Notes from Negotiating Committee, June 10, 2002

Management proposal of June 5, 2002 

AFA counterproposal of June 8, 2002 

Management's June 9th response to AFA proposal

MEC Special Meeting

Monday, 6-10-02 
In an attempt to do our part to help the airline qualify for the loan guarantees from the Air Transportation Stabilization Board and possibly avoid the consequences of a bankruptcy filing, your AFA Negotiating Committee has continued talks with management. 

Late in the evening of Wednesday 6/5, management gave  the AFA Committee a full proposal of the cuts it is seeking from the flight attendants.  
 

Management's proposal of 6/5 included: 

• Wage cuts of 15.5%  
• Deletion of other pay factors
• Significant health care, pension and other benefit cuts (vacation, sick, salary continuance) 
• Changes to our Scope language which would leave us unprotected in the event of a 'partial transaction', in which part of our airline is sold off, and which would allow for furloughs 
• Agreement with AFA that furloughed mainline flight attendants would get first crack (in seniority order) at working any new flights operated by MidAtlantic, and that negotiations would continue over how a potential 'flow-through' agreement would work to allow flight attendants to return to the mainline, with seniority intact, as jobs become available 
• Establishment of a profit sharing plan 
• A contract extension through 12/31/09 (which satisfies the ATSB's requirement for a stable 7-year plan). 

The Committee and its advisors met throughout the day on Thursday 6/6, 'costing out' the company's proposal and preparing a preliminary proposal to respond to management. The company's proposal and the preliminary response was presented to the AFA US Airways Master Executive Council on Friday 6/7, at a Special Meeting. After a thorough review of costs, strategy and goals, the MEC approved a counter proposal that was presented to management on Saturday 6/8. 

AFA counterproposal of June 8, 2002

The proposal AFA presented to management included:

• Stock options and profit-sharing that are no less favorable than the terms agreed to with any other work group 
• An agreement that management will not ask the Bankruptcy Court for more reductions than those provided in any potential ratified agreement with the flight attendants
• Language to maintain mainline jobs now and into the future 
• Provisions that all other labor groups must participate in the airline's cost savings plan 
• Savings credit for the flight attendants in this process should the pilots change any of the items in their contract in which we have 'Me Too' agreements
• Wage reductions that were significantly less than proposed by management, with snapbacks and additional raises in future years, as well as a guarantee of even higher raises if the company's revenue surpasses what's predicted in the Business Plan 
• Temporary elimination of Crew Meals and the Uniform Cleaning Allowance for the term of the agreement (with a snapback prior to contract amendable date)  Temporary elimination of the $22 Longevity Pay for a flight attendant who has completed 14 years of service (Sect. 3.Q.) and of the $1 per block hour flown Reserve Override provided to reserves who have completed 5 years of service (Sect. 3.N.) through 2004, then snapback to current book rates 

Management's June 9th response to AFA proposal

Management responded to the AFA proposal on the morning of 6/9. In the company's new proposal, management has

• Reduced the term of the contract extension to December 31, 2008 Eliminated its proposal to discontinue a number of supplemental pay factors, reduced some of its benefit cut proposals 
• Eliminated proposed cuts to our pension formula, and added stock options to the 'payback' list.  
• All told, the proposals from management averaged the same amount of money per year -- about the $90 million per year in cuts they've said they need from us.  

The MEC met in special session on Sunday 6/9, and again Monday evening, 6/10, to discuss a possible response to management's latest proposal. Financial and industry analysts retained by AFA met with managements' numbers crunchers all day on Monday, then with the MEC in the late afternoon to share new and updated information.

The entire proposal given to management by your Negotiating Committee on 6/8 provided the company with an average of $50 million per year in cost savings. That equals 55% of the $90 million per year that management says they need from us. Management has not wavered to date in their commitment that $90 million is the appropriate savings that flight attendants must come up with. But your Negotiating Committee and advisors do not necessarily agree with the $90 million number. 

How much in sacrifices will we be willing to present in a tentative agreement? That depends upon management's costing formulas. To date, we have a few substantial disagreements in the numbers being used by management to cost out certain items. If the company does not consider our concerns when re-calculating the numbers, the ultimate target for flight attendant cuts will have to be lowered significantly. However, if management re-calculates the items according to our concerns, our analysis of an appropriate target savings number for the flight attendants will be a bit closer to the $90 million. 

All of the other labor groups have stated publicly that they recognize the need to provide our airline with cost savings, and that they will respond to that need. To date, management has made proposals to all groups. The pilots, reservation and ticket agents and flight attendants have made counter proposals. The remaining work groups are scheduled to respond to management's proposal by Tuesday 6/11. 

Negotiations are scheduled to be completed by 6/15. If we reach a tentative agreement, you will get the chance to vote on it.  

As we go forward, the details of the proposals will change. Some items may be added, some may be taken off the table. We will report out to you again after we meet with management. Until then, keep flying 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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