OUCH!!!

"first week of February 2013, although the date may vary depending on whether any appeal is filed and the length of the appeal process."

December 21, 2012

Dear Continental Airlines Pilot,

Under the new United Pilot Agreement, a retroactive pay/lump sum amount was collectively bargained for on behalf of the pilots. The United Pilot Agreement was signed on Dec. 18, 2012.

This letter is intended to notify you of the methodology of allocation of the retroactive pay/lump sum (which is also included as part of the United Pilot Agreement) and of the policy for filing disputes, and is being sent in accordance with Section 40, Part 3J-3(a) of the ALPA Administrative Manual.

Retroactive Pay/Lump Sum (Allocation Between CAL MEC and UAL MEC)
ALPA and United Airlines, Inc. negotiated a lump sum payment totaling $400M. The percentage (and dollar amount) of the $400M to be received by the Continental pilots (the Continental Pilot Amount) and the United pilots (the United Pilot Amount) was neutrally determined in an arbitration process (Exhibit A of LOA 24 of the United Pilot Agreement) as follows:

$175,000,000 to the Continental Airlines Master Executive Council of the Air Line Pilots Association; and

$225,000,000 to the United Airlines Master Executive Council of the Air Line Pilots Association.

Allocation Methodology (MECs’ Determination of Allocation to Continental Pilots)
Following the arbitration award, each MEC independently determined the allocation methodology for the amount allocated to its respective pilots, in accordance with Section 40, Part 3J-3 of the ALPA Administrative Manual. The methodology decided upon by the Continental MEC is included as Exhibit C of LOA 24 in the United Pilots Agreement. The following is excerpted from Exhibit C of that LOA.

“…the sum of $175,000,000 (the Continental Pilot Amount) is payable to Continental Pilots in cash, in two tranches of $109,375,000 and $65,625,000 respectively, subject to appropriate deductions and withholding required by Agreement or under law, on the Payment Dates specified in the Lump Sum LOA, and to the Hold Back Fund provided in Paragraph I. One-half of each tranche of the Continental Pilot Amount (the Availability Portion) will be distributed to Eligible Pilots in proportion to their Availability, and one-half (the Earnings Portion) will be distributed to Eligible Pilots in proportion to their Considered Earnings.”

Exhibit C then provides in more detail how the Availability Portion and the Earnings Portion are to be calculated. A complete copy of Exhibit C is included as an attachment to this letter.

Dispute Process
A pilot may, with written notice and within 30 days of this letter, invoke an expedited dispute resolution procedure with regard to an issue(s) concerning the MEC allocation decision (allocation methodology), in accordance with Section 40, Part 3J. Specifically, as per Section 40, Part 3J, Subpart 5:

The dispute-resolution procedure may be invoked by a written notice filed with the Vice President–Administration/Secretary, within the time limit set by paragraph 4.a above, by (i) the President or his designee, an MEC officer or a member of the MEC or (ii) a pilot or pilots from the involved pilot group with the consent of the President or MEC Chairman.

The full copy of Section 40, Part 3J of the ALPA Administrative Manual is attached to this letter.

The ALPA Vice-President-Administration/Secretary with whom the notice invoking the expedited dispute resolution process must be filed is Capt. Bill Couette, 535 Herndon Parkway, P.O. Box 1169, Herndon VA 20172.

First Expected Payment Date
In order to finalize the amount due each pilot, we must verify that we have accurate earnings and availability information from the Company. We are in the process of completing that review now. The estimator that is located on www.unitedpilotagreement.com is still available to give you an idea of the amount that you will be entitled to. A final, password-protected verification website will be available soon with accurate data for each individual pilot. However, even this verification is only an estimate and the amount may change based on data corrections following the data verification process and/or reallocations resulting from the dispute resolution process.

It is our intent to get the first tranche checks to you no later than the first week of February 2013, although the date may vary depending on whether any appeal is filed and the length of the appeal process. The second tranche will be available following the completion of the seniority list integration. We will have more information about that date as it approaches. Also, please be aware that in accordance with ALPA policy, a percentage (as determined by ALPA) will be reserved as a “holdback fund.” Amounts remaining in the holdback fund will be distributed to eligible pilots at the appropriate time after necessary allocation adjustments (for example, to correct Company-provided data) have been made.

In Unity,

Can't wait for several of 4500 pilots, sequentially, to file disputes thus delaying our "tranch" by months or longer.

You should feel more patriotic for paying more taxes. Remember it all about fairness.

Don't you see what a unity builder that is? Kinda like the 175/225 payouts to each group. Total unity. We are blessed to be able to share in the new united unity.

We do? Maybe just the SS portion if that is allowed to revert back to the 2% higher rate it once was. However, it's still going to be federal taxed at a 25% bonus and then all your other state and local taxes plus ALPA dues will be taken out.

As was stated on the news this morning, tax rates aren't going to "snap back" to the previous rates on January 1st. Technically, yes, but in actual terms payroll processors aren't going to change their systems for the first month of the year in anticipation of even a short term extension being done. Payroll systems will have to adjust if there isn't a deal by the end of January to the first week of February.

However, barring that, you'll still get it back in your taxes. I know, I want it now, too, not the overpayment as a refund in 2014. But since the president has moved his number up to the $400K mark and Boehner has come down to $1,000,000 your actual tax on this isn't likely to be different than what you are paying now.

Interesting to see the unity shoe on the other foot.

I agree with what you're saying, but the tax issue to me is less about the fiscal cliff, and more about my taxable income in 2012 vs 2013. I'm fairly confident that my marginal tax rate in 2012 will be 15% (taxable income less than $70,700), but with the pay raise from the contract, my marginal rate in 2013 will be 25%. If my DOS retro is $20,000, that's a tax hit of $2,000 plus another $400 (2%) for the payroll tax increase. That's a big deal in my world, but I'm sure most guys will be at or above 25% marginal rate either way.

Exactly. Too funny.

You know, vindictivness is a sign of low intelligence.

You are really on a roll now.