EMPLOYEE Q AND ANovember 29, 2005
The National Mediation Board (NMB) has scheduled a final bargaining session between CO and the International Association of Machinists (IAM) representing CO flight attendants, for Dec. 7 and 8 in the offices of the NMB in Washington, D.C. Employees have asked a number of questions about the negotiations since CO released Employee Bulletin No. 26 and posted the “Industry Update and Wage and Benefit Comparisons†on the intranet. This Q and A answers employees’ most frequently asked questions about the talks.
What happens if an agreement is reached in the final round of meetings on
Dec. 7 and 8?
CO expects that the IAM would schedule information meetings during December and continue meetings into January because of the holiday period, and that flight attendants would have the opportunity to vote on the agreement sometime in January. However, the exact voting schedule and method of voting would be determined by the IAM.
What happens if no agreement is reached in the final round of meetings on
Dec. 7 and 8?
The consequences for everybody would be worse, as the NMB has stated it could declare that the negotiations are at an impasse if no agreement is reached on Dec. 7 and 8.
Under the Railway Labor Act, if the NMB concludes that the parties are at an impasse and either party rejects arbitration, then the parties enter a 30-day cooling off period.
At the end of this period, CO and the IAM can exercise “self-help.†This means that the company would implement needed wage and benefit reductions, and flight attendants would be able to strike. To compensate for the enormous cost associated with related schedule reductions and the customer “book away†factor in fear of a strike, the implemented pay and benefit reductions would have to be larger than what the company is currently seeking.
CO has no desire to go down this destructive and divisive path. A confrontation would be bad for every employee in the company.
Why can’t CO and the IAM just freeze the current agreement?
That is not an option. CO needs the full $500 million in wage and benefit reductions. The company continues to face significant challenges to its survival, including high fuel prices, a weak domestic fare environment, continued growth of low cost competitors and the pressure caused by other airlines lowering costs in bankruptcy.
Since oil prices have recently declined, why do flight attendants still have to give?
While oil prices are lower than they were a month ago, today’s oil prices are significantly higher than when CO began seeking employee wage and benefit reductions last year. When CO announced the need for pay and benefit reductions on Nov. 18, 2004, the price per barrel of crude oil was $46.22. When the tentative agreements were reached on Feb. 28, 2005, it was at $51.75 per barrel. As of Nov. 28, 2005, crude was selling at $57.36 per barrel.
Why the push to complete these negotiations now?
Over the past year, CO, the flight attendants and their union have worked together to understand the issues and explore every item thoroughly. Many flight attendants have told the company they understand the need for reductions and want to get this deal done.
CO is fortunate that the other work groups elected to move forward and ratify their reductions earlier this year, permitting CO to avoid a crisis and post modest profits in the second and third quarters.
However, the company continues to face significant challenges to its survival. CO lost a significant amount in the first quarter, expects to post a significant loss in the fourth quarter (the company posted an approximate $115 million loss in October alone) and expects to lose a significant amount for the full year 2005.
These losses cannot continue if the company is to survive. CO needs to get the necessary reductions from flight attendants and resolve the open issues so that everyone can work together in the new year :down: :down: :down: :down: CAL awarded stock
Below is the breakdown of total stock distribution between now and 2007. They have 3 dates that are in play.
They get different numbers of shares as of these dates if they hit the following targets.
By 6/30/05 the stock must have stayed above 17.4775 a share for 20 consecutive days.
By 3/31/06 the stock must have stayed above 20.4775 a share for 20 consecutive days.
By 12/31/07 the stock must have stayed above 22.4775 a share for 20 consecutive days.
This means if the stock stays above 22.475 for 20 consecutive days anytime before 12/31/07 they get their total awards. Here are the individual spoils.
Bethune $4,844,375
Campbell $3,056,625
McCoy $2,642,075
Compton $2,642,075
Cox $2,037,750
Erwin $2,642,075
Misner $2,642,075
Moran $2,037,750
Smisek $6,605,187
Walker $2,037,750
Grizzle $2,642,075
Ladderman $2,642,075
Marzetta $2,642,075
Kenny $660,518
Vogel $2,642,075
KELLNER $10,188,750
GRAND TOTAL= $49,963,230 :down:
Working together works for some folks.
