AFA - US
Airways E-Line July 18x, 2002
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Contents:
Annual Savings Cut to $75.8
million
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Notes
from the US Airways Negotiating Committee Message to Members
7-18-02
Annual Savings Cut
to $75.8 million
The AFA Negotiating Committee
and consultants have finished analyzing the pilots’ tentative contract
and have discussed it with management. Based upon our analysis and
discussions w/ US Airways, our annual savings contribution will be cut
by $1.2 million per year, from $77 million to $75.8 million.
Our tentative contract was
contingent upon the pilots reaching a tentative deal that equaled 85% of
the cost savings number management had calculated it needed over the term
of the agreement. Once the pilots reached a tentative, according
to our agreement, we analyzed the pilots’ deal.
The term of the pilots’ contract
is for 6.5 years, through 2008. The original annual savings numbers
calculated by management ($90 million for flight attendants and $595 million
for pilots) were calculated based upon a 7.5-year contract, through 2009.
Management recalculated the
savings targets, using the same mathematical formulas developed to reach
the original $90 million and $595 million numbers. ALPA's average
annual savings target through 2008 was recalculated to be $547 million,
and AFA's average annual savings target through 2008 was recalculated to
be $89.2 million.
The pilots’ tentative averages
$465 million per year in cost savings. Our tentative averages $77
million per year in cost savings. Doing basic math ($465/$547), the
pilots’ deal equals 85% of their target number over the 6.5-year term of
their agreement. Since the value of our deal over the same 6.5 year
term ($77/$89.2) equaled 86%, management owed us money back. To get
our deal down to 85%, management agreed to put $1.2 million per year back
in our contract. The revised annual savings for our tentative is
$75.8 million.
Since management’s biggest
need in terms of cost savings is in the first few years of the Restructuring
Plan, we have added the $1.2 million per year back into our contract by
changing the final two wage increases in our tentative from 2% increases
to 2.9% increases. It also made sense to do this because putting
the money back in up front would have only meant about a .3% decrease in
the initial wage cut. Putting the savings at the end enabled us to
get back close to 2% more in wages.
So, why did the pilots’ number
go down more than ours in proportion to their original number? It
went down more mainly because of the actuarial calculations that have to
be made when computing pension effect on wages. When a year was taken
off of the term of the agreement, a huge chunk of pension credit got chopped
off of the pilots’ number. Essentially, in the seventh year, our
pension credit as a part of the savings was minimal, whereas the pilots’
pension is so disproportionately high when compared to ours (and every
other US Airways employee) that the pilots’ savings target dropped more
than ours (and everyone else’s).
For more information on the
tentative agreement, come to a roadshow. See the roadshow scheduled
HERE.
Send your questions and keep
up to date with the Hotline - 800-654-3143, Website - www.afausairways.org
, E-Line or Negotiations Info Hotline - 800-531-3242.
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