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UAL Merger Comte Msg

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ableone

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UAL Merger Committee Update - May 4, 2010

Fellow United Pilots,

On Monday morning, United Airlines announced a merger with Continental Airlines. This letter is intended to provide information on the merger process and to let you know that the UAL Merger Committee is well-prepared to deal with this announcement. The Committee has a wealth of experience and diversity, and is well-suited to represent the interests of all United pilots.

We appreciate that a merger can create confusion and anxiety, and in that light we want to communicate with you about the salient points of ALPA Merger Policy and how we’ve prepared to work through an integration of the pilot seniority lists. But first, it is essential to a complete understanding of Merger Policy to understand the most recent seniority integrations and apply the lessons learned from those mergers to increase our opportunities for success.

US Airways and America West
In accordance with Merger Policy at the time of the US Airways (East) and America West (West) merger, the two pilot groups pursued a dual track approach that entailed negotiating a Joint Collective Bargaining Agreement (JCBA) while simultaneously going through the process of integrating the seniority lists.

As provided for by ALPA Merger Policy, the two groups’ merger committees worked through negotiation, then mediation, in an effort to reach an integrated seniority list. Because they were unable to reach agreement, they proceeded to arbitration - the final step of Merger Policy. Each merger committee selected a pilot neutral from the list of ALPA Pilot Neutrals to serve on the Arbitration Board along with professional arbitrator, George Nicolau. As expected, there were great differences in the groups’ concepts of a fair and equitable merger. In basic outline, the East pilots proposed a Date of Hire integration, adjusted for length of service, subject to further conditions and restrictions (equipment fences) that would push the most senior West pilots down the seniority list, and inserted many furloughed East pilots above active West pilots. They did not move off that position throughout the process despite urging from the arbitrator. The West pilots proposed integrating the lists based on a series of ratios with all the furloughed US Airways pilots and some active pilots on the bottom of the list.

The Board held hearings for weeks and, months later, issued its decision. In its Opinion and Award, the Board integrated the seniority lists by reserving a number of positions (commensurate with the staffing of the A330 and B767) at the top of the list for the former East pilots on the theory that the West pilots did not have expectations to fly widebody equipment. The remainder of the list was an integration of active pilots through ratios derived from fleet and seat data. The Board also created a “fence” around the A330 and B767 flying, making those positions available only to East pilots for a period of four years, although those fences were to disappear – and did – if mandatory retirement was moved from 60 to 65. The former East pilots who were on furlough were placed at the bottom of the active list.

The Nicolau Award was accepted by the merged company but was never implemented. A majority of the pilots at the new US Airways (LCC) voted to change their bargaining agent to the US Airways Pilot Association (USAPA). A USAPA founding document tenet provides that seniority lists are to be integrated on a Date of Hire basis, however, to date, that has not been achieved. Changing bargaining agents resulted in terminating substantive talks on the JCBA. To this day, five years after the announced merger, LCC operates as two independent entities with two separate seniority lists, and both pilot groups are still working under their concessionary agreements. With litigation ongoing over the seniority list, LCC management has had little incentive to negotiate a follow-on agreement. Furthermore, the airline’s constriction coupled with the failure to integrate the lists has resulted in furloughs of the West pilots.

Delta and Northwest
The Delta/Northwest merger applied a different approach, based in part on the lessons learned from the US Airways/America West merger. There were some significant differences: the pilot groups were able to leverage professional relationships with the managements to expedite exchange of economic data that formed the basis for moving forward. The management teams conditioned the merger on the smooth and expeditious transition to an integrated pilot seniority list (Integrated System Seniority List or ISSL) and a JCBA. Unfortunately, although the two pilot groups and the prospective merged company were able to reach agreement on what would become a JCBA as well as an equity stake in the new enterprise, they were unable to reach agreement on the ISSL for months. When consensual agreement on an ISSL could not be achieved, the Delta pilots successfully modified and extended their CBA along the lines tentatively agreed to previously for both pilot groups and as well captured an equity stake. On that basis, the merger was executed. When the Delta pilots reached that agreement, the companies announced their intention to move forward with the merger. Shortly thereafter, the parties were able to negotiate a transition agreement that paved the way for the eventual ratification of a JCBA for both the Delta and Northwest pilots and to a process agreement that restarted the seniority integration process under the auspices of three impartial arbitrators.

In the seniority integration arbitration, the Delta pilots proposed a 7-group Status and Category ratio approach that they argued preserved each pilot group’s pre-merger career expectations. The Northwest pilots proposed an integration based on Date of Hire with conditions and restrictions. In the alternative, they proposed a “Dynamic Seniority List” concept that would create fixed seniority “slots” for each pre-merger pilot group and would populate those slots with only the active pilots from their respective groups, in seniority order. As vacancies arise through attrition, the more junior pilots in the respective group would advance to the more senior vacant slots.

In its Opinion and Award, the Board rejected both Northwest’s DOH and Dynamic List approaches. Instead, it adopted Delta’s Status and Category methodology but based on four categories (widebody captains, narrow body captains, widebody FOs and narrow body FOs) rather than seven. Remember that a Status and Category methodology is only concerned with the number of positions brought to the arbitration, not to individual pilots’ current equipment bid position. The Board also incorporated a Pull-and-Plug mechanism to accommodate the Northwest pilots’ assertion that their higher rate of attrition from retirements should be taken into account. This methodology resulted in removing the oldest 274 Northwest pilots from the Northwest pre-merger list, applying the ratios to the remaining pilots and reinserting the removed pilots directly above the next junior Northwest pilot thereafter. The Board also added some conditions and restrictions that created five year fences around each group’s respective premium aircraft (B777, B747, and B787).
 
The New Merger Policy
Subsequent to the LCC/AWA merger, the ALPA Merger Policy Review Committee was charged with a review of Merger Policy to reflect lessons learned. After 18 months of work, and with input from pilots involved in the Delta/Northwest merger, the Committee drafted a new Merger Policy which was approved by the Executive Board in May 2009.

The new policy emphasizes the three major components necessary to fully complete a merger:

• a joint collective bargaining agreement (JCBA) and a possible transition agreement,

• an integrated seniority list, and

• a merged MEC, representing a unified pilot group.

The integration of seniority lists is now viewed as one step in the more comprehensive merger process. The merger is a transaction consisting of the seniority integration process, the contract negotiation process, the ratification process and the transition process, all leading to a single pilot group and one MEC.

Under the new Merger Policy, merger committee representatives’ role is to make a strong and focused effort to resolve seniority integration issues, with mediation and final and binding arbitration mandated on unresolved issues. Factors that must be considered in constructing a fair and equitable integrated seniority list in no particular order and with no particular weight include but are not limited to: career expectations, longevity, status and category.

There are also changes to the seniority list arbitration process. Hearings are now limited to a maximum of 15 nine-hour days of hearings. The default makeup of the Arbitration Board is a panel of three arbitrators, though the merging MECs may agree to revert to a panel of one arbitrator and two pilot neutrals. In the interest of fostering open communications between MECs, new policy language discourages arbitrators from admitting MEC communications as evidence.

What has not changed is that the Integrated Seniority List is not subject to ratification by either MEC or pilot group. Another constant is a pilot’s position relative to his pre-merger brother or sister pilot: your internal relative seniority cannot be changed.

Our Merger’s Timeline
Now that there has been a merger announcement, there is a concise timeline and an orderly process to prepare for integrating the seniority lists.

At the Merger Announcement Date (May 3, 2010), the Merger Committee can begin updating and verifying the employment data of all our pilots. After we have collected the data, we will post the information electronically so that you can validate the data we have collected. If you disagree with the findings with respect to your employment data, you must contest the findings within 20 days of receiving notice from us, with a written statement of fact to support your protest. That challenge can be transmitted via email, and you can request a hearing with us. Within 10 days of the protest, we will notify you of the decision, using the same transmission medium you used.

Within 10 days of the May 3 Merger Announcement Date, the UALMEC will designate our negotiating committee members to serve on the Joint Negotiating Committee for the purpose of jointly negotiating transition agreements, if necessary, and the JCBA.
Within 20 days of the May 3 Merger Announcement Date, the Merger Committee will have finalized the selection of the three impartial arbitrators. Additionally, we will forward the employment data to every non-verified and non-updated pilot. We will also post that data electronically.

It’s now important to reemphasize that the revised ALPA Merger Policy states that negotiations for the Joint Collective Bargaining Agreement should be scheduled consistent with the high priority goal of concluding the JCBA prior to the date for conclusion of the seniority list integration process.

Our Furloughed Brothers and Sisters
By design, the Merger Committee is composed of pilots from across our domicile network and from cross-sections of our seniority list. Pursuant to the UALMEC Policy Manual, our committee must include a pilot from the bottom 25 percent of our seniority list. The important perspective this position carries has not been lost. When we first met as a committee, we realized that one of the greatest challenges we would face was our work on behalf of our furloughed pilots. Past seniority integration arbitration awards have generally placed at least some pilots on furlough as of the date of the merger announcement at the bottom of the integrated list. While past decisions aren’t “binding” on future cases – each of which will turn on its own facts - and while ALPA Merger Policy has changed since those decisions were issued, we would be less than candid with you if we did not point out this historical treatment of furloughed pilots in seniority list integration arbitrations. That said, we are committed to advancing the interests of ALL our pilots – those who are active and those who are on furlough.

Subject only to the caveat that experience in seniority integration arbitration tells us that to be effective with the arbitrators we have to maintain credible positions supported by facts and logic rather than emotion, we will advocate in the strongest terms for all of our pilots and our furloughed pilots are no exception. We pledge to communicate with you frequently, openly and candidly: it may not always be what you want to hear, but it will be the unvarnished truth. Please remember, however, we must communicate with you without compromising our strategies deployed on your behalf. We take very seriously our charge to represent the entirety of our seniority list. We will use all means to defend the United pilots, and we will leave no stone unturned in our pursuit of the best integration possible. We will communicate with you again soon, and are fortified by your keen interest.

Traditionally, no subject is more sacred to an airline pilot than his/her seniority. It is critical for all of us to remember, especially during times of uncertainty, that there is and will continue to be a lot of noise and confusion on the line. In this instance, that noise and confusion stems directly from the many hypothetical seniority scenarios promulgated by those who claim to be in the “know.” They may even claim that certain methodologies are more relevant than others. We urge you to resist the temptation to succumb to the noise. Those of us who have been thinking about seniority integration in general and an integration with Continental in particular - including your Merger Committee and its supporting professionals who have participated in all of the recent merger activity in the industry - are unwilling to “predict” at this early stage how the integration will turn out. It is thus surely the case that those who are more distant from the process have no special insight into that result. That said, there is one thing we can say with certainty: no integrated list will be constructed, either by agreement or by an arbitrator, that would change the order of flight deck crew members on their own respective seniority lists. The bottom line is that ALPA Merger Policy is explicit in what the Seniority Arbitration Board is to use to consider the facts of the case.

In Unity,

Your Merger Committee
F/O Jeff Ruark, Chairman
Captain Steve Gillen
Captain Bill Bales
 
Or to paraphrase, "pilots currently furloughed from a dying company will not be able to steal the careers from pilots currently employed at a healthy one." At least that's how I interpret that, here's hoping the arbitrator does too.
 
Or to paraphrase, "pilots currently furloughed from a dying company will not be able to steal the careers from pilots currently employed at a healthy one." At least that's how I interpret that, here's hoping the arbitrator does too.



Just like CAL was Dying in the early 90ies
 
it should not surprise anyone that furloughed pilots will remain at the bottom of a seniority list integration process.
 
it should not surprise anyone that furloughed pilots will remain at the bottom of a seniority list integration process.

Tell that to USAPA. They didn't like what they heard so they formed a fake union in the hopes that their furloughees could come back to work in the Left seat of an America West jet.

E'ffing Idiots.
 

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