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!
 
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.




Premature speculation about ATL or Tempe?
Wherever HQ ends up, ATL or Tempe????

Ummmm....what happened to PIT and CLT. I dont recall ATL ever being in the running. But since those 2 cities are not mentioned here, I think it's safe to say Tempe will be the "New Delta" HQ