FROM THE CAL MEC CHAIRMAN
01-06-12(Friday)
I want to start by thanking the hundreds of pilots who have taken the time to call, email or text me with their favorable comments regarding our success in achieving profit sharing for the Continental pilots for FY2011. It is good to end the year on a positive note for the CAL pilots. My only regret is that we were unable to reach agreement on the terms of a Transition and Process Agreement (TPA) extension before the end of the year as well. How we ended the year without that being accomplished is one of the things I want to address in this blastmail. Another is our relationship with the UAL pilots.

In last week’s Position Report, we discussed that certain provisions of the TPA could be terminated at the Company’s discretion any time after Dec. 31, 2011. The CAL MEC’s goal was to extend the TPA in its entirety, if possible, and to further extend our contractual right to profit sharing. As you all know, profit sharing was obtained through Contract ’02 for the years 2005 through 2009. The TPA contained a provision to extend that through 2010. As you enter any discussion of this kind, it is important to evaluate and be cognizant of the strong components of your argument and also the weak. It is simply part of fundamental negotiating strategy. In that light, we were aware that management was forecasting domicile and base changes that would require that they terminate the domicile and base protection provisions of the TPA, in whole or in part. Management was also acutely aware that we desired to participate in 2011 profit sharing, just as the UAL pilots are. With all of this being considered, and understanding that this would be a tri-party discussion (with us, the UAL MEC and management participating), the negotiations were complicated. This was compounded further as we were advised that, according to the Profit Sharing Plan Document, if the CAL pilots were to be included in profit sharing for FY2011, the decision had to be made in 2011.

In an email sent on Dec. 9, I contacted the UAL MEC leadership (Capts. Morse and Heppner), suggesting that we work jointly towards an agreement to extend the TPA, along with our Contract ’02-negotiated profit sharing. The following Tuesday, I flew to ORD to meet with the UAL MEC the next day. Upon landing Tuesday evening, the UAL MEC leadership asked me to come to the UAL MEC offices to talk about strategies for the TPA extension discussions. In that meeting, we agreed to a basic plan that would extend the TPA, include the CAL pilots in profit sharing and hopefully provide a path to a more prompt resolution of the JCBA. It was an aggressive plan, but one that I thought would serve as a good starting point for these discussions.

The next day, I met with the UAL MEC as planned, albeit the topic I had expected to discuss (the plan formulated the night before) had shifted significantly. Instead of talking about a plan that would provide value to all 12,000 pilots, they appeared more concerned with whether CAL pilots were getting “more” through potential profit sharing than UAL pilots were getting through the extension of the TPA and about what to tell their pilots should we participate in profit sharing. They placed little or no value on the extension of furlough protection for UAL pilots or the block hour ratio protections for UAL flying. They did not appear to accept the reality that management had a right to terminate the domicile and base protections and that we should be prepared to jointly develop an alternate plan, should management refuse to extend those provisions. It was suggested that I was “defeatist” for entertaining such an idea. And while it was suggested by one representative that the UAL and the CAL pilot groups should both forgo profit sharing, to show unity towards getting a complete extension of the TPA, there were no takers. You could have a heard a pin drop in the room.

The meeting ended with me reaffirming our MEC’s intention to work with the UAL MEC leadership to extend the TPA, to the best of our ability, and restating the CAL MEC goal of achieving participation in 2011 profit sharing, either through the TPA extension process or other means, if necessary. The UAL MEC (not unanimously) asked (and I agreed) that I relay to the CAL MEC that they would like us to forgo profit sharing participation, in a show of unity with the UAL pilots, should we not be able to reach agreement on a TPA extension that included all the terminable provisions. The following day, I learned that the UAL MEC had added another caveat to the proposal after I left: As part of the TPA extension discussions, they insisted that the UAL pilots receive wage rate parity with CAL pilots.

I advised our MEC of the UAL MEC’s message and additions on an informal conference call the following Saturday. (Our policy manual restricts business from being conducted via conference call, so this was an informational call only.) At the end of the call, it was my understanding that the CAL MEC’s position had not changed; i.e., we would try to work with the UAL MEC and reach an extension of the TPA, in whole or in part. However, if that failed, I was instructed to seek other ways to achieve participation in the profit sharing plan for CAL pilots. I advised Capts. Morse and Heppner that we should move forward with the TPA extension talks, telling them that should their all-or-nothing approach be unsuccessful, we would explore other options. I was very clear with them on this point from the start.

To make a very long and complicated story short, we then set about a course that included meetings with management and conference calls, followed by more meetings and conference calls. Unfortunately, we were never really able to discuss most of the substantive issues of the TPA extension because the talks centered on the UAL pilots’ requirement that they receive monetary value equal to CAL pilots’ participation in profit sharing. Given that management characterized this later as United pilots receiving “… twice the profit sharing as all other employees, including fellow pilots at Continental…” it is not unsurprising that the talks were unproductive.

This lasted throughout the Christmas holiday and into the last week of the year. As late as Christmas Eve, I learned that Capt. Morse was active with calls to management, threatening to make status quo legal claims if the CAL pilots received profit sharing.

On Dec. 28, following a conference call with management, Capt. Morse and I received an email from management with a proposal and their insistence that we reply by close of business the next day. It was clearly evident that this was their last offer. Regardless (and despite me informing her that the CAL MEC could not support it), Capt. Morse sent another proposal on Dec. 29 that once again included a monetary amount for the UAL pilots that was equivalent to the amount the CAL pilots would achieve in profit sharing, along with a new provision dealing with base openings (one that our SMEs were not comfortable with). As I had suspected and had advised Capt. Morse would likely occur, management terminated the discussions approximately one hour following their receipt of her unilateral proposal.

Later that day, management reached out to me and suggested that we revisit talks related to settlement of the B-767-200 aircraft sale grievance that had broken down in late summer. Even back then, profit sharing was on our minds and was part of those initial settlement discussions. The next day, the last business day of 2011, we were able to reach agreement on the deal to secure profit sharing I outlined for you last week.

It is unfortunate that the UAL MEC and their leadership were left with nothing to show for their efforts, but I make no apologies for achieving profit sharing for the CAL pilots once it was clear that any extension of the TPA terminable provisions was unachievable by year-end 2011. It is easy to second guess strategies and hindsight is always 20-20, but the truth is that when you take an all-or-nothing stance, sometimes you end up with nothing. That is what the UAL leadership gambled with. They went all in with a pair of twos and seemed shocked that management called their bluff. Now they are left with the difficult position of having to explain to their pilots why they failed. Even more unfortunate, rather than taking responsibility for their decisions, strategies and actions, they instead cast blame in my direction and on our MEC. I cannot help but think back to Capt. Morse’s own words in her October video describing the UAL MEC to the UAL pilots, "The current MEC is renowned throughout the world for its vicious and self-destructive behavior."

There are those who think that our MECs’ ability to work together or our pilots’ unity has been compromised over our grievance settlement and resultant inclusion in the 2011 profit sharing plan. I do not think that our unity with the UAL pilot group is so fragile that the continued inclusion of CAL pilots in the very same profit sharing plan they participate in will fracture it. We continue to have common goals and common interests. We will continue to work together to provide benefit for all 12,000 pilots through the JCBA, as well as with joint committee efforts on a host of other issues that affect our pilots at both legacy carriers.

One of these most recent efforts involves scope. With Capt. Heppner’s consensus, our CAL and UAL MEC scope experts are working together to develop a plan of action for when the Company goes to single coding later this quarter. We have been working this project separately for some time now and have developed a good amount of data. I believe a joint effort will only serve to benefit all our pilots. Thus, our Alliance Committee and members of the UAL Scope Committee and Grievance Committee conducted their first joint meeting this week. In addition to this new joint effort, the JNC remains actively engaged in contract negotiations. The only disunity at that table is between the JNC and management. In other areas such as SPSC, R&I, CIRP, Safety, Professional Standards and others, our MEC committees remain focused on jointly improving the lives of all 12,000 pilots.

That is not to say that there are not members of the UAL MEC who are upset that we were not able to extend the TPA and were thus granted no option but to achieve our goal for profit sharing by settling the B-767-200 aircraft sale grievance. On the UAL side, I suspect that untruthful communications from their outgoing leadership and one or two of their local councils may have a lot to do with UAL pilots’ angst. My intent with today’s message is not to participate in an email or communications battle with those who revise history to suit their purposes, but to provide a different perspective and additional context for discussion. Rarely if ever is there only one side to any story. I am again reminded of Capt. Morse’s October message and her statement regarding the motivations of some of the UAL MEC, "Some of our councils act responsibly… others on the MEC have expressed outright contempt for the collective and have stated their objective is to destroy the Association." Please keep this in mind should you see some of the more heated and inflammatory communication that is going around.

I am hopeful that the new UAL MEC Chairman, Capt. Jay Heppner, will be able to put a stop to this destructive behavior and I stand ready to continue our efforts to build upon the unity between our two MECs and our two pilot groups. However, it is a political reality that accusations not answered become believed to be truths and perception becomes reality. It is also true that in order for untruths to prosper, those who know the truth must remain silent. It would be irresponsible of me to let lies become truth due to a lack of response. I am confident that Capt. Heppner can overcome the political pressure he must be facing and will tell the UAL pilot group the truth. The plain facts are that given the course of events with the TPA discussions, the goals of the UAL MEC and the goals of your CAL MEC, one of the two pilot groups was going to be deeply disappointed. We had hoped to achieve all, but when TPA talks that would provide benefit to both groups dissolved without resolution, I was left with only one path remaining: to serve the Continental pilots whom I represent. Last, do not forget that we have faced and resolved other disagreements between our two pilot groups, some significant. We have and will continue to work together on a JCBA and in all areas where we have common interests. It is my sincere hope and fervent belief that with Capt. Heppner’s help, we will be able to put an end to what Capt. Morse described in October as a UAL MEC where “politics were placed before the pilots."

Have a good weekend and Fly Safe.