What are "prevailing equities"
 

In the hearings in D.C., Mr. Bloch made two important points on what the arbitrators thought was important when creating a list.

"The first, of course, is to create a list that recognizes the prevailing equities of the new relationship, some points on that, just a small digression. Numerous witnesses have alluded to the fact that this is a conglomeration of equals. You differ as to how equal, but I think Dr.Campbell was essentially correct in speaking of this being a merger and not some sort of an acquisition. I don't hear any serious argument from either side that one company is the savior of the other in this. And secondly, there is no doubt that you -- and I know that we -- will not cure the inequities, real or perceived, of the past, nor can we isolate or insulate anyone against the vagaries of the future. Talk about career expectations in this industry is a little like dreaming about income expectations and investment opportunities at a roulette table."

So, what's a current prevailing equity? Because it appears that prevailing equities brought to the merger will dominate the decision. Not future expectations or perceived inequities of the past.

If you edited some of the muttering and digression his statement boils down to this.

The first, of course, is to create a list that recognizes the prevailing equities of the new relationship. And secondly we will not cure the inequities, real or perceived, of the past, nor can we isolate or insulate anyone against the vagaries of the future. Talk about career expectations in this industry is a little like dreaming about income expectations and investment opportunities at a roulette table.

You've zoned in on one of the very important points, in my view. My interpretation of Bloch's use of the term "prevailing equities of the new relationship" is a reiteration of his comment that the arbitration board essentially agrees that neither airline is saving the other, and they view this as a merger of equals. Using the term "prevailing equitites of the new relationship" is shorthand for the board's overall view of the two companies and what they brought to the merger.

A bigger question for me is; why would he have said it? I have a strong suspicion as to why, but it's obviously only my opinon.

The comment of not being able to cure the inequities of the past is rather obvious. The comment of not being able to isolate or insulate anyone against the vagaries of the future means (I think) that they are going to use the tried and true method of taking a snapshot at some point (constructive notice, corporate closure, end of firm aircraft orders, etc.) and construct a list.

The only other question is, will they use the computer programs we've provided them to move the list forward into the future to see how the list will look down the road.

Carl

Carl,
Using a computer program to see how the list will look down the road sounds a lot like "isolating or insulating against the vagaries of the future."

And Carl we all what Yogi thinks about that. :)

Scoop

With one exception: Attrition is not a vagary, it's a statistical certainty. The NWA/REP arbitration used the attrition "look ahead" to decide how long the fences should be. With Bloch saying they hoped to craft a list that the pilots could live with now and in the future, it leads me to believe they will look at the attrition equation in any proposal they are contemplating.

Carl

But is garanteeing future advancement based on that attrition a statistical certainty, within the context of this merger? I don't believe he set any priorities as to which basis for future expectations is more valid or more vague. The "now and in the future" comment is pretty general, unobjectionable platitude, I doubt he gave a little "wink" ;)to the NW side when he said it.

I kind of home'd in on the quote about not solving the inequities of the past. I suspect he is talking about the Red/Green issue. (If not then what?) If that is correct then it could be a blow to a DOH list. Just thinking out loud........probably shouldn't do that!!!!!:D

Not to change the subject, but has any one looked at the seniority list put out on a website called isoprepanalysis dot com? Looks like a straight ratio.

My understanding of the term "Prevailing Equities" concerns the status quo on what the value of a specific DOH brings to each pilot on each list. I have a lot of friends at NWA. Some hired before and some after me. Even those hired several years ahead of me fly lower paying equipment and don't enjoy the quality of life that I do. One of them the other day asked if I ever fly when I commented on how I never see him. (Yes, I do like 9 to 10 day a month schedules!)

A modest fence on a ratioed list should allow the NWA pilots to enjoy the temporary bump in their attrition. Down the road, more DAL pilots retire than NWA pilots.

15 to 20 years down the road....

--But just as "statistically certain" therefore, real, -as NW's 5-10 years down the road.

Well one statisical certainty will be the number of Northwest pilots who retire prior to DCC to go out under the old medical plan. For months we have been hearing that the number could be up to 1000 pilots. And if the SLI was finished prior to DCC that myth might have carried weight on the arbitrators decision.
I guess we can assume that if guys were going to go early they had their chance and the rest are in it for the long haul. I don't remember if this issue came up during the hearings but it is now irrelevant - we have a small number of guys that retired and that is now a fact.
BTW - do any NW guys know the actual number?

Scoop

I don't know the actual numbers, but I know a number of guys were caught off guard. Now they're probably in until 60 so they don't have to pay $2,000 per month for medical premiums.

It didn't come up on our side. We simply displayed the blue/red chart that moved forward in one year increments based on a statistical 62.4 age of attrition.

Carl

Not really, 75% of our list will be gone. They don't see it as real.

On average NWA pilots are only a couple of years older than DAL pilots, so about 75% of Delta pilots should be gone also.

Regardless, future attrition has never played a part in seniority list integration under ALPA policy with the exception of a modest fence with AAA/AWA, where the age disparity was significantly larger than in this case, so I'm not at all surprised that Mr. Bloch has suggested that it wont play a role in this integration either. The emphasis will most likely be on the prevailing equities, which are the current and dominant equities, with little consideration of what's happened in the past or career expectations at the old Delta or the old NWA. This strongly suggests some form of ratio of current and comparable positions brought to the "new venture."

The two groups are not even close to equal in age.

I for one hope for an arbitrated decision. We could not possibly do worse than what was offered to us by DALPA.

Future attrition models played a part in both mergers that I was personally involved in. It's what was used to determine how long the fences would be for the DOH list at NWA/REP. Where's your data to support your thesis of "never" playing a part in an SLI?

I'll bet Mr. Bloch would be surprised at how you've characterized his statements. Where do you claim Mr. Bloch "suggested" this? Or are you one of those who thinks the retirement age is a "vagary" of the future?

Carl

At our last LEC meeting our negotiators said that NWA had nearly 200 guys over the age of 60 already on the list (most on some type of sick/disability with the rest being SO's). When those positions were taken out, the difference in both median and average age was less than 2 years. Even with those over 60's included it was about 2 years. FWIW

The "incredible" 1000 attrition a couple of days ago probably narrowed the difference a little more.:D

That is a good argument for DOH, thanks.

The 1000 pilots was managements guess at a worst case scenario. It is also why DCC was the same day as DOJ approval, this was very calculated on their part. They caught a bunch of our pilots with their pants down. At this point some will need to stay to cover the downgrade in health benefits and an upgrade in costs.

Not really, it's a far better argument for relative position, as it points out that the attrition argument is rather weak. The rest of the Delta case showed growth trumped attrition anyway.

Where is DOH mentioned in ALPA merger policy?

In any case, we can spin our wheels all day behind these anonymous keyboards and create some more fodder for the brainiacs at ALPAwatch. Or we can hope that the two parties actually negotiate from a basis of fact to a conclusion, either through agreement or a fair decision from the 3 wiseguys.

Or maybe we can call for a telephonic vote of confidence for Carl, Capn, and Super as we conclude these proceedings:D

It's a math problem. A really senior guy got $50,000 in equity at today's prices (all tax sheltered). The increase in premiums over NWA for he and a spouse if retired at 60 is far less than that.

It's not a reason for most. It might have been a reason for somebody like Carl who should retire at 52.:D

Our merger committees see and know the weaknesses of their proposals. Many of us cannot. For example, we have a DAL pilot here that says attrition is a weak argument, but says the DAL argument based on future growth "plans" and aircraft order "options" trumps other arguments. This despite Bloch's statement of future vagaries.

I see a third chance of either proposal being adoped, and a third chance of something in the middle. Anyone who doesn't see that is setting themselves up for disappointment.

Nowhere, but (as you know) this isn't being done under ALPA merger policy. ALPA has always said DOH was never in merger policy, just a mention of it as a method. Even with that said, DOH found it's way into the majority of arbitrated decisions.

Carl

No, if I did that, I might just spend time on the internet posting on...

Hey wait a minute!

Carl

You're technically correct that it's not being done under ALPA merger policy, but that's for the structure (no PID, etc.) Refer to the process agreement, paragraph 5:

5. The issue for resolution before the Arbitrators will be the fair and equitable integration of the pre-merger Delta and Northwest seniority lists consistent with ALPA Merger and Fragmentation Policy ("ALPA Merger Policy").

I'm hopeful that the wiseguys will provide suitable pressure to force the two parties to reach that "fair and equitable list" with no ruling required.

I would bet that pressure is going to be absolutely enormous when the hearing reconvenes

Carl

I think Lane Krantz is only speaking to his recollection. Here's my recollection:
1. After the case had been presented, Mr. Roberts asked for the ability to project into the future based on no growth and attrition at age 60.
2. The Republic proposal was DOH with a 5 year fence.
3. The NWA proposal was a ratio with a 5 year fence.
4. Mr Roberts decided on DOH with a 20 year fence.

I can't prove this beyond all doubt, but I think Roberts used the look ahead ability to institute a 20 year fence that neither side asked for. Since Lane couldn't prove this either, he was correct in not saying so.

Carl

Yes. My understanding was DOH used to be a method listed in ALPA merger policy. I believe DOH was removed from ALPA policy and replaced with "fair and equitable." That's what I've heard, but I don't know that for sure.

As far as DOH since 1991, I don't remember. USAir guys got the top 517 positions, but I don't know if DOH played into the arbitrator's decision to do that.

How many arbitrated SLI's have there been since 1991?

Carl

No Carl you know what they got those positions. It is spelled out in the award.

Again, Carl, "looking ahead" in this manner is a far, far cry from the actual construction of a list based entirely on future attrition that benefits one pilot group only. (Please see my post #20, I assume you agree with the conclusions I draw?) BTW, why do you suppose ALPA got rid of any mention of DOH in their merger policy? That would be an interesting discussion.....and might shead some light on our current "predicament".

deleted, my link didn't work

Your premise as to NWA using "look ahead" as the basis for constructing the seniority list is completely wrong. You seem to be implying that NWA is using that to somehow justify our whacky notion of DOH. If that is what you are implying, it shows how your own personal bias is blinding you. And your not alone.

NWA does not need to defend DOH as a methodology. It has been used in whole or in part for many arbitrated lists. NWA guys offer no apologies for wanting credit for every day of service from our airline - and thus we need no justification. Especially since the arbitrator's opinion is that we are a merger of equals. There is an inherent fairness to the DOH concept. If the demographics were reversed, every Delta pilot would see this with complete clarity. The "look ahead" is used to show why a 10 year fence is needed to protect DAL pilots until most of the senior NWA guys are gone. The 10 year fence doesn't protect NWA pilots. Since we are asking to be credited for every day that we have worked at NWA, we don't need the protection. We could have just proffered DOH without a fence, but then our award would be just as extreme as the DAL proposal.

Once again...the look ahead program was used to construct the fences, not the DOH seniority list. And we don't need a look ahead program to "justify" the DOH methodology given its long history in mergers. Especially in this merger of equals.

Carl

Carl,

I promised myself yesterday I was going to stay out of this debate but like the proverbial carrot on a string in front of the horse, I've got to just mention this.:D

We are equal in terms that we were both fairly well positioned separate companies that could have survived with out the merger. But as far as the rest of it goes (DOH, equipment, etc)......isn't that why we are having these debates?

If we were so equal, a straight ratio would work wouldn't it? Then there would be no need for fences or anything else.

That is correct. Our only area of inequality is in our respective demographics...thus the catapult into arbitration. There are some other DAL guys however that feel they must try to make a case that NWA is not at all equal to DAL in many ways. The DAL merger team tried to make that case for 3 days. The result: arbitrators calling this a merger of equals.

As stated earlier, the unequal demographic is why a straight ratio or straight DOH is unfair without fences. Somehow I think that even if our demographic was equal, there would be guys justifying a new method to advantage themselves. You know - DAL pilots should rank higher on the list because, DAL has thinner FA's, DAL has better looking FA's, DAL has nicer FA's... On second thought, I probably better stop that line of reasoning. :D

Carl

PS: You haven't responded to my posting of the actual wording of our proposed fence. Did you see how any growth is shared 1 for 1? Or can you not say so for fear of being barred from future ribs n grits events? :D

Carl,

Like I said, I had promised myself to back off on this forum. I'm not much of a forum poster anyway. I've kinda gotten in over my head here!:D As far as writing goes, I am not a very articulate person and this medium has its inherent drawbacks.....one of which is typing....I hate it!! I much prefer face to face.

All I'll say about fences is that they can be porous and controversial (ala your 24 or however many abitrations there were for the NW/REP merger). If there is a need for fences, I would prefer to see shorter ones that would allow all of us to take advantage of the new "Delta" and all the bases and aircraft that come with it.

Please don't get the idea I'm trying move DL guys into your turf. I just want everyone, DL and NW, to be able to move bases/equipment to have a better QOL and I think fences are a pretty big hinderance to this idea.

I quess I'm feeling pessimistic today, but I just don't see a negotiated list coming out of this process. Maybe they could delay the list until Jan 1, 2009 so it wont ruin Christmas for whomever!!!:D

Denny

Well, all I can say is that I'll miss your posts when you decide to back off. You're plenty articulate, and more importantly, you make a lot of sense.

Carl

[quote=Carl Spackler;490254]

The "look ahead" is used to show why a 10 year fence is needed to protect DAL pilots until most of the senior NWA guys are gone. The 10 year fence doesn't protect NWA pilots. Since we are asking to be credited for every day that we have worked at NWA, we don't need the protection. We could have just proffered DOH without a fence, but then our award would be just as extreme as the DAL proposal.

Carl,
On a seperate post I asked if any Green Book guys had any comments on the 20 year fences - not one response. It appears that fences are very popular if you are "fenced-in" not so popular if you are "fenced-out."
Anyhow I think most DAL guys would love fences but why no fence protection for junior FO's? IF you guys want to fence off your heavies - great, but if the DC-9's are rock solid with the price of oil declining back it up with a fence. If the 9's get parked the furloughs come from the NW side. If DAL parks 88's the furloughs come from the DAL side. I have said before this would allow much more flexiiblity with the bottom of both lists which seem to be a problem area.
You guys are definitely trying to "cherry-pick" where the fences will go, and I don't blame you, but at least admit it. Case in point, the 767ER - no fence proposed by NW.

Scoop