• MEC President's Response to Doug's Letter
• Accessing The Hub
• AFA Local Numbers

Dear Members,

Mr. Doug Parker
Chairman of the Board and CEO, US Airways Group
4000 E. Sky Harbor Blvd.
Phoenix, AZ. 85034


Dear Mr. Parker,

On behalf of the members of the Association of Flight Attendants (East), I am writing this letter to let you know that we are not happy with the recent financial transactions that you and various senior executives have exercised in the last two months. We are also not happy with the tone and content of your letter to the employees of US Airways explaining your position with regard to your particular transactions (Ed. Note; Mr. Parkers letter can be read HERE). Furthermore, the decision to implement annual 3% merit raises to certain non contract employees seems at odds with your previous statement to me and others that, "the merger only works if all merged labor contracts remain cost neutral". 

This letter will be posted on our website and sent to all US Airways East Flight Attendants. I will personally provide you with a hard copy on Monday at the Labor Advisory Committee's Quarterly meeting.

With respect to the stock option transactions I am very disturbed with your explanation of the facts surrounding the stock grants, their expiration dates and the need to move now in order to diversify your portfolio. The recent transactions by yourself, Mr. Kirby, Mr. McClelland, Mr. Kerr, Mr. Walsh, and Ms. Eberwein all resulted in millions of dollars in profit for yourself and the aforementioned executives. In your case alone, the gain was approximately nine million dollars. 

Doug, I am not naïve. I realize that CEO's and senior VP's are going to make more than rank and file employees. I also realize that compensation packages that include stock options in lieu of salary are a risk. Trust me; no one knows more about gambling on US Airways stock than the rank and file employees of US Airways. As I have told you before, I personally have been burned by US Airways stock three times; twice by owning it and having it wiped out in two bankruptcies and now by being excluded from equity participation as a result of the second bankruptcy. 

Your letter also states that, "all of these options were granted to me during my time at America West" and you go on to say "…while these stock option exercises/sales will result in some meaningful cash payments to me no cash comes directly from US Airways." Clearly we travel in different circles, as that is the first time I have ever heard someone describe a nine million dollar gain simply as "meaningful". While you are technically correct that the price of the stock at the time of the sale is the result of the market and the money does not come from US Airways, in reality that is not so. I believe the employees of US Airways are US Airways.

As you have said previously many times, without the merger of the two companies, America West would have in all likelihood found itself in bankruptcy. Absent the merger then, a trip to bankruptcy court would have rendered all of the stock options held by former America West executives worthless. The primary reason US Airways was able to exit bankruptcy was the fact that the employees gave the company over one billion dollars in annual cost savings. In fact, AFA alone gave over 150 million in annual cost savings through wage and benefit reductions, work rule changes and the forced termination of our pension. The combined cost savings and the merger produced the investment necessary to save both airlines. While there may not have been a cost associated to the corporation for the stock exercises/sales there most certainly was a cost to the employees of US Airways who provided the basis for former America West executives to be in the position of luxury you now find yourselves in. Good timing, I guess. 

Your letter also explains that if options are not exercised before their expiration date, "they simply go away". While I will agree it would not be prudent to allow options to expire, I am confused with your statements that the sale of the options does not mean you think, "US Airways is topping out but (rather) we are just getting started". If that is the case then my confusion lies with your decision to exercise over 272,000 shares when only 24,750 shares, or less than 10% of the shares exercised, were due to expire this year. The vast majority of the shares sold by you and the other executives since June had expiration dates ranging from 2012 through 2015. I realize that you and others all still hold additional options but don't find it the least bit comforting to know that you aren't going to exercise any more options in 2006. 

It is too late to make a long story short but the belief of my membership is that the merger created a windfall for a select few and that windfall was derived from the sacrifices of others. 

The decision to implement annual 3% merit raises for non contract employees will clearly raises cost for the corporation but as you said in a letter to the affected employees you were "delighted to be in a position to offer these increases" and attributed the decision to the greater than expected successes of the merger and the overall profit outlook for 2006. It sounds as if you are saying the company can afford it because we are profitable. You also stated that contract employees, "have their annual pay increases implemented as part of their contracts." While that is a true, I am compelled to detail publicly what the AFA East contract provides for in terms of contractual pay raises:

• 2007 - 1% raise
• 2008 - 2% raise
• 2009 - 2% raise
• 2010 - 1% raise
• 2011 - 1% raise
• 2012 - 3% raise

Under the current contract it will take AFA East members 6 years to return to the wages they were earning in 2004 prior to the bankruptcy. AFA West members currently have no increases in their contract as their Section 6 negotiations have been recessed in order work on a merged contract. You have indicated in past statements that this is all a negotiated process and in order to increase pay, other areas of the two contracts would have to incur reductions in order to keep the costs neutral. My question to you is this; in order to allow the 3% increase for non contract employees are you reducing their vacation, sick pay and other benefits to make up the difference? I think not. 

In closing your letter to the non contract employees you said, "We have a lot of challenges ahead, but I am optimistic that we're up to meeting and exceeding our customers' expectations." 

Indeed the challenges are many. One of them is that this airline is now global in scope. Are you aware that on any given business day there is only a five hour window when both the East and West managers and employees are working simultaneously during normal business hours? This fact is causing problems with benefit and travel questions for my membership as well as operational decisions. I hope this management is addressing this challenge. 

The other challenge is for management to realize that their employees are no different than their customers. This management must also meet and exceed our expectations or we will all fail. At the moment I just don't see that happening. Serving pizza and ice cream in the crew room, while a nice gesture, simply won't get it done.

So that's it Doug. We have a problem and I wanted you to know about it. 

Respectfully,



Mike Flores,
MEC President 
AFA-CWA

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