There is a lot of information being disseminated by US Airways and ALPA that is inconsistent. But, after personally discussing this issue with leaders of both sides of the dispute, this is my opinion of where we are headed.
Next week the Company will file a motion to terminate the pilot pension plan per S.1113 of the bankruptcy code and violate the protections provided under the restructuring agreement S.1113 letter.
Either on Monday, January 27 or Tuesday, January 28 management will deliver to each pilots home a detailed alternative defined contribution pension plan, which with the PBGC minimum benefits will be a combined take it or leave it offer. The offer will provide each pilot with a combined PBGC and company provided defined contribution retirement of about 40 percent of a pilot’s FAE at age 60.
Then ALPA and the Company will begin to litigate this issue per the motion. In my opinion, Judge Mitchell will not initially rule on the motion, he will request the parties negotiate a settlement, and he will defer a ruling to a later date. During follow on negotiations ALPA will not agree to any solution that terminates the pilot pension because once it is obvious that there will be no agreement between the parties, the court will have no recourse but to allow the company to terminate the pilot pension plan.
Judge Mitchell recognizes the bankruptcy financing agreements and ATSB loan guarantee require a pension funding resolution or the company cannot emerge from bankruptcy. Since the courts primary responsibility is to the creditors, the judge will set aside ALPA’s claim.
When this occurs, trust between US Airways CEO Dave Siegel and ALPA could be forever severed, which does not bode well or the future and could be a lethal event to management’s desire to “change the cultureâ€.
Once the judge terminates ALPA's pension, the pilots will have two options: Strike or agree to management's ultimatum. At this point it's unclear where this is headed, but at this point the majority of the rank-and-file members would vote to strike. Why? The pilots understand the impact of the termination of their pension plan and they believe what is proposed is unfair (with ALPA the only labor group during bankruptcy process being asked for another major concession). Moreover, the pilot’s believe a valid strike threat would given them the ability to negotiate from a position of strength because in essence a work stoppage would led to the liquidation of US Airways.
Another important point is ALPA advisors have told the MEC if company asks the court to terminate the pilot pension plan, management would then be in violation of the S.1113 letter they signed in August. This letter prohibits management from asking the court for relief from any of the pilot contractual provision(s). Furthermore, the legal advisors believe that all of the relief that we have given the company over the last 6 months may be null and void because this letter was contained in the initial restructuring agreement.
Meanwhile, during the 60-day distressed termination process and litigation, ALPA and the US Airways Congressional delegation will continue to pursue a legislative solution. ALPA Legislative Affairs believes this effort is now gaining positive momentum on a national level in the Senate Finance Committee, which may permit the pilot defined benefit plan to remain in place before the March 31 deadline to emerge from bankruptcy.
Reports indicate the Senate Finance Committe will review pension problems for the entire country and ALPA could be a beneficiary of any potential legislation to permit the proposed revised restoration funding plan.
ALPA has scheduled a Special MEC meeting with its advisors at ALPA International Headquarters on Tuesday, January 28, to be in session as events unfold.
Chip