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AFA-CWA ANNUAL BOARD OF DIRECTORS MEETING
AGENDA ITEM #1 AFA-CWA MERGER AGREEMENT

The 34th annual AFA-CWA Board of Directors meeting will be held October 16-18 in Phoenix, AZ.

As you know, the Board of Directors (BOD) is comprised of the Local Executive Council Presidents from each of the AFA represented airlines. The International officers as well as the Master Executive Council (MEC) officers are ex-officio (non-voting) members of the BOD.

The BOD is the highest governing body of the Union. The decisions of the BOD shall be the final governing decision of the Union and shall be binding on the Executive Board (the Master Executive Council Presidents from each carrier) the Officers and members both active and inactive.

In short, the Local Executive Council Presidents are the decision making body of the Union.

Business at the BOD meeting is conducted through Agenda items. Agenda items are sent to agenda committees for debate. The agenda committees discuss each agenda item assigned to the respective committee. Agenda committees can amend the Agenda items and make a recommendation to the full BOD for action.

Once the agenda item has gone through the committee process and presented to the full BOD, further debate takes place and a vote is taken to either adopt or reject the agenda item or send it back to the committee for more debate.

AGENDA ITEM #1 AFA-CWA MERGER AGREEMENT

The link below will allow you to review Agenda Item #1, the AFA-CWA Merger Agreement and an AFA-CWA Merger Questions and Answers document: HERE

Adobe Acrobat PDF File

(Download viewer for above file)

Agenda Item #1 was submitted by the Merger Oversight Committee and asks the BOD not to invoke the Opt/Out Termination clause in the AFA-CWA Merger Agreement. The AFA-CWA Merger Agreement provides for membership ratification to enter into the agreement with CWA and a vote by the BOD to terminate or opt out of the merger agreement.

Now for the history-

As a result of the devastation to the airline industry after 9/11 AFA found itself in serious financial distress. The loss of thousands of members as a result of airlines downsizing or liquidating and the corresponding loss of dues revenue put AFA in a poor financial position at a time when AFA members needed the Union the most. AFA was rapidly eating into our reserve fund and that fund would not be enough to provide financial stability for the Union for very long.

The Union was faced with three choices:

1. Dramatically cut services to the members in order to keep the dues at $39.00.
2. Drastically raise the dues in order to continue providing the existing services to the members.
3. Look for a merger partner in order to stabilize the dues and maintain the same or greater level of service to the members.

An AFA Executive Board committee was appointed to conduct interviews with six (6) International Unions in order to find a merger partner that would best suit the needs of AFA.

CWA was selected as the best merger partner for a variety of reason- not the least of which was their willingness to cover our budget shortfalls for four (4) years without raising our dues during that time period thus allowing AFA to continue to provide the same or greater level of service. As a member of the AFA Finance Committee for the past 3 years I can assure those budget shortfalls were substantial with this years AFA budget being in the red by over $600,000.00. The budgets were in the red since the merger because CWA promised AFA the Union would not have to cut staff or services during the opt out period. If the BOD decides to finalize the merger with CWA the merger agreement mandates that dues would be raised to the CWA average of $43.00.

AFA members were provided the opportunity to vote on whether or not to join CWA. The membership approved the merger and the merger agreement with CWA.

AFA and CWA entered into a merger agreement that provided for a four (4) year period during which either party could opt out of the merger agreement. That four year period ends December 31, 2007 and it is now up to the BOD to decide whether or not to exercise the opt out clause.

Next week's BOD decision -

The 2004 BOD approved the creation of the Merger Oversight Committee (MOC) to report to the BOD on the merger's progress during the course of the opt out period and make a final recommendation to the 2007 BOD to either finalize or terminate the merger. During the past two years the MOC has made sure that CWA remained in compliance with the terms of the merger agreement; identified and forced correction of several problems that had developed; and made suggestions that have been adopted that will provide for a dispute resolution process should CWA not live up to the terms of the agreement.

The MOC has recommended to the BOD that the merger agreement be finalized.

AFA-CWA Secretary/ Treasurer, Kevin Creighan, prepared four (4) possible scenarios for the BOD to consider and held several conference calls with the BOD over the last several weeks to answer any questions related to the opt out decision.

The four scenarios are as follows:

1) Opt out with Dues at $39.00 and significantly reduce services. This scenario is the worst case or, in my opinion, the "doomsday" scenario. Staff support would be virtually cut in half- I certainly would not want to be in negotiations and lose a full time attorney and staff negotiator. LEC and MEC budgets would be reduced thus leading to cuts in office staff at the councils. As a stand-alone Union, with no dues increase, AFA would likely eat up the Reserve Fund and be teetering on the edge of bankruptcy almost every day. If even the slightest downturn in the industry occurred, absent membership assessments, the Union would likely dissolve.

2) Opt out with Dues at $43.00. The revenue increase would allow for a slightly better environment but is still a high risk because the start up costs of restoring AFA as a stand-alone Union would use a significant amount of the Reserve Fund. LEC budgets and MEC budgets would remain at current levels but would not increase. AFA would again be at risk of dissolving through bankruptcy if the industry were to suffer a downturn. The ability to attract new members through organization would be significantly compromised in both this and the first scenario.

3) Opt out but raise the Dues to $49.00. This scenario would allow us to maintain all of the current services without having any staff or budget cuts. AFA would be able to function and continue on as a stand-alone Union providing member services at levels that the members deserve. The only problem with this scenario is that the members would be footing the bill.

4) Remain with CWA and raise the Dues to the merger mandated CWA average of $43.00. This scenario would maintain all of the existing staff and services and allow for an increase to the LEC and MEC budgets. No reduction would be necessary to any AFA programs or budgets. No additional administrative staff would be necessary and no start-up costs would be required. The additional revenue from the dues increase would allow us to balance our budget and the excess revenue would be at AFA's disposal.


So there you have it-

The obvious question is- "We have all taken pay cuts, lost benefits and had our pensions terminated and now you want to raise Dues?" That is a normal reaction and a valid question. While I respect the question, I believe faced with the options and looking at all the possibilities, the only rational choice is to finalize the merger with CWA. Even though there were concessions and givebacks as a result of bankruptcy, those concessions and givebacks would have been far worse without AFA on the property backed by the support of CWA. We have also not had a dues increase since 1994.

US Airways is somewhat unique with respect to other airlines regarding the merger with CWA. Everyone currently on the property was here when the merger agreement with CWA was negotiated and distributed. Everyone currently on the property had the chance to vote on whether or not to enter into the merger agreement with CWA. The majority of voting US Airways Flight Attendants voted to enter into the merger agreement with CWA.

The industry has changed but management has not. Management still believes they have the right to continue concessionary bargaining and not share in the wealth that we unquestionably helped create. Now more than ever, this Union needs to be financially strong, this Union needs to be membership strong and this Union needs to remain a partner with CWA.

Thanks for reading,

Mike Flores, President
The US Airways Master Executive Council
AFA-CWA

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AFA Local Numbers

Council 40 PIT 412-245-1214
Council 41 DCA 703-212-8090
Council 69 BOS 781-289-8454
Council 70 PHL 215-492-0840
Council 82 LGA 315-736-3483
Council 89 CLT 704-527-0325

New Hotline Number Toll Free: 866-USA-AFA2
US AIRWAYS Benefits Information 800-872-4780

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