Important MEC Code-a-Phone - Jan 24th

ualstar

Member
Dec 11, 2002
20
0
MEC CODE-A-PHONE UPDATE
January 24, 2003
This is Roy Freundlich with a US Airways MEC update for Friday, January 24.
The following update is fairly long and detailed but contains important information that all pilots need to be aware of as your MEC prepares to deal with the aggressive inequity being attempted by US Airways management against our pilot group. In essence, the Company has developed a business plan that would sacrifice our pilots pension benefits while at the same time effectively shifting 500 million dollars from the pilots pension plan to all the other employee pension plans to maintain and preserve their original benefits.
MEC Chairman Bill Pollock held an internal ALPA coordination meeting yesterday and today at the ALPA offices in Herndon to address the current threat to pilot pension benefits and coordinate MEC committee activity. Attending the meeting were members of the Retirement and Insurance Committee, Negotiating Committee, Communications Committee and ALPA financial and legal advisors. The officers, committee members and advisors at this meeting also received a confidential presentation from President and CEO David Siegel, and other management officials and corporate advisors, on management’s views on addressing pilot pension benefits.
Over the past nine months, since the onset of the first restructuring negotiation in May 2002, preserving the pilots’ pension benefits has been a top priority for your MEC. During the first restructuring negotiations, the Company sought benefit and cost reductions for all employee pension plans to reduce US Airways’ PBGC funding requirements in order to meet ATSB conditions for a loan guarantee. Pension plan costs were reduced for pilots, flight attendants, mechanics and management employees primarily as a result of wage reductions, which reduced final average earnings calculations and thereby reduced pension benefits, liabilities and the underfunding contributions required by US Airways.
With these wage reductions, the June 2002 ATSB business plan total contribution for the pilots’ pension plan for seven years, 2003 through 2009, was about 1.66 billion dollars (down from 2.31 billion dollars prior to the concessions). The total for all other employee pension plan contributions combined was reduced to about 860 million dollars. The total for all other employee pension plans contributions in the June 2002 ATSB business plan was about 2.52 billion dollars (1.66 billion plus 860 million dollars). After all employee groups ratified the first restructuring agreements in August through October 2002, the Company committed to meeting this total funding obligation of about 2.52 billion dollars, preserving all employee pension plans.
In November 2002, after the Company announced that revenue forecasts from the June ATSB business plan were not being realized, management revised its revenue forecast downward and came back to employees, under the threat of imminent bankruptcy liquidation, for another round of concessions. In addition to the revenue forecast, the Company had data that indicated lower asset values of the pension plans and modified assumptions for underfunding contributions. The underfunding cost was revised significantly upward as a result of the impact that market conditions and lowered interest rates had on the pension plans.
During the second restructuring negotiations, retirement benefit reductions were included in the pilots’ December 13 supplemental cost reduction agreement to help preserve the pilots’ pension plan. This included reducing the maximum benefit multiplier from 65 percent to 50 percent and the yearly multiplier from 2.4 percent to 1.8 percent over the first 25 years of benefit accrual. This, in turn, produced pension cost reductions and saved the Company approximately 77 million dollars average per year for seven years, or 500 million dollars for the seven-year period. The pilot concessions to the retirement benefits nullified the impact that lower market performance and interest rates had on the pilots’ pension plan. As a result, despite the reduced market value of assets and the reduced interest rate assumptions, the pilot pension plan contribution costs for US Airways only slightly increased by about 38 million dollars over the seven-year period to about 1.69 billion dollars (up from about 1.66 billion dollars calculated in the summer of 2002).
However, the other employee pension plans’ combined contribution costs increased by about 582 million dollars to about 1.44 billion dollars (up from about 860 million dollars) due to the market and interest rate changes. This cost increased because no other employee group agreed to benefit reductions to preserve their pension plans. The effect was that the 500 million dollar pilot cost reduction agreed to by ALPA was absorbed by the increased cost of the other employees’ pension plans, which to date suffer no benefit decrease. The total for all employee pension plan contributions in the present plan contribution requirements as of January 2003 was about 3.14 billion dollars (1.697 billion + 1.44 billion). This cost was up from the previous business plan’s 2.52 billion dollars primarily because of the increased cost of the other employee pension plans, not the pilots.
Even after round two, with ALPA’s reduced pension benefits, management took the position that the Company could not meet the increased funding obligation for all employee pension plans and still meet ATSB conditions for a loan guarantee. In an effort to preserve all employee pension plans, the Company petitioned the PBGC for a deferred payment schedule by requesting the seven-year funding contribution for the pilots’ plan be spread out over 30 years. This request reduced the Company’s seven-year underfunding requirement for only the pilots’ pension plan from 1.69 billion dollars to about 852 million dollars, again making up for the increased cost of the other employee pension plans, which the Company included in its January 2003 ATSB business plan. The Company added the increased pension contribution of 1.44 billion dollars of the other employee pension plans in the January 2003 ATSB business plan, and promised other employees their pensions were secure as a result of their concessions.
After the PBGC rejected US Airways’ restoration-funding plan, ALPA jointly pursued a legislative solution with the Company to require the PBGC to accept the restoration funding plan solution that preserved all pension plans. On December 13, prior to ratifying the Supplemental Cost Reductions agreement, the MEC required that a confidential side letter be executed by the Company that legally obligated it to provide funding for pension benefits to pilots in the event the pilot pension plan was terminated by the PBGC. This agreement was confidential because if publicly revealed during our pursuit of a legislative solution, it would have interfered with this effort. However, at the first Senate hearing on this issue, President and CEO David Siegel revealed that a company alternative pension plan that replicated the economics of provisions in the second pilot restructuring agreement was being developed by the Company. Mr. Siegel further ignored the confidentiality provision of this side letter in subsequent email messages to individual pilots.
Despite recent legislative setbacks, the legislative solution is still active in the Senate Finance Committee and is being vigorously pursued by ALPA.
Given the Company’s position and proposed solutions to date, the termination of the pilots’ pension plan will cause our pilots to lose substantial accrued benefits that the pilots have already earned, which will be inequitable to all US Airways pilots. We do not believe that alternatives being pursued by the Company at this time would prevent pilots from losing a substantial part of the benefits that they have earned. Please understand clearly that ALPA has in no way agreed to the termination of the pension plan, and we are actively reviewing many alternatives in order to preserve our pilots’ benefits.
US Airways pilots have provided significantly more concessions that any other employee group—in fact more than all combined—to help this company survive and emerge from bankruptcy. We are now being rewarded by solely facing the termination of our defined benefit retirement plan, while the cost reductions for our pension plan are in effect shifted to preserve the full benefits of all other employee groups’ pension plans at increased funding costs.
At this point your MEC members, officers, and key committees are coordinating activity in our effort to protect the benefits that US Airways pilots have already earned and paid for time and time again.
MEC Chairman Bill Pollock has called a special MEC meeting for Tuesday, January 28 and Wednesday, January 29, at the ALPA Offices in Herndon for the purpose of giving the MEC a briefing on the status of the pilots’ pension plan.
Your MEC representatives clearly recognize the magnitude of unfairness the pension issue presents to our pilots. It is imperative from this time forward that all pilots stay informed.
As this issue progresses please do not allow it to affect in any way your duties as flight crewmembers or the operation of the airline. It is imperative to our success that our airline’s operations remain reliable and stable. Any job actions are illegal and expose all of us to significant liabilities and to the failure of our efforts to preserve our jobs and our pensions. This is of the utmost importance and must be taken seriously and sincerely by all crewmembers. Please continue to participate in our legislative affairs program that is available on the pilots only section of the US Airways MEC website.
Please remember we have 1,748 pilots on furlough, with 79 pilot furloughs scheduled for February 4.
Thank you for listening.
 

flyin2low

Veteran
Nov 4, 2002
577
1
www.domain.com
You would think that the company would apply the same percentage to all affected workgroups with defined benfits plans. Instead of using the pilots plan to support the rest. Just pick a percentage of concessions, across the board, that will make it happen for all affected groups. That way everyone is treated fairly....................... Percentages are Percentages
 

cavalier

Veteran
Aug 28, 2002
2,409
1
www.usaviation.com
[blockquote]
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On 1/25/2003 10:42:14 AM flyin2low wrote:

You would think that the company would apply the same percentage to all affected workgroups with defined benfits plans. Instead of using the pilots plan to support the rest. Just pick a percentage of concessions, across the board, that will make it happen for all affected groups. That way everyone is treated fairly....................... Percentages are Percentages
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[/blockquote]

Yes, fair, the pilots pull down 6 figures and everyone else pulls down the low 5 figures, PLUS the lower wage earners no longer have a pension. I see it coming, the pilots demanding everyone else "share" their pain least they throw a fit. What little respect I had left went out the window when I read the woe is me from Chip and some of his flying pals. Skull & Bones membership seems to be the requirement to be an elitist sky pilot. I remember looking up to a F/O when I was a young man, now I look at those same people in a completely different light that is not at all a pleasing one.
 

nvrsaynvr

Member
Aug 20, 2002
21
0
[blockquote]
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On 1/25/2003 10:42:14 AM flyin2low wrote:

You would think that the company would apply the same percentage to all affected workgroups with defined benfits plans. Instead of using the pilots plan to support the rest. Just pick a percentage of concessions, across the board, that will make it happen for all affected groups. That way everyone is treated fairly....................... Percentages are Percentages
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[/blockquote]
Good you feel that way -- , so I suppose you will support dividing the pilots 19% stock ownership in our new company equitably amongst the rest of our employees?

And if I remember correctly, wasn't it about 38% raise the pilots were getting for parity adjustment (pretty close to the amount you are giving back isn't it?)? My group's raise was maybe about 1/3 of that percentage. And, let's see, a pilot's insurance contribution based on salary, that will of course require a little adjusting won't it?
 

sdavis29

Advanced
Nov 13, 2002
222
0
www.usaviation.com
[P]
[BLOCKQUOTE][BR]----------------[BR]On 1/25/2003 10:42:14 AM flyin2low wrote:
[P]You would think that the company would apply the same percentage to all affected workgroups with defined benfits plans. Instead of using the pilots plan to support the rest. Just pick a percentage of concessions, across the board, that will make it happen for all affected groups. That way everyone is treated fairly....................... Percentages are Percentages [/P]----------------[/BLOCKQUOTE]
[P]not a bad idea....and to show no hard feelings for the way we were "TREATED FAIRLY" what if fleet and cust service were to kick in say 100%....remember percentages are percentages...and 100% of zero is still zero......[BR][BR][BR][/P][img src='http://www.usaviation.com/idealbb/images/smilies/10.gif']
 

real world

Advanced
Dec 14, 2002
103
0
Two questions based on the Code-A-Phone statement:

"the MEC required that a confidential side letter be executed by the Company that legally obligated it to provide funding for pension benefits to pilots in the event the pilot pension plan was terminated"

Does this not constitute an agreement?


"We do not believe that alternatives being pursued by the Company at this time would prevent pilots from losing a substantial part of the benefits that they have earned"

So then what is the problem?
 
B

BottomFeeder

Guest
RealWorld,

The problem is a matter of trust. The pilots have backed the FNG and feel they have been fragged by his statements at the hearings. They need a leader not another Wolf.

It is a shame***** he could have been the glue to bind this togeather. Now it appears he is the thinner to break it down.

HOW SAD
 

Bear96

Veteran
Aug 20, 2002
2,926
122
[FONT size=4]OK now this is getting funny.[BR][BR]So on the one hand the U pilots are putting on a big boo-hoo face saying they will end up with nothing from U and have to retire on only the $28K/yr. PBGC maximum for age-60 retirees, and comparing that figure to what they would have received under the current plan to garner public and congressional support.[BR][BR]All the while they have a "secret" agreement that they will indeed end up with something greater than the PBGC guarantee, paid for at least in part by U.[BR][BR]And for all the pilots saying it isn't fair for management to be going after only your pension and not those of other work groups: OK then, have management try to negotiate with all the unions to reduce their pensions. All the unions can say "Take a hike;" U will be unable to fund all the pesions; the PBGC will come in and take them all over.[BR][BR]To 90% of employees in the other work groups, a $28K at age 60 maximum PBGC guarantee may look pretty generous.[BR][BR]So I am not sure I see the wisdom of the pilots encouraging that strategy?[/FONT]
 

cavalier

Veteran
Aug 28, 2002
2,409
1
www.usaviation.com
[blockquote]
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On 1/25/2003 11:13:46 AM autofixer wrote:

Don't worry, I am sure the pilots look at all of the other groups in a different light too.
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And that sir is exactly why there is no support for the pilots, that very attitude.
 

autofixer

Veteran
Aug 20, 2002
1,804
241
www.usaviation.com
[blockquote]
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On 1/25/2003 11:26:43 AM cavalier wrote:

[blockquote]

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On 1/25/2003 11:13:46 AM autofixer wrote:


Don't worry, I am sure the pilots look at all of the other groups in a different light too.

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[/blockquote]

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And that sir is exactly why there is no support for the pilots, that very attitude.
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[/blockquote]
So it is okay for other groups to look a pilots differently, however, when pilots do it is an attitude? No comprende compadre?
 

us10

Advanced
Sep 11, 2002
138
0
[blockquote]
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On 1/25/2003 11:34:20 AM real world wrote:


Two questions based on the Code-A-Phone statement:

"the MEC required that a confidential side letter be executed by the Company that legally obligated it to provide funding for pension benefits to pilots in the event the pilot pension plan was terminated"

Does this not constitute an agreement?


"We do not believe that alternatives being pursued by the Company at this time would prevent pilots from losing a substantial part of the benefits that they have earned"

So then what is the problem?
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[/blockquote]


You left out the last three words of the your cited quote.The words; "by the PBGC" should have been included.The side letter did not cover a company requested termination or a joint company/ALPA requested termination.
If the PBGC should step in and terminate the plan ALPA wanted some protection.

Please re-read the second of your quotes.If you still can't see the problem, well, I don't think I can help you.
 

cavalier

Veteran
Aug 28, 2002
2,409
1
www.usaviation.com
[blockquote]
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On 1/25/2003 11:54:56 AM fatburger wrote:

cavalier-

your post reaps with jealousy. it's truly sad.

fatburger
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The term would be, disgust, I never begrudge a soul because I have made my own choices in this life. Pilots wanting everyone to hurt and feel their make believe pain is what I am referring to. THAT is truly sad, acting like spoiled children.