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UAL Merger committee on UAL/CAL integration
September 24, 2013
Longevity, Status and Category, Career Expectations and the
Importance of Credibility in the SLI Process
ALPA Merger Policy lists three factors that arbitrators must consider in constructing an integrated seniority list (“ISL&rdquo😉; Status and Category, Longevity, and Career Expectations. The Eischen/Kaplan/Nolan Arbitration Board’s Award made clear that these factors must not only be considered, but they must actually be used in constructing an ISL. On that point, the Board said:
The revised 2009 Merger Policy is clear that we must at least consider all of the listed factors. Based upon the language and context of the revision, we interpret that instruction as guidance to use all three factors, not just look at them, unless we find some good reason for not using one or more of them. After carefully reviewing the Merger Policy and the evidence, we find no good reason to omit any of the listed factors in constructing our awarded ISL in this case.
We hold that all three listed factors are relevant, important and necessary to produce a fair and equitable ISL in this case.
As the UAL Merger Committee stated in their closing brief, these three factors tend to pull against each other and using one of the factors in constructing an ISL will necessarily affect the relationship of the others.
* * *
Status and Category (also known as “relative position&rdquo😉 as it is applied in building seniority lists is simply a method to determine ratios to integrate pilots. As has been said many times, a pilot’s actual status and category has nothing to do with his or her position on the final list but is used only to count pilot jobs that are then ratioed together in various groupings to form a Status and Category list. In general, for airlines with similar fleet makeups, a Status and Category list closely approximates a relative seniority list.
A pilot’s relative seniority is the primary determinant of his ability to bid for higher paying equipment and earn more compensation. As a general matter, the higher you are on a seniority list, the higher paying the position you will be entitled to bid and hold. Pilots in the top 10% of their list have the ability to bid for the highest paying equipment and earn the most money while pilots in the bottom 10% of the list have to take what is left over after everyone else has bid. (Of course, whether you actually bid for the highest position you can hold is a personal decision every pilot can make.) This is true whether or not the top 10% of pilots at an airline have 5 years or 20 years of longevity. At one point when United was hiring many pilots each year, pilots with 1 or 2 years longevity could hold 777 first officer. Now it takes many more years of longevity to hold the same position and earn higher wages. Other airlines, with other hiring patterns, will have pilots with lesser or greater longevity than similarly situated pilots at United, but if the pilots from both airlines reside in the same relative position on their lists, they will be in a position to earn the same as United pilots.
Longevity is the amount of time between a pilot’s date of hire and the snapshot date (in this case October 1, 2010), reduced by a pilot’s time on furlough. The Board decided, as the UAL Committee argued, that the CAL pilots who came to CAL from Continental Express or one of its predecessors, and the time these pilots spent at Continental Express through flowback programs in lieu of a furlough, should not be counted in their longevity. Therefore, comparing two pilot’s dates of hire is not a valid comparison of longevity; you also have to factor in furlough time.
Longevity is less a factor in direct cash compensation than is a pilot’s Status (CA or FO) or Category (777 or 320) because wage advances based longevity top out at 12 years. Put another way, the difference between 2nd year pay rates (first year pay rates are probationary rates and are not on the normal progression of wage rate increases) and 12 year wage rates for any position are significantly lower than the difference between any step of the 320 FO scale and the same step on the 747 CA scale. Other contractual benefits. e.g. sick leave, vacation, pension and others, are affected by longevity to the extent that they increase in value throughout a pilot’s career.
Longevity has another value; sweat equity. Sweat equity can’t be quantified in the same way wages can be. It is simply a recognition that a pilot who has 20 or 25 years of longevity with their company has contributed more to building a merged enterprise than a pilot with 5 or 10 years longevity.
* * *
Before moving on to career expectations, we want to make two observations about our use of longevity that various questions in forum comments and emails suggest are not fully understood by some of our pilots. One is about our use of “Zeus” data rather than “Indoc” data to calculate the true longevity of the CAL pilots and the second is how the calculated longevity of the CAL pilots was used in the list construction methodology.
Turning first to why we used Zeus and not Indoc, there are two explanations; one implicates tactics and the other implicates facts. As you all know (or should know), we spent the better part of three years trying to get information from the CAL Merger Committee and from the Company on when CAL pilots, who began their careers at Continental Express (or one of its predecessors) actually began work at mainline CAL and when CAL mainline pilots flowed back to Continental Express in lieu of furlough – information we always said (and the Board ultimately agreed) was critical for determining the CAL pilots’ true longevity. Repeated efforts to get the information voluntarily were met with either resistance or statements that the information didn’t exist. It took herculean efforts to get the Zeus data, and an arbitration to get the CAL defined benefit plan credit data to help validate the Zeus data, necessary to produce our true longevity analysis. Even then the CAL Merger Committee resisted both the relevance and accuracy of the Zeus data and we did not know how the Board would rule on our use of it and on our basic “legal” argument that the only time that should be counted toward longevity is mainline time, particularly in light of the CAL Committee’s repeated objections during the hearing. So we enlisted the Board, in the midst of the hearings, to press the Company for even more accurate data. Two days before the end of the rebuttal case, we were finally provided the Indoc data.
The Indoc data largely confirmed the validity of the Zeus data in showing when CAL pilots who began their careers at Continental Express actually began at CAL mainline and bolstered substantially the credibility of our position regarding the proper start date for these pilots’ longevity calculations. In light of that, we made a conscious decision not to redo our longevity calculations for two reasons. First, we did not want to overstate our position. We believed that we had made significant progress on both the relevance issue and the accuracy issue and we thought it was just too late in the case to change our presentation and still retain the credibility we had earned with the Board on these basic points. Second, using Indoc dates for the CAL pilots would not have been analytically correct. The Indoc dates are the dates they completed initial introductory Company training and began operational training. But our calculation of the United pilots’ longevity began with the very first day each pilot began training at United, starting from the first day pilots hit the property and included all the days they spent in United indoc. It would have been inconsistent to use one starting date – the Indoc date – for the CAL pilots and another starting date – the first day they reported for training – for the United pilots. Making that argument would have undermined the credibility we had built up on this issue, and as you can see from the Board’s Opinion, credibility is critical in shaping the final award.
Second, even if it had been appropriate to use the CAL Indoc dates to begin our calculations and we had used it, it would not have made much difference even if the Board had accepted that approach (which, again, we concluded they would not do).
As it is, we were able to shave off 4383 years of “non” mainline CAL longevity. Using the Indoc dates would have only shaved off 220 more (5%). Spread out among the 1648 CAL pilots at issue, this would have reduced their longevity on average by 49 days. When the Board’s 65/35 weighting is taken into account, the net effect of using Indoc dates, on the Zeus group, would have been a reduction on a per pilot average of 17 days of longevity.
On the broader view, using the Indoc dates changes the entire group's average longevity by 6 days per pilot. Put another way, the Indoc to Zeus differential represents 0.31% of the calculated longevity of the CAL pilot group.
For all of these reasons, we concluded that the better course was to continue to use the Zeus data as we had argued all along and the Indoc data only to give the Board comfort that the Zeus data was sufficiently accurate for purposes of the list building exercise.
* * *
On the question of how we used longevity, actual and corrected, remember that like status and category, we first ranked the longevity of all pilots on both lists in longevity order unlinked to any individual pilot and then assigned pilots from each airline to each longevity value in seniority list order. Thus, pilots were assigned longevity values that were not necessarily their own, but each pilot had an assigned longevity value of some pilot from that pilot’s list. As a consequence, each pilot group got “credit” for the longevity its group brought to the merger. That is really the only way to use longevity in this process, because Merger Policy dictates that in building an ISL, the Board cannot reorder the pilots from their respective positions on their individual lists. If pilot A is above pilot B on their separate seniority list, he has to be above pilot B on the combined list even if pilot B actually has greater longevity than pilot A. But rest assured, no pilot got a longevity weighting that the pilot was not entitled to; all longevity credits – and only the calculated longevity credits from the pilots on each list based on their mainline flying – were used in the longevity calculations.
* * *
The final factor is Career Expectations. Career expectations are tougher to pin down and are open to parochial interpretations by individual pilots. We saw this in our case as the CAL Committee focused solely on W2 earnings as a measure of career expectations and ignored many other important parts of our contracts that provided real value. Some items than can be considered in career expectations are fleet makeup, fleet growth and retirements, pilot retirements, non-wage contractual value, among many others. As many of these items are subject to rapid change, they play a less important role in the actual ISL construction and play more of a role in conditions and restrictions following the integration of the lists.
The most common comment that we get from pilots is that their career expectations have changed and they are not happy with some aspect of the future. “I was going to be a 747 Captain for my last 6 years and now I don’t think I will ever get there.” But the reality is that arguments about what is going to happen in 15 years fall on deaf ears when made to arbitration boards; those arguments just don’t ring true in today’s airline industry. The fact is that the entire industry changed after 9-11 and will continue to change in the years ahead. The 20-year fences that occurred in the Republic/Northwest merger were largely considered to be a failure and they will not happen again. Rather than try to set up some long term fences, arbitrators want the “list to do the work” or make sure that the list is fair and equitable and then have pilots bid by their system seniority and not according to some complicated set of rules that are open to endless fights.
Arbitrators such as Richard Bloch have written awards recently that place fences closer and closer to the arbitration hearing date. In our case, the arbitrators chose 5 years OR when the 25th B787 is delivered. The Houston Chief pilot has said that the 25th B787 is scheduled for delivery in December 2015. If he is correct, effectively the fence is only a 2 year 3 month fence. This is by definition the adjustment for career expectations the Board felt was necessary for the list to be fair and equitable. After 2 years and 3 months, the list will stand on its own without any further artificial restrictions to bidding.
As the Arbitration Board wrote in Delta/Northwest; “The resulting list neither realizes nor maintains each and every career expectations, nor could it do so. No recitation of career expectations ever includes a merger, and no merger can leave all hopes and plans unaffected.” In the end, only the most senior pilot on the list will not have his career expectations altered in some fashion; that is the nature of mergers.
* * *
The biggest mistake a pilot group can make in thinking about the SLI process or in analyzing an award is to focus on one factor among the many used in building the ISL and use that as the sole determinant in judging the “fairness” of the outcome of the integration. In the history of SLI cases, we have observed that pilot groups often did just that and stuck to extreme positions and thus effectively had little or no real input in the ISL Board’s work in building a list. When they do that, items that are important to them get lost along with the extreme positions they take on more fundamental issues. We have seen that most recently in America West/US Airways and Delta/Northwest, where the US Airways and Northwest Merger Committees each proposed Date-of-Hire integrations when there simply was no basis in the facts or in Merger Policy for that position. In those cases, the respective arbitration boards each issued awards that were patterned on the America West and Delta Committees’ proposals and contained virtually nothing proposed by the other pilot group.
In this case, there were just some hard demographic facts that we couldn’t run away from and that we had to take into account in our presentation. At the time of the merger, the bottom third of the Continental list had been hired since 2006. Their average age was 7 years younger than the bottom third of the United list. The only way to ameliorate that demographic reality would have been to staple the bottom third of the Continental list to the United list. That would not have happened under the best of circumstances. Of course, we did not have anything close to the best of circumstances; 1445 of our pilots were on furlough – 1227of them involuntarily furloughed from the bottom of our list. Had we approached integrating the lists to try to directly confront these DOH facts, our position would have been rejected as quickly and completely as the CAL proposal was rejected. As we have noted, DOH isn’t even a factor in Merger Policy – longevity is. And even if we had proposed simply a longevity list to account for these differences, our proposal would have been rejected for the same reason the CAL Committee was rejected. As the Board said about that proposal:
The primary failing of the CAL proposal's use of only status, to the virtual exclusion of all other Merger Policy factors, is that it unfairly, inequitably and disproportionately benefits one pilot group to the consequent detriment of the other. If either group proposed using any other single Merger Policy factor alone, like longevity, the resulting list would also be distorted, but in a different direction.
The United Merger Committee went through literally hundreds of iterations of list-building methodologies before we decided on the hybrid methodology we proposed. Our analysis was focused on both ensuring fair and equitable treatment for the entire United seniority list, but also staying within the boundaries of ALPA Policy so that the ISL solution ultimately adopted by the Arbitration Board would be crafted based on our direct input. In our opinion, the hybrid list was the best possible solution that both protected United pilots’ careers and also gave the Board the tools they needed to analyze and adjust the list if they couldn’t accept our initial proposal in its entirety. In doing so, we knew that in some parts of the list, pilots’ relative positions based on status and category would not be the same as they were pre-merger. We also knew that pilots with different longevity (and as well different dates of hire) from the two merging airlines would be next to each other on the integrated list, in some cases several years apart. The demographics of the two pilot groups, and their comparative status and category ratios, were so different that focusing solely on date of hire or longevity would have forced us to offer an extreme solution. And we knew from past cases that the arbitrators would have rejected an extreme position in total. Our view on the Board’s willingness to disregard extreme positions was confirmed in spades by the Opinion the Board issued in connection with the ISL. In it they said:
In our considered judgment, both the methodology of the CAL Committee and its resultant proposed ISL are incompatible with the revised ALPA Merger Policy. Aside from the windfall inequities generated by using an April 1, 2013 snapshot date, total disregard of the longevity factor cannot possibly be justified in the factual circumstances of this case. Not surprisingly, the ISL produced by the CAL Committee's fatally defective methodology is neither fair nor equitable.
Instead of taking an extreme position that would have been rejected, by concentrating on a method to ensure that longevity was used as an important factor in constructing the list along with status and category, we moved many pilots in the bottom part of our list to a higher relative seniority than they had prior to the merger. This will accelerate their career progression in the short term. In the long term, their expectations of moving to the top of the list will be altered by that demographic reality. But achieving this balance was the key to ensure that all of our pilots, including our most junior working and furloughed pilots, did not have their careers demolished by this merger.
* * *
If pilots hyper-focus on one item or the other and avoid looking at the big picture, they can all find something to complain about. However, by keeping ALL the factors of ALPA Policy in focus, by considering the neutral process that we agreed to, and by considering the fates of other pilot groups that stuck to extreme positions, we hope that all pilots will reach the same conclusion we did. The approach we selected and the list it produced was fair and equitable to all United pilots and the hybrid methodology was the best tool available to reach that list.
The following quote is from the arbitration decision in the Delta/Northwest seniority integration and the words are just as true for our merger:
“The resulting list neither realizes nor maintains each and every career expectations, nor could it do so. No recitation of career expectations ever includes a merger, and no merger can leave all hopes and plans unaffected. The most that can be said, and it can be said with some assurance in this case, is that the merger of these particular companies will result in a uniquely powerful entity, by virtue of the contributions of both carriers, that is capable of better withstanding the substantial challenges of the current environment than if the Companies had chosen to go it alone."
Longevity, Status and Category, Career Expectations and the
Importance of Credibility in the SLI Process
ALPA Merger Policy lists three factors that arbitrators must consider in constructing an integrated seniority list (“ISL&rdquo😉; Status and Category, Longevity, and Career Expectations. The Eischen/Kaplan/Nolan Arbitration Board’s Award made clear that these factors must not only be considered, but they must actually be used in constructing an ISL. On that point, the Board said:
The revised 2009 Merger Policy is clear that we must at least consider all of the listed factors. Based upon the language and context of the revision, we interpret that instruction as guidance to use all three factors, not just look at them, unless we find some good reason for not using one or more of them. After carefully reviewing the Merger Policy and the evidence, we find no good reason to omit any of the listed factors in constructing our awarded ISL in this case.
We hold that all three listed factors are relevant, important and necessary to produce a fair and equitable ISL in this case.
As the UAL Merger Committee stated in their closing brief, these three factors tend to pull against each other and using one of the factors in constructing an ISL will necessarily affect the relationship of the others.
* * *
Status and Category (also known as “relative position&rdquo😉 as it is applied in building seniority lists is simply a method to determine ratios to integrate pilots. As has been said many times, a pilot’s actual status and category has nothing to do with his or her position on the final list but is used only to count pilot jobs that are then ratioed together in various groupings to form a Status and Category list. In general, for airlines with similar fleet makeups, a Status and Category list closely approximates a relative seniority list.
A pilot’s relative seniority is the primary determinant of his ability to bid for higher paying equipment and earn more compensation. As a general matter, the higher you are on a seniority list, the higher paying the position you will be entitled to bid and hold. Pilots in the top 10% of their list have the ability to bid for the highest paying equipment and earn the most money while pilots in the bottom 10% of the list have to take what is left over after everyone else has bid. (Of course, whether you actually bid for the highest position you can hold is a personal decision every pilot can make.) This is true whether or not the top 10% of pilots at an airline have 5 years or 20 years of longevity. At one point when United was hiring many pilots each year, pilots with 1 or 2 years longevity could hold 777 first officer. Now it takes many more years of longevity to hold the same position and earn higher wages. Other airlines, with other hiring patterns, will have pilots with lesser or greater longevity than similarly situated pilots at United, but if the pilots from both airlines reside in the same relative position on their lists, they will be in a position to earn the same as United pilots.
Longevity is the amount of time between a pilot’s date of hire and the snapshot date (in this case October 1, 2010), reduced by a pilot’s time on furlough. The Board decided, as the UAL Committee argued, that the CAL pilots who came to CAL from Continental Express or one of its predecessors, and the time these pilots spent at Continental Express through flowback programs in lieu of a furlough, should not be counted in their longevity. Therefore, comparing two pilot’s dates of hire is not a valid comparison of longevity; you also have to factor in furlough time.
Longevity is less a factor in direct cash compensation than is a pilot’s Status (CA or FO) or Category (777 or 320) because wage advances based longevity top out at 12 years. Put another way, the difference between 2nd year pay rates (first year pay rates are probationary rates and are not on the normal progression of wage rate increases) and 12 year wage rates for any position are significantly lower than the difference between any step of the 320 FO scale and the same step on the 747 CA scale. Other contractual benefits. e.g. sick leave, vacation, pension and others, are affected by longevity to the extent that they increase in value throughout a pilot’s career.
Longevity has another value; sweat equity. Sweat equity can’t be quantified in the same way wages can be. It is simply a recognition that a pilot who has 20 or 25 years of longevity with their company has contributed more to building a merged enterprise than a pilot with 5 or 10 years longevity.
* * *
Before moving on to career expectations, we want to make two observations about our use of longevity that various questions in forum comments and emails suggest are not fully understood by some of our pilots. One is about our use of “Zeus” data rather than “Indoc” data to calculate the true longevity of the CAL pilots and the second is how the calculated longevity of the CAL pilots was used in the list construction methodology.
Turning first to why we used Zeus and not Indoc, there are two explanations; one implicates tactics and the other implicates facts. As you all know (or should know), we spent the better part of three years trying to get information from the CAL Merger Committee and from the Company on when CAL pilots, who began their careers at Continental Express (or one of its predecessors) actually began work at mainline CAL and when CAL mainline pilots flowed back to Continental Express in lieu of furlough – information we always said (and the Board ultimately agreed) was critical for determining the CAL pilots’ true longevity. Repeated efforts to get the information voluntarily were met with either resistance or statements that the information didn’t exist. It took herculean efforts to get the Zeus data, and an arbitration to get the CAL defined benefit plan credit data to help validate the Zeus data, necessary to produce our true longevity analysis. Even then the CAL Merger Committee resisted both the relevance and accuracy of the Zeus data and we did not know how the Board would rule on our use of it and on our basic “legal” argument that the only time that should be counted toward longevity is mainline time, particularly in light of the CAL Committee’s repeated objections during the hearing. So we enlisted the Board, in the midst of the hearings, to press the Company for even more accurate data. Two days before the end of the rebuttal case, we were finally provided the Indoc data.
The Indoc data largely confirmed the validity of the Zeus data in showing when CAL pilots who began their careers at Continental Express actually began at CAL mainline and bolstered substantially the credibility of our position regarding the proper start date for these pilots’ longevity calculations. In light of that, we made a conscious decision not to redo our longevity calculations for two reasons. First, we did not want to overstate our position. We believed that we had made significant progress on both the relevance issue and the accuracy issue and we thought it was just too late in the case to change our presentation and still retain the credibility we had earned with the Board on these basic points. Second, using Indoc dates for the CAL pilots would not have been analytically correct. The Indoc dates are the dates they completed initial introductory Company training and began operational training. But our calculation of the United pilots’ longevity began with the very first day each pilot began training at United, starting from the first day pilots hit the property and included all the days they spent in United indoc. It would have been inconsistent to use one starting date – the Indoc date – for the CAL pilots and another starting date – the first day they reported for training – for the United pilots. Making that argument would have undermined the credibility we had built up on this issue, and as you can see from the Board’s Opinion, credibility is critical in shaping the final award.
Second, even if it had been appropriate to use the CAL Indoc dates to begin our calculations and we had used it, it would not have made much difference even if the Board had accepted that approach (which, again, we concluded they would not do).
As it is, we were able to shave off 4383 years of “non” mainline CAL longevity. Using the Indoc dates would have only shaved off 220 more (5%). Spread out among the 1648 CAL pilots at issue, this would have reduced their longevity on average by 49 days. When the Board’s 65/35 weighting is taken into account, the net effect of using Indoc dates, on the Zeus group, would have been a reduction on a per pilot average of 17 days of longevity.
On the broader view, using the Indoc dates changes the entire group's average longevity by 6 days per pilot. Put another way, the Indoc to Zeus differential represents 0.31% of the calculated longevity of the CAL pilot group.
For all of these reasons, we concluded that the better course was to continue to use the Zeus data as we had argued all along and the Indoc data only to give the Board comfort that the Zeus data was sufficiently accurate for purposes of the list building exercise.
* * *
On the question of how we used longevity, actual and corrected, remember that like status and category, we first ranked the longevity of all pilots on both lists in longevity order unlinked to any individual pilot and then assigned pilots from each airline to each longevity value in seniority list order. Thus, pilots were assigned longevity values that were not necessarily their own, but each pilot had an assigned longevity value of some pilot from that pilot’s list. As a consequence, each pilot group got “credit” for the longevity its group brought to the merger. That is really the only way to use longevity in this process, because Merger Policy dictates that in building an ISL, the Board cannot reorder the pilots from their respective positions on their individual lists. If pilot A is above pilot B on their separate seniority list, he has to be above pilot B on the combined list even if pilot B actually has greater longevity than pilot A. But rest assured, no pilot got a longevity weighting that the pilot was not entitled to; all longevity credits – and only the calculated longevity credits from the pilots on each list based on their mainline flying – were used in the longevity calculations.
* * *
The final factor is Career Expectations. Career expectations are tougher to pin down and are open to parochial interpretations by individual pilots. We saw this in our case as the CAL Committee focused solely on W2 earnings as a measure of career expectations and ignored many other important parts of our contracts that provided real value. Some items than can be considered in career expectations are fleet makeup, fleet growth and retirements, pilot retirements, non-wage contractual value, among many others. As many of these items are subject to rapid change, they play a less important role in the actual ISL construction and play more of a role in conditions and restrictions following the integration of the lists.
The most common comment that we get from pilots is that their career expectations have changed and they are not happy with some aspect of the future. “I was going to be a 747 Captain for my last 6 years and now I don’t think I will ever get there.” But the reality is that arguments about what is going to happen in 15 years fall on deaf ears when made to arbitration boards; those arguments just don’t ring true in today’s airline industry. The fact is that the entire industry changed after 9-11 and will continue to change in the years ahead. The 20-year fences that occurred in the Republic/Northwest merger were largely considered to be a failure and they will not happen again. Rather than try to set up some long term fences, arbitrators want the “list to do the work” or make sure that the list is fair and equitable and then have pilots bid by their system seniority and not according to some complicated set of rules that are open to endless fights.
Arbitrators such as Richard Bloch have written awards recently that place fences closer and closer to the arbitration hearing date. In our case, the arbitrators chose 5 years OR when the 25th B787 is delivered. The Houston Chief pilot has said that the 25th B787 is scheduled for delivery in December 2015. If he is correct, effectively the fence is only a 2 year 3 month fence. This is by definition the adjustment for career expectations the Board felt was necessary for the list to be fair and equitable. After 2 years and 3 months, the list will stand on its own without any further artificial restrictions to bidding.
As the Arbitration Board wrote in Delta/Northwest; “The resulting list neither realizes nor maintains each and every career expectations, nor could it do so. No recitation of career expectations ever includes a merger, and no merger can leave all hopes and plans unaffected.” In the end, only the most senior pilot on the list will not have his career expectations altered in some fashion; that is the nature of mergers.
* * *
The biggest mistake a pilot group can make in thinking about the SLI process or in analyzing an award is to focus on one factor among the many used in building the ISL and use that as the sole determinant in judging the “fairness” of the outcome of the integration. In the history of SLI cases, we have observed that pilot groups often did just that and stuck to extreme positions and thus effectively had little or no real input in the ISL Board’s work in building a list. When they do that, items that are important to them get lost along with the extreme positions they take on more fundamental issues. We have seen that most recently in America West/US Airways and Delta/Northwest, where the US Airways and Northwest Merger Committees each proposed Date-of-Hire integrations when there simply was no basis in the facts or in Merger Policy for that position. In those cases, the respective arbitration boards each issued awards that were patterned on the America West and Delta Committees’ proposals and contained virtually nothing proposed by the other pilot group.
In this case, there were just some hard demographic facts that we couldn’t run away from and that we had to take into account in our presentation. At the time of the merger, the bottom third of the Continental list had been hired since 2006. Their average age was 7 years younger than the bottom third of the United list. The only way to ameliorate that demographic reality would have been to staple the bottom third of the Continental list to the United list. That would not have happened under the best of circumstances. Of course, we did not have anything close to the best of circumstances; 1445 of our pilots were on furlough – 1227of them involuntarily furloughed from the bottom of our list. Had we approached integrating the lists to try to directly confront these DOH facts, our position would have been rejected as quickly and completely as the CAL proposal was rejected. As we have noted, DOH isn’t even a factor in Merger Policy – longevity is. And even if we had proposed simply a longevity list to account for these differences, our proposal would have been rejected for the same reason the CAL Committee was rejected. As the Board said about that proposal:
The primary failing of the CAL proposal's use of only status, to the virtual exclusion of all other Merger Policy factors, is that it unfairly, inequitably and disproportionately benefits one pilot group to the consequent detriment of the other. If either group proposed using any other single Merger Policy factor alone, like longevity, the resulting list would also be distorted, but in a different direction.
The United Merger Committee went through literally hundreds of iterations of list-building methodologies before we decided on the hybrid methodology we proposed. Our analysis was focused on both ensuring fair and equitable treatment for the entire United seniority list, but also staying within the boundaries of ALPA Policy so that the ISL solution ultimately adopted by the Arbitration Board would be crafted based on our direct input. In our opinion, the hybrid list was the best possible solution that both protected United pilots’ careers and also gave the Board the tools they needed to analyze and adjust the list if they couldn’t accept our initial proposal in its entirety. In doing so, we knew that in some parts of the list, pilots’ relative positions based on status and category would not be the same as they were pre-merger. We also knew that pilots with different longevity (and as well different dates of hire) from the two merging airlines would be next to each other on the integrated list, in some cases several years apart. The demographics of the two pilot groups, and their comparative status and category ratios, were so different that focusing solely on date of hire or longevity would have forced us to offer an extreme solution. And we knew from past cases that the arbitrators would have rejected an extreme position in total. Our view on the Board’s willingness to disregard extreme positions was confirmed in spades by the Opinion the Board issued in connection with the ISL. In it they said:
In our considered judgment, both the methodology of the CAL Committee and its resultant proposed ISL are incompatible with the revised ALPA Merger Policy. Aside from the windfall inequities generated by using an April 1, 2013 snapshot date, total disregard of the longevity factor cannot possibly be justified in the factual circumstances of this case. Not surprisingly, the ISL produced by the CAL Committee's fatally defective methodology is neither fair nor equitable.
Instead of taking an extreme position that would have been rejected, by concentrating on a method to ensure that longevity was used as an important factor in constructing the list along with status and category, we moved many pilots in the bottom part of our list to a higher relative seniority than they had prior to the merger. This will accelerate their career progression in the short term. In the long term, their expectations of moving to the top of the list will be altered by that demographic reality. But achieving this balance was the key to ensure that all of our pilots, including our most junior working and furloughed pilots, did not have their careers demolished by this merger.
* * *
If pilots hyper-focus on one item or the other and avoid looking at the big picture, they can all find something to complain about. However, by keeping ALL the factors of ALPA Policy in focus, by considering the neutral process that we agreed to, and by considering the fates of other pilot groups that stuck to extreme positions, we hope that all pilots will reach the same conclusion we did. The approach we selected and the list it produced was fair and equitable to all United pilots and the hybrid methodology was the best tool available to reach that list.
The following quote is from the arbitration decision in the Delta/Northwest seniority integration and the words are just as true for our merger:
“The resulting list neither realizes nor maintains each and every career expectations, nor could it do so. No recitation of career expectations ever includes a merger, and no merger can leave all hopes and plans unaffected. The most that can be said, and it can be said with some assurance in this case, is that the merger of these particular companies will result in a uniquely powerful entity, by virtue of the contributions of both carriers, that is capable of better withstanding the substantial challenges of the current environment than if the Companies had chosen to go it alone."
