In the Matter of the Arbitration Between:

____________________________

TRANSPORT WORKERS UNION OF AMERICA, LOCAL 545

AND

TRANSPORT WORKERS UNION OF AMERICA, LOCAL 542

____________________________

Hearing Held October 30, 2006
Before Robert B. Harris, Esq.1

Appearances:

For the Local 542:
Regina C. Hertzig Esq.

For the Local 545:
Steven K. Hoffman Esq.
Katie B. Feiock Esq.

OPINION
Facts
This proceeding arises by agreement of Locals 542 and 545 of the TWU to
resolve the question of how the respective seniority lists of Flight Dispatchers of
U. S. Airways, Inc. and America West Airlines, Inc. are to be combined so as to
result in a “fair and equitable” merged list.2 The so-called Allegheny-Mohawk labor protective provisions have been incorporated in both locals’ collective
bargaining agreements3. The America West (hereinafter “AWA”, occasionally)
workforce is composed of 37 active Dispatchers whose employment conditions
were established under a collective bargaining agreement between Local 542 of
the Transport Workers Union of America and America West. The U.S. Airways
(“Airways”) workforce consists of 130 active Dispatchers operating under a
contract between that company and TWU Local 545.4 As will be discussed in
further detail below, the merged workforce will operate under the U.S.
Airways/Local 545 collective bargaining agreement.

The Respective Proposals5
Locals 542 and 545 (also “West” and “East,” respectively, for ease of
reference) present dramatically differing versions of a merged seniority list. West
contends that, but for AWA’s having merged with U.S. Airways and thereby
bringing a host of new investors, Airways could not have survived. In furtherance
of its argument that Airways would have been liquidated, with a consequent loss
of all bargaining unit jobs, West proposes an algorithm6 that results, generally,
in West Dispatchers being slotted in after every third or fourth east Employee. 7
East, for its part, says a straight date of hire methodology is fair, equitable
and appropriate under the circumstances.

Standard of Integration
It is surely true, as West argues, both that this case requires a
determination of “fair and equitable”, under the circumstances, and that
“dovetailing” (the shorthand employed in this case for integration by date of hire)
is not always fair and equitable.8 In this case, however, the record reflects a
history (1) of two carriers whose merger worked to the relative advantage of each,
and (2) of respective bargaining unit members, both of whose employment
situations were bettered by the combination. If, on the one hand, Airways
Dispatchers were the beneficiaries of new life in general, it is also true that the
AWA inherited a labor agreement that treats them better; in many cases,
substantially so. Without question, a date of hire approach will, as noted below,
operate to the disbenefit of West workers. In part, however, that is the natural
result of the fact the East unit is manifestly more senior. And, adoption of the
West algorithm results in a marked windfall for West employees, featuring
seniority advances that are nowhere justified by the record in this case. 9

The Financial Picture
From the evidence, it is clear enough that the merger with AWA was a
meaningful factor in U.S. Airway’s emergence from bankruptcy. Together, the
two companies were able to attract investments that, operating alone, they might
not have secured. However, West’s claim that U.S. Airways emerged from
bankruptcy “only because it [was] acquired by a stronger enterprise”10 is reflected
neither in the KPMG audit report (cited by West)11 nor in any other portion of the
evidence. Instead, each carrier had something to contribute. Airways, for
example, was much larger. It served almost twice as many destinations as AWA
and carried twice the number of passengers.12 Airways has substantially more
cash on hand, following the merger agreement. AWA, for its part, brought
relative success as a low cost carrier operation with a meaningful presence in the
Western United States.
Airways’ “fresh start”13 included a series of steps designed to strengthen
Airways’ financial situation. Among other things, it entered into concessionary
bargaining with its unions, ultimately securing some $1 billion dollars per year in
cost reductions. 14 Termination of certain existing defined benefit and other post-
retirement benefit plans generated substantial savings.15 A 35 percent decrease
in labor cost16 taken together with other cost saving measures, resulted in a
positive net operating income for the second and third quarters of 2005, prior to
approval of the merger agreement in September of 2005. 17 AWA, for its part,
while not in bankruptcy, was attempting to confront what it regarded as a
troubled and potentially perilous future, absent the merger, in the face of rising
fuel costs and depressed unit revenues as a result of over capacity, among other
things. It, too, needed cash.
West characterizes the merger decision on AWA’s part as a one-way
economic bailout. But there is no support for this in the record; surely, the
respective companies did not endorse that view. AWA concluded, according to
the statements of its CEO, that “…when we looked out at our future, what we saw
wasn’t good…. Assuming we couldn’t go out and restructure or raise cash, it is
possible that AWA would have been facing its own Chapter 11 at some point.
Employees may like to think we “saved” US but the fact is we saved each other…18
The June 10, 2005 issue of “Plane Deal”, an AWA publication, touted some
of the benefits of joining fleet forces:
When merged, the combined airline will become the nation’s 5th larges
airline, as measured by domestic available seat miles (ASMs). The
combined airline is expected to operated a mainline fleet of 361 planes
(supported by 239 regional jets and 57 turbo props for feed into the
mainline system), down from a total of 419 mainline aircraft operated by
both airlines at the beginning of 2005….19

In the context of a “Town Hall” Q&A , the company noted
the prospect of a combined airline was more enticing to investors:
The money is being raised for the combined airline, because investors see
the value in the merged entity. Frankly, airlines in their current state don’t
look appealing to investors, who are savvy to know industry change needs
to take place. The proposed merger represents the kind of change that
investors believe will be successful. So, unfortunately, we wouldn’t garner
this kind of interest if we were seeking funding for America West “as is.”20

Much of West’s claimed superiority over East, in terms of what it brought
to the merger, is speculative. There is, for example, scant support for West’s
claim that, post-merger, “the focus of lender anxiety is clearly on the side of U.S.
Airways”21 or that, following the merger, with the AWA CEO assuming the helm
in Phoenix, “the predator king gets to have the top job, to grant fiefs to his
chieftains, and to fly the flag over his castle!”22 Rather, what appears from the
evidence is that, post-merger, the companies adopted a mixed management team
and that, significantly, they adopted the US Airways collective bargaining
agreement as applicable to the combined TWU force. Thus, setting aside the
respective claims of who came with what, the hard evidence as to what was
achieved shows significant parity as between carriers, each of which contributed
complementary elements to a combined operation.
Most meaningful are the gains realized by West Dispatchers when
operating under the US Airways labor agreement. It is, by most measures, the
more generous document of the two. According to the record, AWA Dispatchers,
prior to the merger, were the lowest paid among major carriers and worked the
greatest number of annual hours.23 Following implementation of a transition
agreement, work hours for AWA Dispatchers will be cut by 133 hours per year.
Work days will be reduced from 10 to 8 hours.24 The East contract includes a
profit sharing plan in addition to the 401(K) profit sharing; the West agreement
has none. Wage rates under the U.S. Airways cba are more generous; AWA
Dispatchers will reach top of scale in eleven years instead of fifteen and will enjoy
wage gains ranging from 16% to 52%.25 On the average, AWA Dispatchers will
gain a 36% salary increase.26
Additionally, the Airways contract incorporates special “Planning Unit”
positions that provide salary overrides of up to $300 per month. Significantly,
these positions, which were not part of the AWA bargaining unit, may, after three
years Dispatcher experience, be bid on without regard to seniority.27 There are
other contract elements, including bidding schedules and sick leave banks
(accumulating 150 days that can be paid out upon leaving employment,
contrasted with AWA’s 40 day maximum, with no pay out) that add to the overall
attractiveness of AWA employees’ new contract situation. The West claim that
similar gains might have been realized in renegotiating the AWA contract is
speculative and ultimately unconvincing.
Finally, one must consider, in terms of fairness and equity, the resulting
shape and impact of the merged seniority list. The equities, in this regard, favor
the East group. As indicated earlier, the U.S. Airways Dispatchers are
considerably more senior then their West counterparts. The arithmetic
placement proposed by Local 542 would devitalize the existing Airways seniority
list by granting substantial, and in some cases monumental seniority leaps that
cannot be justified by the record in this case. For example, senior-most AWA
Dispatcher Brenda Cozzen has an A.D. (occupational) date of January 1985. By
the West proposal, she would be slotted directly above an East employee with
almost six years greater seniority. This pattern is repeated down through
position #81, where Dispatcher Lopez would gain more than ten years’ advantage
over his counterpart, and so it continues through to the end of the list, with West
employees receiving twelve, thirteen and fourteen year advantages. 28 As the
East notes, 29 the junior-most West employee did not begin work as an AWA
Dispatcher until November of 2005, after both execution and approval of the
merger agreement.
There are other equity considerations. According to the evidence, West
Dispatchers were, under their previous agreement, accorded seniority as of their
Occupational Dates rather then their date of hire into the class or craft. However,
under the Airways contract, and under East’s integration proposal, they will
receive dates consistent with their date of hire into the class or craft. As such, the
first nineteen workers on the AWA seniority list will receive more seniority than
they had pre-merger, in some cases as much as thirteen years. 30
In summary, based on these findings, the conclusion is that fairness and
equity in this case militates strongly toward a date of hire list. On the one hand,
this outcome may consign certain West employees to furlough and will, of course,
make them more vulnerable, based on their relative seniority, to later
displacements. But that is, after all, the essence of length-of-tenure based
seniority, which, in this particular case, heavily favors the older U.S. Airways
work force.
That the date of hire approach has been adopted by other unionized
groups in both companies is, in and of itself, by no means dispositive ; the facts
and relative equities of each of the affected groups ultimately are what will
determine a given outcome. In this case, those elements favor the East group, for
the reasons set forth above. Accordingly, the finding is that the date of hire
method is more fair and equitable and it is hereby awarded.