Nobody likes the concessions and it’s easy for an employee to point out pay and productivity excess for other employee groups, but it’s difficult for us to do the same about our own contract. It’s human behavior for this to occur because we all accommodate our thoughts with the questions we ask our selves. I fully understand this point and the depth of the cuts on those who make less than others, which provides those interested in US Airways with 45,000 different opinions on who should make what concession.
ALPA is very pragmatic of the requirement for the pilot’s to give more than other employees to help save the company, but the majority of the pilot’s believe they have given enough and the third proposed cut it the pilot pension plan is facing significant resistance.
Prior to signing the restructuring agreements US Airways employed about 4,700 pilots and 30,000 employees in the other departments. There are 6 times more employees from the other labor group’s and management than ALPA.
ALPA represents 10 percent of the workforce, is 30 percent of the payroll, and took 60 percent of the cuts.
The non-pilot employees represent 90 percent of the workforce, is 70 percent of the payroll, and took 40 percent of the cuts.
ALPA’s total restructuring agreement and modified restructuring agreement pay and benefit concessions were $566 million, plus a $77 million cut in pension pay outs. This represents a total concession of $643 million per year.
The total non-pilot concessions for both agreements is $484 million per year with no pension cuts, which is $159 million less than ALPA.
The average pilot pay and benefit cut is $138,000 per year. ALPA President Duane Woerth told the Senate Appropriations Committee on January 14 the average pilot concession represents 46 percent of a pilot’s total pay and benefits.
The average non-pilot pay and benefit cut is $16,133 per year.
The average pilot pay and benefit cut is about $122,000 per year more than the average non-pilot employee pay and benefit cut.
ALPA is the only employee group that is being asked for a third major concession with the company threatening to distress terminate the pilot pension plan. Management has said that the IAM, AFA, and management pensions are secure.
During the 90’s, the Company did terminate CWA and FSA pensions, but these employee groups would will have 10 years of market performance more than a pilot to improve their defined contribution/401(k) plan market value, whereas most pilots would have less than 10 years total market action to improve an imposed defined contribution plan market value.
Last week at the Senate Appropriations Subcommittee hearing ALPA was “extremely†unhappy with US Airways chief executive officer Dave Siegel’s testimony and I was “deeply disappointed†in his remarks. In response to Siegel’s testimony ALPA spokesman Roy Freundlich told the Pittsburgh Post-Gazzette the CEO’s comments were “outrageous†and he “betrayed†the pilot group.
Some observers have called Freundlich’s comments “inflammatoryâ€, but Freundlich’s thoughts are the opinion of the US Airways MEC and rank-and-file members. What’s sad about this development is that any trust that has developed between senior management and ALPA is gone, which does not bode well for the future.
ALPA and its members are upset because the pilot group has provided two retirement concessions, has been the only employee group to provide a retirement concession, and now is being asked to provide a third concession.
The first pilot pension concession was provided in the first restructuring agreement with a reduction in a pilot’s final average earnings. Shortly after signing this agreement, management came back to ALPA and said after discussion with the PBGC, the pilot pension would have to be adjusted again with a reduction in the multiplier and a cap in the accrual of 50 percent.
What’s important to note is that the Treasury Department has a representative on the ATSB and the PBGC as well as the PBGC a sitting member on the unsecured creditor’s committee. What ALPA wants to know is why does the company not know what the government wants and why is the requested pension cuts being renegotiated time-and-time again, shortly after a TA is ratified? Why do the pilot’s have to give again just a few weeks after signing a new agreement?
Recognizing the close discussion between the parties (US Airways, ATSB, and the PBGC), ALPA agreed to management’s plan to provide restoration funding and the MEC ratified the modified restructuring agreement to help the company submit its Plan of Reorganization by the December 20 deadline.
However, shortly thereafter ALPA was notified that the PBGC rejected management’s pension restoration funding plan, but only the pilot plan was at risk of a “distressed termination†and the company would fund every other employee defined benefit retirement plan.
What virtually every ALPA member wants to know is “why aren’t retirement cuts being taken by management, the IAM, and AFA?†Why do the pilot’s have to take three retirement cuts and no other employee is taking a cut during the bankruptcy process? Is that fair?
Meanwhile, the Pittsburgh Post-Gazette wrote on January 19, “Just when you thought it couldn’t get any worse for US Airways employees, the airline is demanding a drastic reduction in the amount of annual pension contributions it makes. The airline hopes to achieve this through a bill in Congress, but chances look slim because out-of-state lawmakers fear that other ailing companies may seek similar favorable treatment. Without changes in the law, the airline says its only option is to eliminate the pilot’s pension and replace it with a new, less generous one. Otherwise, the airline says, it won’t be able to survive.â€
The Post Gazzette’s call: “It must seem for many US Airways employees that the cure to the airline’s financial woes is worse than the disease.â€
ALPA believes management is not doing its part to obtain legislative relief and that is why Freundlich said US Airways’ action is “outrageousâ€. Moreover, some pilot’s want to know why is the Company “in the pilot’s pocket again before the ink is dry on the last agreement?†In response, ALPA has said it will not agree to a third cut in retirement benefits and the pilot group has engaged in a significant congressional lobby campaign to obtain legislative relief.
Nobody knows how the discussion to terminate the pilot’s pension will proceed, but there are reports without pilot participation in the process, the company may not be able to terminate the pilot pension before March 31. If true, then the company may violate its bankruptcy financing terms and not be able to emerge from its reorganization that could cause the airline to file for a Chapter 7 liquidation.
Separately, in my opinion, the biggest issue I see forthcoming is that there has been major damage done between ALPA and Siegel, which is likely to have a major negative impact on the corporation moving forward.
What we all need to realize is that perception is reality and it’s your reality that determines your destiny. Let’s hope the pilot pension issue can be resolved because this problem has now become US Airways’ largest bankruptcy obstacle and after management has come so far to successfully reorganize the company, it would be sad to see the airline fail and management’s final destiny “something less than desirableâ€.
Meanwhile, one pilot emailed me today an interesting comment, which is now the sentiment of the majority of pilots. This pilot said, “If he (Siegel) thinks he is going to leave this company with the prestige of having negotiated the biggest givebacks in history while preserving labor peace, he has just hit the wall. How many companies will risk their labor relations to hire the man that terminated the retirement of his pilots? He will have Lorenzo written all over him. He needs a mutually acceptable agreement or everything he has worked for is gone.â€
Chip