West MEC recognizes that the majority of benefits of ANY joint contract will fall to the East pilots. Under the current pay proposal of the Joint Negotiating Committee, more than 80 percent of the pay increases will go to the East pilots.
Back to top
--------------------------------------------------------------------------------
3. Transition Agreement
MYTH: The Company is in violation of the TA in that they are now having the East perform "cross-country" type of flying.
FACT: The TA is specific in that the Mississippi River is only a wall for flying as it pertains to Hawaii, Europe, and the Caribbean. The specific language in Section II.B.4.e. states:
The current and announced flying, as of the effective date of this agreement, between points west of the Mississippi River and the State of Hawaii will be flown by America West pilots. The current and announced flying, as of the effective date of this agreement, between points east of the Mississippi River and Europe or the Caribbean will be flown by US Airways pilots. Notwithstanding the above, up to two daily round trips to Europe, up to two daily round trips to the Caribbean, and one daily round trip to Hawaii may be flown by pilots of the other airline.
Back to top
--------------------------------------------------------------------------------
4. COMPANY FINANCIAL CONDITION
MYTH: LCC’s second quarter results demonstrated once again that US Airways is providing the profits and covering the losses of America West.
FACT: Those reported figures are not necessarily representative of the actual independent revenues and costs of each side of the operation.
FACT: It’s usually important to the Company (and investors) that the surviving side of the operation show good financial performance.
FACT: From the SEC 10-Q filing:
The operating expenses of AWA reflect expenses for certain services shared with US Airways. During the first six months of 2007, in anticipation of merging to a single operating certificate, operations of AWA and US Airways continued to be integrated, including the migration to a single reservation system in early March. During the second quarter and first six months of 2007, shared services included reservations, technology and data processing services and corporate functions such as tax, legal, compliance.
FACT: The Company’s recent filing has nothing to do with our collective objective of securing a fair contract for all America West and US Airways pilots.
