UAL ALPA S.1113(c) Term Sheet -- check on UA board

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Originally posted by Chip Munn. [BR][BR]ClLick here to post replies:[BR][BR][BR][A href=http://www.usaviation.com/idealbb/view.asp?topicID=3192&sessionID={08F79E76-DC6B-4FE0-BFDF-5226CC7448C5}][FONT color=#0b3053]UAL ALPA S.1113&copy; Term Sheet[/FONT][/A][BR][BR][BR]--------------------------------[BR]January 10, 2003 [BR][BR]Dear Fellow Pilot: [BR][BR]At the outset, let me thank you for the overwhelming support which you provided in response to ALPA’s request that you approve the interim agreement which we recently put before you. [BR][BR]As you know, this interim agreement, together with those covering the other employees and the Court-imposed reduction on IAM-represented employees, will meaningfully assist the company in accessing the next tranche of DIP financing. Even more importantly, it will afford us an adequate opportunity to deal with the challenges of working with the company to modify our current agreement appropriately to meet the legitimate long term financial and structural needs of the company. [BR][BR]To give you some idea of the scope of the task we are confronting, I have decided to release to you the so-called Section 1113&copy; Term Sheet which the Company proposed to us last month. We have told the company we believe this is an irresponsible and unworkable do***ent, as it represents nothing more than the wish-list of all of those in WHQ who would love to see our Agreement gutted. It was not costed when it was put together, and its development is unrelated to any overall economic goal which the company may believe is necessary for long-term viability. As we sit here today, we still have not received full costing numbers, nor have we received either any economic justification for a target number (which has not yet been provided) or the company’s view as to ALPA’s appropriate share of the burden. This makes the negotiation challenge formidable and without precedent within ALPA. [BR][BR]Therefore, I would ask you to try to view this for what it is – a “Christmas Tree†opener by United. Get angry, as we did, and then take a deep breath and recognize it for what it is. We are in the process of developing a response for review by the MEC. We think this is the best and most practical way to respond. Once the MEC has given direction, we will commence serious discussions with United, and we will, to the extent possible, keep you apprised of developments. In the interim, you can make your wishes known at your LEC meetings as to how you view various components of our Agreement in term of importance. [BR][BR]In the meantime, I cannot stress enough the continued importance of providing the level of service which has characterized United since we filed for bankruptcy. The challenges are real, and we must succeed in the marketplace while simultaneously doing all that we can to protect our Agreement and our profession. Thank you again for your support and your continued professionalism. [BR][BR]Fraternally, [BR][BR]Captain Paul Whiteford [BR][BR]Section 1113&copy; Proposal Term Sheet [BR][BR]ALPA [BR][BR]Objective [BR][BR]Restructure the current Agreement to enable the transformation of United consistent with the announced business plan. [BR][BR]Effective Date [BR][BR]The effective date of the new Agreement will be the first calendar day of the calendar month following the execution of the new collective bargaining agreement. <________, 2003> [BR][BR]Term [BR][BR][SIX years:____] [BR][BR]The amendable date of the new Agreement will be ______, 2009. [BR][BR]Revise the duration clause to provide: [BR][BR]“This Agreement shall become effective <________, 2003> and shall continue in full force and effect until <_______, 2009> and shall renew itself yearly without change unless written notice of intended change is served in accordance with Section 6, Title I of the Railway Labor Act, by either party at least thirty (30) but not more than sixty (60) days prior to <_______, 2009> or any year thereafter.†[BR][BR]Compensation Discuss methods of reaching cost saving objectives through compensation adjustments including: [BR][BR]· Eliminate the base hourly pay increases in Section 3-B scheduled for May 1, 2003 and May 1, 2004. [BR][BR]· Eliminate the international override payments incentive in Section 3-B-1-d. [BR][BR]· Eliminate the incentive pay for late night flying in Section 3-B-7-a. [BR][BR]· Revise the junior manning assignment override pay in Section 3-B-7-c to 10%. [BR][BR]· Revise base hourly pay rates in Section 3-B on the Effective Date by reducing it by 29%. [BR][BR]· The new reduced base hourly pay rates will be increased by 1.5% each year effective on the anniversary of the Effective Date until <_________, 2008>. [BR][BR]· Revise minimum monthly guarantee in Section 3-B-4-a from 75 hours to 60 hours. [BR][BR]Scope and Job Security [BR][BR]Discuss the following business flexibility enhancements that can be used in transforming United consistent with the business plan: [BR][BR]Low Cost Carrier Competitive Solution [BR][BR]Create a United Sub-brand that can be deployed in markets that are identified as “low cost†markets and in which there is an inability to segment fares; the result to be a product that is competitive with Frontier, Jet Blue, Southwest, ATA, etc. [BR][BR]Furlough Protection [BR][BR]Eliminate furlough protection for all pilots as currently provided in Section 1-H-1 to allow the workforce to seek its proper level over the short and long term consistent with the business plan. [BR][BR]Number of Regional Jets and their deployment [BR][BR]Eliminate the restrictions in Section 1 on (i) the number of Small Jets; (ii) the operation of Small Jets; (iii) the relationship of Small Jets to the mainline fleet and number of mainline pilots; (iv) code sharing with carriers who fly over 70 seat RJs; (v) other feeder carrier limitations to enable small jets to be deployed in the appropriate markets consistent with the business plan. [BR][BR]Size of Regional Jets [BR][BR]Revise Section 1-M-28 to seventy (70) seats in order to compete effectively in 70 seat markets consistent the business plan. [BR][BR]Number of Pilots [BR][BR]Eliminate Section 1-C-1-g minimum number of pilots related to SJs. Eliminate Section 1-H-2 absolute minimum number of pilots. Permit the number of pilots to be realized through the business plan. [BR][BR]Fleet Number [BR][BR]Eliminate
Section 1-H-3 absolute number of aircraft. Eliminate Section 1-B-4-a restricting carriers to whom aircraft may be sold. Permit the number and type of aircraft to be realized through the business plan. [BR][BR]Number of Block Hours [BR][BR]Eliminate Section 1-H-4 absolute minimum number of block hours. Eliminate Section 1-C-3 minimum number of international block hours. Permit the number of block hours to be realized through the business plan. [BR][BR]Domestic Code Share Limitations [BR][BR]Eliminate conditional language in Section 1-C-2-a and eliminate Sections 1-C-2-a (1), (2) and (3) and 1-C-2-b. Permit United to enter into domestic alliances as needed to respond to rapidly changing industry environment as indicated by the business plan. [BR][BR]International Code Share Limitations [BR][BR]Eliminate conditional language in Section 1-C-3 and eliminate Sections 1-C-3-a, b, c, d, and e; 1-C-5-a. Permit United to enter into international alliances as needed to respond to the rapidly changing industry as indicated by the business plan. [BR][BR]Route Transfer [BR][BR]Eliminate Section 1-B-4-b to enable route transfer as needed in the business plan. [BR][BR]Cargo [BR][BR]Eliminate Section 1-C-6 requiring Company to endeavor to ship all cargo on Company aircraft and preventing profit sharing on cargo with other carriers. Permit United to coordinate with other carriers to maximize revenue and respond to rapidly changing industry as indicated by the business plan. [BR][BR]Work Rules, Productivity and Efficiency Discuss the following work rule changes that can be used in transforming United consistent with the business plan: [BR][BR]Hours Maximums [BR][BR]Revise monthly, actual and scheduled flight time limitations in Section 5-B-1 and 5-B-2; and Letter 91-2, L.1 and L.2 from 81/85 to 92 in all cir***stances to permit more productivity. Eliminate bank provisions. [BR][BR]Duty Rig [BR][BR]Eliminate Section 5-G-3-a and related sections to remove scheduling restriction that penalizes certain IDs. [BR][BR]Trip Rig [BR][BR]Revise Section 5-G-3-c and related sections to provide ratio of 1:4.5 to reduce penalty on certain IDs. [BR][BR]Minimum Day [BR][BR]Eliminate Section 5-G-3-b and related sections to reduce penalty for certain IDs. [BR][BR]Days Off [BR][BR]Revise lineholders minimum days off to 10 days; revise reserves to 12 days of which 4 are moveable to increase productivity. [BR][BR]Atlantic Augmentation [BR][BR]Eliminate Letter 01-14 and modify Letter 91-2 to affirmatively state that augmentation is not required on Atlantic operations under 8 hours. [BR][BR]QWL Letter [BR][BR]Revise Letter 00-20 to provide “best efforts†to meet quality of life parameters. [BR][BR]Shuttle Letter Delete Letter 94-11. [BR][BR]Staffing Discuss the following changes that can be used in transforming United consistent with the business plan: [BR][BR]International Relief Pilot [BR][BR]Create International Relief Pilot (IRP) applicable to two man crew aircraft to provide cruise pilot as augmented crew. [BR][BR]Manpower Formula [BR][BR]Eliminate manpower formula in Section 8-B. This provision is linked to the elimination of the minimum pilot provisions in Section 1. [BR][BR]Training Expense [BR][BR]Apply a 36-month freeze to each position award. [BR][BR]Preferential Bidding Implement a preferential bidding system to replace line bidding as provided in Section 20. Amend/eliminate all provisions of the Agreement that are inconsistent with preferential bidding. Accordingly reduce the notice period for involuntary vacation leave from 45 days to 30 days. [BR][BR]Domicile Closing Eliminate domicile closure language from US code share letter of agreement and permit any base to be closed where closure is warranted from a business plan perspective. [BR][BR]Training Staffing Revise Section 1-B-3, Pilot Instructor Letter 98-1, 98-8, 89-2 to permit non-seniority list simulator instructors, sale of training center and greater flexibility in sale of simulator surplus time. [BR][BR]Benefits Discuss the following benefit changes that can be used in transforming United consistent with the business plan: [BR][BR]Pilot Defined Benefit Plan [BR][BR]Revise multiplier in the Pilot Defined Benefit Plan as provided in Exhibit A. [BR][BR]Pilot Directed Account [BR][BR]Eliminate Company contribution to Pilot Directed Account as provided in Letter 00-18, B-2. Retain pilots’ vested balances. [BR][BR]New 401(k) [BR][BR]Establish a 401(k) retirement account as set forth in Exhibit A. [BR][BR]Retiree Medical [BR][BR]The employee contribution to the cost of retiree medical for pre and post Medicare retiree medical benefits may be modified consistent with Exhibit __. [BR][BR]Retiree Life Insurance [BR][BR]Revise Letter 00-19 and all other provisions of the Agreement as necessary to provide retiree life insurance as provided in Exhibit A. [BR][BR]Medical/Dental Plan Equality [BR][BR]Revise Letter 00-19, A and C and other provisions of the Agreement as necessary to replace all current medical and dental plans with a uniform plan (or plans) to be available to all Company employees as set forth in Exhibit A. [BR][BR]Medical/Dental Plan Contribution [BR][BR]Revise Letter 00-19, A and C and other provisions of the Agreement as necessary to provide that all employees shall contribute to the cost of coverage for all company-sponsored medical, dental plans as set forth in Exhibit A. [BR][BR]When an employee chooses a Medical HMO or Dental HMO option (if available), if the cost of the HMO or DHMO exceeds the cost the PPO, the employee share of the cost for the HMO or DHMO shall be equal to the employee share of the cost of the PPO option plus 100% of the additional cost. [BR][BR]Flexible Spending Account [BR][BR]Current program of Health and Dependent Care Accounts, with maximum annual contribution of $5,000 per account. Forfeitures to be used for plan administration. [BR][BR]Active Employee Life Insurance and AD&D, LTD [BR][BR]Revise Agreement as necessary to provide consistent with Exhibit A: [BR][BR]Company paid Life Insurance: One times annual base pay (max $200,000). [BR][BR]Contributory Life Insurance: Up to eight times annual base pay. [BR][BR]AD&D: Company-paid (none). Offer contributory coverage on same basis as current plan. [BR][BR]Revise pilot long-term disability plan as provided in Exhibit A. [BR][BR]Per Diem [BR][BR]Revise hourly per diem expense allowance in Section 4-A to $1.50 domestic and $1.75 international. [BR][BR]Vacation Accrual [BR][BR]Revise Section 11 to provide maximum 35 days of vacation accrual and pay. [BR][BR]Vacation Overlap [BR][BR]Eliminate the vacation overlap pay provision in Section 11-C-1 by paying 2.6 hours per vacation day. [BR][BR]Layover Hotels [BR][BR]Revise Section 5-G-1-c to eliminate the “downtown or downtown-like†requirement for layovers equal to or greater than 13 hours and treat all layovers as field layovers. [BR][BR]First Class Deadhead [BR][BR]Revise Section 5-D-3 and 5-D-4 to eliminate booking pilots in first class on and off line. Revise corresponding international provisions in Section 2-B. [BR][BR]Paid Moves [BR][BR]Discuss reaching cost savings objectives through revision of Section 10-A to provide paid moves only when a pilot experiences an involuntary domicile transfer. Further, only provide paid move when pilot actually moves to his domicile. [BR][BR]Sick Leave [BR][BR]Revise Agreement to provide that sick leave accrual, sick leave pay and medical leaves of absence shall be as provided under “Short Term Disability/Sick leave†in Exhibit A. [BR][BR]Occupational Sick Leave [BR][BR]Eliminate all current provisions providing for occupational sick leave or injury leave and/or pay. Occupational injuries shall be treated as sickness and sick leave, and pay during such sick leave shall be available as provided under “Short Term Disability/Sick leave†in Exhibit A. [BR][BR]Furlough Pay [BR][BR]Revise Agreement as necessary to cap severance pay at a maximum of eight weeks. [BR][BR]Sick Leave Pay [BR][BR]Revise Section 13-A to provide that pilot will be paid only for the actual hours that are debited from the sick leave account. [BR][BR]Company-paid Union Time [BR][BR]Revise Letter of Agreement 91-30 dealing with Company-paid ALPA ID drops. [BR][BR]Force Majeure [BR][BR][TO discussed be] [BR][BR]Grievance Withdrawals [BR][BR]ALPA to withdraw specified grievances with prejudice. List to be provided. [BR][BR]Success Sharing Establish an appropriate success sharing program to ensure that employees parti****te in United’s successful transformation. [BR][BR]UNITED [BR][BR]D e c e m b e r 24, 2002 – [BR][BR]Capt. Paul Whiteford [BR]Chairman [BR]UAL MEC Office [BR]6400 Shafer Court, Suite 250 [BR]Rosemont, IL. 60018 [BR][BR]Dear Paul: [BR][BR]In our haste to prepare the 1113 proposals, we have realized we neglected to include our need to address the provisions in the Agreement that address such events such as change of control, certain investment activities, sale of assets, successorship, and the related issues that affect our ability to attract capital and to reorganize successfully. [BR][BR]Please be advised that we propose to discuss, modify, or eliminate, as necessary, the provisions below, and any related provisions: [BR][BR]Section 1-B through 1-G [BR]Section 1-I and 1-J [BR][BR]Yours sincerely, [BR] [BR]Peter B. Kainn [BR]Vice President - Labor Relations[BR][BR]EXHIBIT __[BR][BR]BENEFITS[BR][BR]I. Active Employees [BR][BR]A. Medical[BR][BR]Preferred Provider Option (PPO) In-Network $250 single/$500 family deductible80/20 coinsurance$1,250 single $2,500 family out-of-pocket limitInpatient mental health and substance abuse treatment limited to 30 days per calendar year per person, out patient limited to 30 visits per calendar year per person. Out-Patient physical therapy, speech therapy, chiropractic and similar therapy treatments limited to $2,000 per person per calendar year.Unlimited lifetime maximum Out-of-Network (deductibles and out of pocket limits are in addition to the In-Network amounts) $150 single/$300 family deductible 60/40 coinsurance $1,000 single $2,000 family out-of-pocket limit overed expenses limited by reasonable and customaryInpatient mental health and substance abuse treatment limited to 15 days per calendar year per person, out patient limited to 15 visits per calendar year per person (not in addition to in-network)Out-Patient physical therapy, speech therapy, chiropractic and similar therapy treatments limited to $1,000 per person per calendar year (not in addition to in-network benefit)$500,000 lifetime maximum Covered expenses would include necessary care and treatment of illness, injury, and pregnancy as well as expenses for certain preventive care, e.g., pap smears, PSA tests and certain routine physicals. The PPO Incentive check, coverage for hearing aids, and coverage for FAA physicals will be discontinued. Retail and mail order prescription drugs employee co-payment 10% (minimum charge of $5) of cost for generics and 30% (minimum charge of $10) for brand medication. Deductible of $50 per person $100 per family and out-of-pocket limit of $300 per person and $600 per family per calendar year. Mandatory use of mail order program after a prescription has been filled 3 times at retail. Strong management to ensure consistency with medical necessity and generally accepted practice. Maintenance of Benefits for employees with other group coverage rather than Coordination of Benefits. Full right of reimbursement Cover children to age 19 and to age 23 if full-time student. Employee contribution for full-time employees would equal 20% of the cost of the plan. Employee contributions for part-time employees would equal 20% of the cost of the plan for single coverage and 50% of the cost of the plan for dependents. Offer HMO options as appropriate. Employee contribution for full-time employees will be 20% of the cost of the HMO option up to the cost of the PPO option plus 100% of the excess, if any. Employee contribution for part-time employees will be 20% of the cost of the HMO option for single coverage and 50% of the cost of the HMO option for dependents up to the cost of the PPO option plus 100% of the excess, if any. [BR][BR]B. Dental[BR][BR]Provide current PPO dental plan Deductible $50 per person $100 per family (doesn’t apply to preventive)100% Preventive80% Restorative50% major and orthodontiaAnnual non-orthodontia max - $2,000 Lifetime orthodontia max $2,000 Maintenance of Benefits for employees with other group coverage rather than Coordination of Benefits. Cover children to age 19 and to age 23 if full-time student. Employee contribution for full-time employees would equal 20% of the cost of the plan. Employee contributions for part-time employees would equal 20% of the cost of the plan for single coverage and 50% of the cost of the plan for dependents. Offer Dental Health Maintenance Organization (DHMO) coverage. Employee contribution for full-time employees will be 20% of the cost of the DHMO option up to the cost of the PPO option plus 100% of the excess, if any. Employee contribution for part-time employees will be 20% of the cost of the DHMO option for single coverage and 50% of the cost of the DHMO option for dependents up to the cost of the PPO option plus 100% of the excess, if any. [BR][BR]C. Flexible Spending Account[BR][BR]Current program of Health and Dependent Day Care Accounts with maximum annual contributions of $5,000 per account. Forfeitures to be retained by the Company and used to reduce the cost of the administration of the benefit plans. [BR][BR]D. LIFE INSURANCE Company paid: 1 times base pay with maximum of $200,000.Contributory: up to 8 times pay through Group Universal Life [BR][BR]E. Accidental Death and Dismemberment[BR][BR]Company paid: None.Offer contributory coverage on same basis as current plan. [BR][BR]F. Short Term Disability/Sick Leave[BR][BR]Retain sick leave accrual concept. After 6 months of service, accrue one day per month of employment to a maximum of 125 workdays (equivalent for flight groups). Bank to be used for both non-occupational and occupational absences. The benefit is 100% of base salary reduced by any state disability benefit or workers’ compensation amounts. If the employee is eligible for but has not claimed state disability benefits, no sick leave is payable. (Loss of time benefit, management supplemental sick leave, and pilot short-term disability benefits are terminated.) [BR][BR]G. Long Term Disability[BR][BR]To be determined. [BR][BR]H. Illness Leave of Absence[BR][BR]Maximum period of unpaid illness leave of absence 3 years, medical and dental benefits continue while on approved leave.[BR][BR]I. DEFINED BENEFIT PENSION PLAN 1.3% times final average pay (5) times years of parti****tion to a maximum of 30 years. Early retirement reduced 3% per year from age 62 (60 for pilots). Traditional optional forms of payment with no lump sum distributions. [BR][BR]J. Defined Contribution Pension[BR][BR]Beginning in 2004 the Company matches 50% of the employee contribution to a maximum employee contribution of 4%. [BR][BR]K. VACATION[BR][BR]Modify the accrual schedule to the following: Completed Years of Service Weeks of Vacation [BR][BR]1 through 4 - 2 [BR][BR]5 through 9 - 3 [BR][BR]10 though 19 - 4 [BR][BR]20 and over - 5 [BR][BR]II. Retired Employees [BR][BR]A. Retiree Medical[BR][BR]Pre Medicare [BR][BR]Provide the same PPO option as active employees. Employee must be at least age 55 (50 pilots) with at least 10 years of service and retire from active status or illness leave of absence. Employee contribution based on length of service at retirement as follows: PPO Option Years of Service % of Cost [BR][BR]10 to 20 100% [BR]20 to 25 75% [BR]25 and over 50% [BR][BR]Post-Medicare Employee must be at least age 55 (50 pilots) with at least 10 years of service and retire from active status or illness leave of absence. One or more supplemental plans to Medicare will be offered with the retiree paying the full cost of the coverage. [BR][BR]B. RETIREE LIFE Employees must be at least age 55 (50 pilots) with at least 10 years of service and retire from active status or illness leave of absence. The benefit is $10,000
 
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