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July 9, 2002 

Dear Fellow US Airways Flight Attendant, 

I don't like writing this letter, but I am writing to you because our carrier is in trouble. In order to save US Airways from bankruptcy, management has asked all of its employees to make sacrifices that will negatively affect our lives. 

US Airways was particularly hard hit by the tragic events of 9-11, as our new CEO has pointed out. Those events, and in my opinion, poor management over a long period of time, have resulted in the most difficult period our carrier has faced in its history. 

Our Current Situation 

After 9-11, the federal government recognized that airlines were going to be hit hard with a financial downturn as passengers stayed away from flying until they felt safe again. In response, the U.S. Congress established two vehicles to help hurting airlines through the financial difficulties. 

First, carriers got an immediate grant of cash; all they had to do was apply. US Airways received about $330 million to help defray the costs of the shutdown that immediately followed the tragedies. 

Second, a federally guaranteed loan process was established through the Air Transportation Stabilization Board. It was set up to help carriers secure financing during the downturn if banks weren't willing to lend them money on their own. US Airways is not able to get a loan on its own. And without an infusion of cash, management says it will be forced to file for bankruptcy. The government requires carriers applying for the loan guarantee to reduce labor costs. That's one of the reasons management wants cuts in our contract. 

Management also says that it needs these cuts in order to survive in the long-term, and compete in an industry that's sure to continue to have tough times for the foreseeable future. 

My job as MEC President is to represent you and attempt to get the flight attendants through this impossible situation. I take that responsibility very seriously.

Following the company's request for concessions, and analysis of the airline's books by AFA-retained financial analysts, the elected leaders from all of the flight attendant bases and I worked together. Once we were convinced that not making sacrifices was not an option, we moved forward with talks. Those talks have resulted in a tentatively agreed to package of cost savings for our airline. Once all of the language is finalized, this package will be sent to you for a vote. 

I'm writing to tell you how I feel about this situation, about the plan and process that we have laid out, about the tentative agreement, and about your options. 

Who I am 

I'm a 25-year US Airways flight attendant. I've been a union activist for over 15 years, including serving as the former Local Council President in Pittsburgh and as the Master Executive Council Grievance Chair. Now I am the MEC President. 

When I ran for the post of MEC President, I knew our carrier was having financial difficulties. But I never dreamed that our airline would be forced to the brink of bankruptcy. Yet, here we are. 

And I'm angry. I'm angry that our carrier was mismanaged into these dire conditions. I'm angry that, once again, management has come to us with its hand out, looking to save the company on the backs of us and our families. I'm angry that I've put so much of my life into this airline and it always seems to want more out of me, while giving me less. But, here we are. 

When management came to me and said, "We need you to negotiate with us to cut flight attendant costs," I had to make some tough decisions. 

First, I made some personal decisions. I decided I want to continue working here. I want to fly for a number of more years. I'm single, so I don't have another income to assist me. I don't want to give up anything, but I am willing to give some things now if I can get them back, plus a reward for my sacrifices in the long run. 

Second, I made some professional decisions. As MEC President, it is my job to ensure that the flight attendants have some protection during bankruptcy, since the potential for bankruptcy is a reality. It is my job to ensure that flight attendants do our part to help the airline avoid bankruptcy and get a loan guarantee from the federal government that will enable our carrier to survive so we have jobs for the long-term. And it's my job to ensure that, once the carrier turns around, flight attendants get to share in the profits (which we never have before) as a reward for our investment.

I believe the tentative agreement we have reached accomplishes those goals. I also feel the alternative leaves flight attendants open for much more dramatic cuts with no protection in bankruptcy, threatens the long-term viability of our carrier, and prevents us from sharing in the gains once our carrier is successful again. 

Negotiations Strategy 

To achieve this agreement, I met regularly with the MEC. I worked with the AFA International Officers and Staff to ensure that the proper resources would be dedicated to helping us through this dire situation (and they were). And I worked closely with the experts who were retained to assist us in our negotiations. Working together, we all carefully planned out a strategy for engaging the company in these talks. 

Elected by the MEC, the Negotiating Committee consisted of our Chairperson, Boston-based flight attendant and Boston LEC President Buddy Brannon, Pittsburgh-based flight attendant and Pittsburgh LEC President Teddy Xidas, Philadelphia-based flight attendant and Philly LEC Vice President Terry Graf, and me. 

To work on scheduling issues, Philadelphia-based flight attendant and former MEC President Carol Austin was brought in as a special advisor to the Negotiating Committee. Newly elected Philadelphia LEC President Mollie McCarthy was a special advisor to the Committee on reserve issues. 

International Staff attorneys and professional negotiators Ben Elliott and Stephani Brown also went to the negotiating table with us. Ben has negotiated dozens of contracts for AFA-represented carriers and has a background in contract negotiations with the United Mineworkers of America. Stephani is the attorney who handles most of the contract violation cases that go to arbitration or litigation for US Airways flight attendants. 

The experts pulled in to assist us in these talks were:

Eclat Consulting - Eclat specializes in airline industry and financial analysis. The firm is headed by former Air Line Pilots Association International President Randy Babbit. Eclat's Managing Director, Bill Swelbar, Vice President Mark King, and Senior Consultant Russ Wodiska spent a considerable amount of time analyzing the financial and costing information provided by management. Bill Swelbar has spent 18 years as an expert in airline industry economic and financial trends, and in labor-side contract negotiations. Mark King has worked as part of many flight attendant and pilot negotiations crunching the numbers. Russ Wodiska provided expertise in the analysis of the airline's current state and in the financial forecast for its future. 

Segal Company - A nationally recognized benefits consulting firm, the Segal Company's Tom Harter provided expert analysis of management's plan to move all employees to a single preferred provider organization. Tom was able to cost out management's original proposal, and assist the committee in making decisions that ultimately cut the out-of-pocket cost increases to flight attendants by hundreds of dollars per year. 

Claude Poulan - A pension benefits expert and actuary, Claude continues to work with the Negotiating Committee and Committee Advisor Carol Austin in an attempt to design an early-out pension program that is acceptable to management. 

Guerrieri, Edmond & Clayman - Attorney Rob Clayman, a partner in this Washington, DC-based labor law firm, advised the MEC and Negotiating Committee on bankruptcy issues. Rob has worked for labor unions representing workers during airline bankruptcies at other carriers.

Friedman, Kaplan, Seiler & Adelman - A New York-based law firm that specializes in stock and equity transactions continues to assist the Committee in analyzing the profit-sharing and equity component that is being developed to return some of our investment to the flight attendants.

The Committee considered the advice of the professionals we had assisting us and began talks with management. Management wanted $90 million per year in cuts from our contract and $950 million in total cuts from all labor groups. 

After analyzing the carrier's financial position, Restructuring Plan and considering the guidelines that the ATSB has set for securing the loan guarantee, our consultants determined that the minimum cost savings management actually needed from the flight attendants to satisfy the ATSB was in the $75-78 million per year range. So, we slowly started to inch our way towards a cost-savings package. 

Initially, the Committee's plan was to follow the pilots in negotiations. We wanted to make sure that we didn't pay a penny more in proportion to our original savings target than the pilots paid in proportion to theirs, and we knew the pilots thought they shouldn't have to pay all of what was asked from them. As negotiations with the pilots slowed, we were able to secure a guarantee from management that if we moved forward with our talks and produced an agreement that paid more, proportionately, than the pilots' final agreement, our agreement would be reduced. With this guarantee, our negotiations moved forward. 

Our negotiations were very heated at times. Our internal caucuses even got heated at times. It was all part of the negotiations process. At one point, one of the members walked out of a Committee caucus. But the Committee, for the most part, acted in unity. When we had a disagreement over an issue, we voted to achieve a consensus before moving on. 

Different Committee members played different roles. Buddy was the Committee Chair and thus attempted to blend the different opinions to achieve consensus. Terry, Teddy and I valued different issues with different amounts of importance and fought for our position. Teddy, for example, was our leader in the fight to reduce the amount of out-of-pocket cost increases in the company's new health care program. 

Health Care 

We talked regularly with the other labor groups on the property. One of the main discussion topics with the other labor groups was the new health care plan the company was pushing for all of the groups to accept. It was clear that every group except us wanted to use the new health care plan as a large portion of the savings they were going to provide to the airline. And the other groups also were willing to pay close to the out-of-pocket costs that management was proposing - which would have increased our out-of-pocket health care costs by 380% over four years. 

Management also made it clear that a change in health care had to be part of the final package. The health care package that management was offering was absolutely unacceptable. The other groups were considering it and management was demanding changes. We decided we had to take the lead in negotiating the costs down significantly. If other groups had gone ahead and accepted the higher costs, we would have had a very difficult time getting management to accept a deal that contained lower monthly employee premium contributions. 

By taking the lead, we were able to reduce the out-of-pocket cost increases by hundreds of dollars per month for many of the health insurance options that are part of the new health plan. Management was not happy that we were so adamant that the costs be reduced because it meant that the other groups would now want to use our contract as a model, and the company wouldn't be able to realize as much savings in the health care arena as it had originally planned. 

I know it's small consolation that the cost increases in health care are less than management wanted initially. And I understand that changing health plans is a very big deal. But, again, this was management's key issue. Every group, including management, is going to have health care changes in their agreements. We were able to make the plans more comprehensive and reduce the costs increases by taking such a hard line. And if this agreement prevents management from asking a bankruptcy judge (if we go into bankruptcy) for the original health plan it wanted us to accept, then every single flight attendant will be better off. 

"No Furlough" 

Another piece of these negotiations that served as a hot button issue for our Committee was the "No Furlough" clause. The ATSB loan process is clear -- the airline cannot be required to keep paying employees for whom it does not have jobs. It's a very poor business practice from the standpoint of the ATSB and the banks that will provide the loans. And that's exactly what the

"No Furlough" clause in our contract would do if the size of our airline is reduced. US Airways would have to pay flight attendants their minimum guarantee even if they were not flying (directly after 9-11, management involuntarily furloughed flight attendants claiming that the "act of war" forced them to cut jobs, which meant our "No Furlough" language didn't apply in that situation). 

A key component in the company's Restructuring Plan is a reduction in aircraft. To meet the terms of the loan guarantee, management was clear that modifications would have to be made to all "No Furlough" clauses in contracts. 

Our "No Furlough" language is being modified to say that there will be no fewer than 275 aircraft outside of bankruptcy and no less than 245 if the carrier has to file for bankruptcy. That means, at minimum, we will continue to have jobs on at least that many aircraft in the future. In addition, if there is an aircraft reduction from the current aircraft number (311), and fewer flight attendants are needed, management will first offer a Voluntary Separation Incentive Package. If involuntary furloughs are still needed, another voluntary furlough similar to the one that went into effect after 9-11 will be offered. If not enough flight attendants apply for either of those programs and an involuntary furlough is necessary, all involuntary furloughees will get first chance to take openings at the new MidAtlantic Airways (in seniority order), and all US Airways mainline flight attendants who take those jobs will retain their seniority on the mainline and will be able to move back up to the mainline as the carrier needs flight attendants in the future (again, in seniority order). 

Profit-sharing AND Equity 

Leading the way in these negotiations to set the bar on the health care issue also enabled us to achieve things other labor groups hadn't been able to make headway on. Most importantly, the returns we are going to get for our investment. 

If this agreement is ratified, we will be part of a profit-sharing agreement that mirrors the successful program Southwest Airlines employees enjoy. We will also get to share in stock price gains through an equity program, through what we believe will be a better program than a complicated stock option program. While the final details of that equity program are still being ironed out, it will be a tool that we can use to regain the investment we are making in this company. 

Your Vote 

Charts showing exactly how the changes in vacation will affect will be in an E-line and on the website, www.afausairways.org . 

On July 1, 2002, the members of the MEC voted unanimously to send the tentative agreement out to you for a vote. Every member of the MEC voiced their opinion that the members must have the chance to see this agreement, weigh the options and make an informed decision for themselves on their future and the future of this airline.

A majority of the members of the MEC also voted to recommend a vote -FOR- the tentative agreement. They did so for different reasons. Personally, I'm going to vote -FOR- this agreement because we stand to lose so much more if our carrier goes into bankruptcy and we don't have an agreement (management has made it clear they will ask the bankruptcy judge for at least the $108 million per year in cuts that were outlined in their initial proposal to us). And the ability to get profit-sharing and an equity return down the road are vital to me, and we will not get those things if this tentative fails. 

I have heard speculation from flight attendants that we could have gotten more if we had waited longer. Some of this speculation was even voiced by the MEC members who did not vote to recommend a -FOR- vote. I don't believe that is true. Again, we stood to gain by going first (lower health care out-of-pocket costs, gaining profit-sharing and equity, and getting a guarantee that we would pay no more proportionately than the pilots). There were risks to going first, but there were also risks to going later (possibility of higher health care costs and no equity). And the Committee reached the consensus that going first gave us more of an advantage on the key issues. 

I also don't believe that the members of the MEC who speculated that we should wait were solid in the belief that we could have gotten more. If they were, those MEC members could have used their votes to send us back to the negotiating table. But they did not. And I believe it's because they understand that the protections against further cuts in the event of bankruptcy and the fact that we were able to drive the negotiations in the very important areas mentioned, rather than have to follow with worse terms, made it a good decision to accept this deal and give you a chance to vote on it, rather than fall behind the others. 

I have also heard some flight attendants speculating that management plans to sell the airline. The company would have had to disclose in its ATSB application its intention to sell the airline. US Airways' application does not mention a sale. 

Two other important items that I want to mention are the possibility of an early-out retirement package, and a committee that will be sitting down with management to discuss scheduling improvements (including reserve issues) that could save the airline money. If the talks over an early-retirement are successful, it could give some senior flight attendants an opportunity to retire early, and subsequently not require as many to be furloughed if the carrier is down-sized. If we achieve agreement on scheduling improvements, we will get cash back in our pockets, just like the deal we have that if the pilots negotiate a deal that's proportionately less than ours. 

In a couple of weeks, all US Airways flight attendants currently paying dues and whose dues account is in good standing will have an opportunity to vote on the tentative agreement. If you're not sure about your eligibility to vote, call AFA at 1-800-424-2401, ext.
861. 

I voted against the 1993 contract. I voted against the 1995 tentative concession agreement. I voted against the 2000 agreement. But I'm voting -FOR- this one because our carrier is really in trouble and this gives us some protection, limits cuts and will enable us to share in profits once our hard work and investment pays off. I'm not saying it's a good deal. But it's the best of a bad situation and it gives us a chance to have a future at this carrier. With no deal, our carrier may not have a future. 

Look around to all of the other labor groups. They're all taking cuts. If some of them don't get agreements, or they fail to ratify their deals, management will be forced to file for bankruptcy, and will ask the bankruptcy judge for at least 100% of the original savings number the company sought from those work groups. If our deal ratifies, management won't seek any changes to our contract over and above what we have agreed to. 

When you make up your mind, make sure you are considering all of the FACTS. Don't listen to rumors. Get real answers. Full details of the agreement will be provided in the package you receive that contains your ballot. Those packages are scheduled to be mailed to your homes next week. Look for a roadshow schedule on the website (www.afausairways.org) and in the E-line. I will look forward to seeing you there. We will have many of our expert consultants with us to answer all of your questions.

Thank you to the people who sent notes of support throughout the process. Thank you to all of you for your patience over the past few weeks. This is a difficult decision for everyone. The future of our jobs and our carrier are at stake. I am confident that we will stand strong in the face of this adversity and, in the end, will move forward in unity. 

In Solidarity, 

Karen Lascoli 
MEC President 

It has been reported in the media that the pilots have reached agreement with the company on their package of cuts. While the pilots are close to an agreement, they have not yet reached a complete tentative. 

We will update you once we have word that a full tentative agreement has been reached between the pilots and US Airways management. 
 

On Wednesday, July 10th, the House of Representatives will vote on H.R. 4635, the "Arming Pilots Against Terrorism Act." Despite AFA's efforts to include strong language to ensure that flight attendants will receive training in order to protect ourselves and passengers, the House Transportation Committee has not included the strongest language possible. While some improvements have been made over the last 24 hours to the Committee's language, more needs to be done to ensure that flight
attendants will in fact receive sufficient training.

Representatives Steve Horn (R-CA) and Peter DeFazio (D-OR) will offer an amendment on the House floor tomorrow with the stronger language that AFA supports. This amendment will provide self defense training and other cabin security training for flight attendants. Transportation Committee leadership will oppose this language. 

In the little time we have before the full House vote on Wednesday, I urge you call your Congressmembers and any members that you have met with in the past and urge them to support the Horn/DeFazio amendment. Also , ask them to make a statement on the floor during the debate about the need to train flight attendants not only in order to protect ourselves but also the flying public. 

A letter that we are hand delivering to all House offices in the morning from International President Pat Friend on this issue is posted on the website: http://afausairways.org/AFANET/letter7_09.html . 

Please call your House member early Wednesday, July 10th, and ask her/him to not only support the Horn/DeFazio amendment but also speak out during floor debate in support of providing this crucial training for flight attendants. Let your Congressmember know that flight attendants are the last line of defense in the cabin and need comprehensive and substantive training to protect ourselves and our passengers. 

Please e-mail Shane Larson to let us know whom called. SLarson@flightattendant-afa.org

Thank you for your continued dedication in providing flight attendants with the training you need. 

Jo Deutsch, Director 
AFA Government Affairs
 

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