"We believe a viable option is to consider additional compensation that is contingent on the Company’s success, coupled with an aligning of pay to market rates. Our compensation philosophy recognizes that employees should have an opportunity to share in the financial success of the Company. For many years, Horizon has offered upside pay potential in the form of profit sharing. More recently, the program called Operational Performance Rewards (OPR) has added further upside pay potential for all employees. "
Whatever approach we mutually agree to take, it’s clear that in order for Horizon to prosper and grow in the years to come, and thus continue to provide a livelihood for our pilots and other employees, we must provide value to Alaska Air Group as a whole and be competitive with the other regional carriers with whom we compete – both directly on routes we fly, and for codeshare business. Tied into that is our compensation philosophy for all employee groups: “Compensation levels should be competitive with levels that would be paid by other regional carriers if they operated in our relevant marketplaces.” With our combined brainpower, I’m confident we can find the best way to accomplish this. Rather than prepare a list of suggested language changes for our first meeting, we intend to share with you a more comprehensive statement of our interests, so we can engage in a discussion of the framework for a collaborative negotiation process. For instance, if we both agree to explore productivity improvements as an offset to higherthan-market wages, one of the challenges will be quantifying the economic benefit of any particular change. We will be contacting you to arrange a mutually agreeable time and place for our initial meeting, so we can begin our talks. We look forward to our teams beginning to work on solutions..
Sincerely,
Arthur E. Thomas Vice President General Counsel and Secretary