For The Record

USA320Pilot

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May 18, 2003
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FOR THE RECORD (US AIRWAYS’ MERGER NEWSLETTER FACTS)

Thanks for reading our “For the Record†series, which we hope is helping to clarify and explain some of what you may be reading in the media about the Delta merger proposal. We’re issuing these on an “as needed†basis. For previous issues, please look on awaCompass.com and theHub.com.

Today’s For the Record clarifies major topics that have been all the buss among the media: pensions at Delta, furloughs at Delta, unions at Delta and where the HQ will be should the merger proceed.

Also, in light of the Delta employee rally in ATL later today, we thought it would be a good time to set the record straight on some of the inaccurate statements out in the press regarding what might happen to employees of either company after a merger.

FURLOUGHS AND OTHER FALLACIES:

While it’s too early in the prcess to know the specifics by employee group, locations, etc. we do know that a merger doesn’t have to mean involuntary furloughs of line employees. In fact, we’ve publicly stated that we don’t anticipate line employee furloughs. How can we do that? Because our experience in the America West/US Airways merger demonstrates that capacity can be cut without sending employees home who want to be at work.

Although the facts of the US/AWA merger speak for themselves, let us summarize here. First, although we had to remove 15 percent of capacity from the combined US Airways/America West merger (about 70 airplanes came out of the combined fleet), not one mainline pilot, flight attendant, mechanic, reservation agent, customer service agent or fleet service agent was involuntarily furloughed as a result.

How as that possible? The extra headcount was managed by offering leaves of absence and also as people resigned from their positions (and yes, we know that attrition for pilots is much lower than other groups, like reservations). Management also made a conscious decision to “run heavy†for awhile, which means that the company carried the extra headcount for a few months knowing that the summer block hour increase would easily take care of the excess. Rather than lay off an employee for a few months, the company decided to keep the team intact.

The stats below back up these statements. Since the merger closed in September 2005, US Airways has hired more than 4,000 employees and re-called more than 750, including:

· 63 pilots
· Almost 300 flight attendants
· More than 200 mechanics and related employees
· More than 100 reservation and customer service agents

(More recalls were offered, which some accepted and others didn’t – these are the numbers of people who have actually returned to the new US Airways from furloughs that occurred before the merger).

The capacity reduction in the Delta merger is even lower – 10 percent rather than 15 percent – and our merger proposal contemplates no involuntary layoffs of line employees when the airlines combined.

Now of course there would be overlap and reductions in the administrative and management ranks, and while we’re not downplaying that, typically, line employees feel that less management and senior Big Wigs is a positive development. Further, even in the administrative positions, most of the US Airways employees ere offered positions and many simply choose not to accept (for geographic locations or other personal reasons).

PENSIONS

As for pensions, the simplest way to state our cast is to say that the merger calls for the exact same treatment of the pensions that Delta’s standalone plan does. That is, in a merger, there isn’t going to be any different treatment of the pensions for pilots or non-represented employees. Our merger model has those costs and liabilities assumed, and the Delta management team knows this.

Delta sponsors tow large pension plans. One is for pilots. The bankruptcy court overseeing Delta’s reorganization authorized the termination of that plan earlier this year, a decision that has been upheld by a higher court. The Pension Benefit Guaranty Corporation (PBGC), the federal agency that insures pension plans, has entered into an agreement with Delta to take over the pilots’ plan. This decision was made a long time go by Delta management and we do not contemplate changing or altering this plan with our proposed merger.

Delta’s other pension plan covers approximately 90,000 non-union retirees and employees. Delta froze this non-union plan effective 12/31/05, meaning that plan participants stopped accruing pension benefits as of 12/31/05. This is different from terminating a plan, as in the pilots’ case, and this plan is not terminated. As part of its agreement with the PBGC, Delta has agreed not to terminate the non-union plan during its bankruptcy reorganization. In addition, Delta has pledged to make additional contributions to the plan when it emerges from bankruptcy. Again, our merger plan does not call for any different treatment and statements to the contrary are simply false. Lies. Rumors. Trash talk if you will.

To summarize, if US Airways and Delta were to merge, the New Delta would honor the terms of the PBGC-Delta agreement, meaning that the pilot plan will be terminated and taken over by the PBGC, while the non-union plan will remain in plae but frozen.

In a nutshell, that means no change to the status quo regarding Delta’s pension plans.

TWO MORE THINGS…

We’re getting questions (and media is speculating) about the state of the union (literally) at a “New Deltaâ€. Only pilots and dispatchers are represented by a union at Delta. By contrast, more than 80 percent of US Airways’ employees are unionized. We’ve been very clear all along with regard to representation. Any decision to unionize is a matter for employees of the new Delta. US is not opposed to union representation, and we will respect the voice of the employees of the new Delta.

AND ONE MORE THING…

There’s lots of premature speculation in the press about where the new headquarters will be – Atlanta or Tempe. There’s even a headline in Tuesday’s Arizona Republic suggesting that a decision is imminent. This is simply not true. What is true is what we’ve said all along – wherever HQ ends up, Atlanta or Tempe, there will be sizable operations I both cities and that means significant employment in both cities. At this early stage of the proposed deal, we’re not anywhere close to making this decision.

If you’re reading this far, you’re doing pretty well! And for forewarned, this is where the “sappy factor†kicks in…so in closing, we hope this helps to clarify some of the rumors churning ol’ grapevine. In light of the Delta employee rally today, we also want to add that our feeling is, at the end of the day, airline employees, no matter what logo is on their wings or uniform, have more in common than not. Most of us came to this industry because we had a passion for flight, a love for travel and people (stop rolling your eyes; every airline employee who works the front line has aid that at one time or another!) and a natural curiosity to see the world many times over.

Although our industry is not what is used to be, it is still a privilege to travel, serve the traveling public and be part of such a high profile business.

While it’s easy to get caught up in the rhetoric being tossed around by all sorts of experts and others, including some of our Delta brothers and sisters, it’s important to stay focused on our similarities and take the higher road.

Happy holidays and stay tuned for more For the Record fun![/font]
 
FOR THE RECORD (US AIRWAYS’ MERGER NEWSLETTER FACTS)



FURLOUGHS AND OTHER FALLACIES:

While it’s too early in the prcess to know the specifics by employee group, locations, etc. we do know that a merger doesn’t have to mean involuntary furloughs of line employees. In fact, we’ve publicly stated that we don’t anticipate line employee furloughs. How can we do that? Because our experience in the America West/US Airways merger demonstrates that capacity can be cut without sending employees home who want to be at work.

The AW/US merger pales in comparison to the proposed DL/US merger. The AW/US merge was not faced with a 35% route overlap. That is why the DOJ was quick to sign off on the deal. The truth is, nobody knows what the DOJ will require and there have been many analysts suggesting that Parker's 10% reduction is far too optomistic.


How as that possible? The extra headcount was managed by offering leaves of absence and also as people resigned from their positions
Delta has already thinned its ranks this very same way. The people left are the ones who "want to be at work."
How are you going to deal with that Doug?



The capacity reduction in the Delta merger is even lower – 10 percent rather than 15 percent – and our merger proposal contemplates no involuntary layoffs of line employees when the airlines combined.

Like I said above. Many feel the 10% constitutes a fallacy and has too many assumptions that have to be realized in order to hold true.


PENSIONS

Trash talk if you will.

As opposed to the corporate speak we hear coming from US.
No layoffs, no problems with the DOJ, we'll comply with everyone's contract.. etc. We have no labor issues. We'll resolve everything by early next year. We love Boeing, Coke, the PBGC, and anyone who could potentially kill this deal.


US is not opposed to union representation, and we will respect the voice of the employees of the new Delta.

We respect them so much, our pilot groups are now conducting informational picketing to express their appreciation for our refusal to negotiate. You too can become a part of this dog and pony show if you just quit fighting us.

AND ONE MORE THING…

There’s lots of premature speculation in the press about where the new headquarters will be – Atlanta or Tempe. There’s even a headline in Tuesday’s Arizona Republic suggesting that a decision is imminent. This is simply not true.

The truth is we will say whatever we have to in order for this to proceed and then we will tell one or the other to pound sand.


If you’re reading this far, you’re doing pretty well! And for forewarned, this is where the “sappy factor†kicks in…

No, it kicked in at "FOR THE RECORD"

Although our industry is not what is used to be, it is still a privilege to travel, serve the traveling public and be part of such a high profile business.

See how lucky you are. You should feel privileged to be here.

Happy holidays and stay tuned for more For the Record fun!
[/font]
Oooh boy. I am downright giddy now.
 
You have to read US statements very carefully - what's that fancy word....parse? And frankly, I suspect the same goes for the DL side, but that's another thread....

In a sense, Parker is right - there have been no personnel reductions due to the US/HP merger. And the reason is simple - they happened before the merger while "old" US was in BK or were the result of actions "old" US took during BK (furloughing the MidAtlantic people post-merger as the planes were transferred to Republic).

Likewise, Parker can say that there'll be no furloughs of DL people as a result of this merger if it happens - the cutting will be done while DL is in BK and before the merger takes place upon emergence.

Jim
 
Although the facts of the US/AWA merger speak for themselves, let us summarize here. First, although we had to remove 15 percent of capacity from the combined US Airways/America West merger (about 70 airplanes came out of the combined fleet), not one mainline pilot, flight attendant, mechanic, reservation agent, customer service agent or fleet service agent was involuntarily furloughed as a result.


Just one question for you. US/AWA have actually yet to be merged. Both are still operating on their own certificate and not one labor group has been integrated yet. So no one has been involuntarily furloughed yet. How can you be so certain it won't happen when US/AWA are actually merged?
 
Michael707767:

Michael said: "Just one question for you. US/AWA have actually yet to be merged. Both are still operating on their own certificate and not one labor group has been integrated yet. So no one has been involuntarily furloughed yet. How can you be so certain it won't happen when US/AWA are actually merged?"

USA320Pilot comments: I simply published a newsletter produced by US Airways. If you're asking me personally, there are no guarantees that a Delta employee will not be furloughed with the potential merger or as a stand-alone business plan. In regard to Doug Parker, I do not share BoeingBoy's negative prediction. In my opinion, BoeingBoy is a retired US Airways pilot who has an "ax to grind" because he lost his Defined Benefit pension.

In regard to merging HP & US, it's not an easy process. US Airways is moving relatively fast to get a combined operating certificate issued by the FAA, which I believe is scheduled for approval on or about May 1, 2007. Nothing can be done to integrate the work groups until then.

Another huge project is the IT integration, which will combine all of the different computer systems. This is an enormous under taking and is scheduled to be completed in March.

Meanwhile, I'm hopeful that the two companies can be integrated by the end of Q2 2007.

US Airways has proven the financial benefit of merging an airlien in bankruptcy with one that is not. There is flexability otherwise unavailable where the parties can cancel leases and contracts to remove excess facilities and aircraft.

I believe it's important to note US Airways believes it will create the most profitable airline in the world with its proposed merger with Delta, which is obviously good news for all stakeholders, including employees. I doubt Delta or any other airline can duplicate this effort.

In regard to the seniority integration(s), US Airways East has an old workforce. For example, in this week's ALPA seniority list integration arbitration proceeding the Merger Committee indicated that in 10 year's 80% of the pilots will be retired. This could create a seniority integration windfall for Delta pilots because of the signficant US Airwasy attrition as employees leave the company.

Again, I believe the biggest problem facing the Delta employees is not the merger, but the potential of a break up of the Atlanta-based company due to labor issues. By the way, I'm not the one who came up with this thought -- it was a high level ALPA official who speculated this could happen. This is just something else to think about...

Regards,

USA320Pilot
 
[In regard to the seniority integration(s), US Airways East has an old workforce. For example, in this week's ALPA seniority list integration arbitration proceeding the Merger Committee indicated that in 10 year's 80% of the pilots will be retired. This could create a seniority integration windfall for Delta pilots because of the signficant US Airwasy attrition as employees leave the company. [/font]

tell me how that would be a windfall for the Delta pilots? Are you saying the USAir pilots should be given priority because they are all old? I bet the AWA pilots see it differently.
 
Michael707767:

If you're asking me personally, there are no guarantees that a Delta employee will not be furloughed with the potential merger or as a stand-alone business plan. Regards,

USA320Pilot


So tell me, is it your opinion that no US or AW employee will be furloughed as a result of this proposed merge?
IMO, there will be numerous AW and US employee layoffs after all lists have been fully integrated.
Simply put, Parker's statements regarding layoffs is misleading. In reality, he doesn't know if and how many people have to go until the deal is done.
 
Although the facts of the US/AWA merger speak for themselves, let us summarize here. First, although we had to remove 15 percent of capacity from the combined US Airways/America West merger (about 70 airplanes came out of the combined fleet), not one mainline pilot, flight attendant, mechanic, reservation agent, customer service agent or fleet service agent was involuntarily furloughed as a result.

The capacity reduction in the Delta merger is even lower – 10 percent rather than 15 percent – and our merger proposal contemplates no involuntary layoffs of line employees when the airlines combined.

While we had to reduce capacity 15% in a merger with no overlap, we will only have to reduce capacity 10% in a merger with almost total overlap. YGTBSM!

What we forgot to mention in our last newletter is that we will extend the DL employees time in BK for as much as a year longer while we WOW them with what we have dubbed "Plan Synergy". Coming to a station near you soon.
 
Meanwhile, I'm hopeful that the two companies can be integrated by the end of Q2 2007.


You are hopeful? How can this possibly happen without negotiated contracts that have been ratified by the membership? Last thing I heard the company isn't willing to negotiate much of anything with any union right now.
 
So tell me, is it your opinion that no US or AW employee will be furloughed as a result of this proposed merge?
IMO, there will be numerous AW and US employee layoffs after all lists have been fully integrated.
Simply put, Parker's statements regarding layoffs is misleading. In reality, he doesn't know if and how many people have to go until the deal is done.


They are recalling at US and it is not cost effective to recall an employee for less than one year. Your theory does not hold water.
 
The newsletter is not entirely true. Every Mid-Atlantic pilot (on the mainline certificate) lost their job.

Further, the DL pilots won't see a "seniority windfall." Neither will anyone on the US-East list see the left seat of one of DL's 777s.
 
Michael:

Michael asked: "tell me how that would be a windfall for the Delta pilots? Are you saying the USAir pilots should be given priority because they are all old?"

USA320Pilot comments: Because of US Airways significant atttition due to age. There is a very high number of people leaving the company in the not-to-distant future due to retirement, medical, and other forms of attrtion, which is dramatically higher at US Airways than at any other legacy carrier. Simply put, most of the US Airways employees will be gone during the next 10 year's and thousands before the two companies are combined. For example, according to ALPA's Merger Committee 80% of the pilots will be gone in less than 10 year's.

Moreover, I would have to check to get an accurate number, but I believe about 25% to 33% of the pilots of the US Airways East pilots would be gone before US Airways and Delta could combine operations in the next 3 year's.

Why? The employees are much older than at other companies.

Best regards,

USA320Pilot
 
I believe about 25% to 33% of the pilots of the US Airways East pilots would be gone before US Airways and Delta could combine operations in the next 3 year's.


[/quote

Here is the question that begs to be asked. When do you retire or have your internet priviledges removed by your dad?