C20 / DTW UPDATE August 19th, 2016
First of all, Thank You very much for your patience during this very busy period. We appreciate it and continue to hear you even if we haven’t responded promptly, or at all in some cases, to your input. Please continue to patiently provide it. We haven’t seen this level of activity and involvement since the TA last year. Contacting more than one of us will also help in getting a timelier response since we all fly on different schedules. Texts and phone calls will likely get the quickest response. Please use those methods if you need a quicker response or have a time critical issue.
Negotiations Update.
The MEC just finished its second special meeting in as many months last week, which was dedicated to refining direction to the Negotiating Committee. Emphasis Items:
Despite record profitability, billions being returned to investors, including the arguably dubious stock buy backs, pilot agreements at our peer airlines (including UPS) that surpass us significantly, and being the only remaining employee group not to regain pre-bankruptcy levels of non-inflation adjusted compensation and contract value from more than 12 years ago, the Company has not moved significantly above their early July pay and compensation offer Negotiator's Notepad 16-07. That offer included:
o A 4-year deal with pay raises starting at Date of Signing (DOS) of 15.5% (1% above the weighted average of UAL’s pay banded rates that actually has a maximum differential of 19%), followed by three 3% annual raises.
o Profit Sharing (PS) changes that were conservatively equivalent to a 4- 6% W2 value through retaining the changes to the PTIX formula from TA1 that would award management stock (recently voted by the Company BOD to be reallocated at likely increased levels) essentially “off the top” thus reducing PS as well as removing the DC contributions from the PS (similar to UAL but certainly very “tone deaf” when the pilot group has increased concerns and expectations about improving what are already completely insufficient retirement parameters, especially for many older pilots).
o Minor pay / no credit vacation improvements
o Not mentioned in the proposal is that they also remain fixated on a couple of very unpopular issues (Profit Sharing changes and more big RJs), as well as refusing to include a few relatively low cost positive items from last year’s TA, apparently for no other reason than to just say they excluded something positive from last year’s deal (per diem on a backside rotation deviation, removing the disability cap for alcoholism and mental health, premium pay for a reserve spill trip into a regular month, to name a couple).
o It was (still is) a very underwhelming proposal, especially considering that after including the PS offsets it was only worth approximately in the 10-11% DOS pay increase range.
o The MEC CH and Negotiating Committee stated that they will be updating the pilot group soon about the Co’s most recent overall position.
NMB “Timeout”. The NMB suspended negotiations for three weeks due to lack of progress from both sides (contrary to some of the hand-wringing that is was all ALPA’s fault). An NMB “Status Conference” is scheduled on August 26 to determine if both sides have enough latitude to continue negotiations. See the August 5th Chairman's Letter.
- Our recent meetings have focused on negotiating direction that both needs to meet significantly increasing pilot expectations (emphasis on polling with strong consideration on individual pilot contact relative to items where reaching conclusions are more difficult via polling) and allow for continued progress during our NMB mediated negotiations. We believe that we have provided more than sufficient latitude to the Negotiating Committee. More details on this later. We’ll also discuss some of the recent MEC conflicts and some “over the top” LEC communications after the more significant items.
- “Routes” to an Agreement. We believe that there are two primary routes to reaching an agreement, which overlap in many areas; continue to the endgame (proffer of arbitration, release to engage in “self-help”) of the NMB process (longer timeline) or to reach an agreement prior. Reaching an agreement prior means that the Company needs to be motivated to do so in some way. Contrary to some of the PR, superficialities, and platitudes about our value, they are unlikely to follow that up with the necessary substance just because they say nice thigs about us. Getting things that they want are likely more motivational than altruism.
Productivity. (Note that the items discussed below are from ALPA’s re- engagement proposal from last fall and based upon pilot input. The order discussed is not necessarily indicative of negotiating prioritization).
o The Company’s primary difficulties revolve around staffing, especially as attrition picks up over the next several years. Note that Sick Leave is also a staffing issue.
o Their “planning” has already led to some significant shortfalls in the past year. It’s certainly not the pilot group’s fault but it does provide an avenue to reach the pay and compensation aspirations that have been emphasized.
o The pilot group has also expressed a strong desire to improve our bottom of the industry vacation parameters. Vacation is a significant driver of increased staffing requirements.
o Since “Quality of Life” (QoL) issues are also important, the MEC, MEC CH, and the Negotiating Committee have worked to make these productivity enhancements mostly voluntary. This is certainly not going to be an “even trade”, “zero sum” effort; we expect much more value in return. When negotiations began in 2014 (prior to TA1) we agreed to address the Company’s issues first with the explicit expectation that when they agreed to discuss pay and compensation issues at the very end, it would be a sufficient proposal. Clearly the less than 9% increase, net of the Profit Sharing (PS) changes, as of the amendable date was not.
o As we began the current round of negotiations earlier this year we started heading down the same path. This led to an animated debate about whether to insist that the Company produce a pay proposal prior to addressing any more of their items. We agreed to press on through final direction on Sick Leave (which was the first significant AIP), but that we’d need a Co pay proposal to continue after that. See above.