AIP at United for no furloughs

AAPalmTree

Well-Known Member
@Seggy ive heard a rumor that scope will be tightened on this agreement and include pay raises at the expiration. Any truth to that from what you’re hearing?
 

turbomax97

What can brown do for you?
I've heard the pay raise as well... its not exactly a selling point. I havent heard of any scope items yet. We will find out in 2 days.
 

Seggy

Well-Known Member
A true game changer. Well done to the UAL MEC.
Yup.

To give some a practical flavor how 'great' this deal is, a lot will be making more with this deal (with the pay protections), working less days, than they would without it in place.
 
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Seggy

Well-Known Member
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September 16, 2020
Pandemic Recovery LOA Tentative Agreement:
Why and How We Got Here


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Until it was finalized, the original concept of this Letter Of Agreement for the MEC and Negotiating Committee had been largely characterized as furlough mitigation. While that was the impetus of this LOA, it really isn’t the overarching theme. From a pure cost analysis, the Company would realize twice the pilot cost savings with furloughs as they will under this LOA. This speaks to the value the Company is placing on having pilots current, qualified, and in their correct position to take advantage of the recovery when it comes. Ultimately, we have too many pilots on the property for the flying that is available, even after all of the voluntary measures already introduced. That leaves only two choices for the Company - furloughs or spreading the flying among all of the pilots and accepting an inefficient staffing model.

The Company has consistently communicated that it wants United Airlines to be in the best position possible to capture recovery opportunities when they arise. Those opportunities may come from a surge in demand following a vaccine, or they may come from competitors, foreign or domestic, faltering. Our goal is to get as many pilots back to their pre-displacement categories as quickly as possible. None of us should want to experience another decade of career stagnation that would occur after a massive furlough that will likely take years to unwind and lengthen the time required to rebuild the airline back to the size we are today.

If your motivation in supporting this LOA is simply to keep all your fellow pilots on the property instead of cutting them loose in an abysmal job market and economic recession, we applaud your unionism. If you are not supportive of this LOA and feel that furloughs are just a career hazard, we ask you to consider if the entire pilot group would be better served long-term by ratifying this LOA. Are we stronger and more capable of defending our careers if we keep pilots in their pre-crisis seats? Does protecting all pilots on the seniority list and being ready for recovery position us better to complete Section 6 negotiations, or would it be better to pursue Section 6 negotiations with thousands of pilots on furlough?

We have been discussing mitigation strategies since the effects of the pandemic on the industry became evident in early spring. Once we exhausted all of the voluntary options created in early summer, we switched to the discussions that led to this LOA in accordance with the direction of the MEC. We negotiated the best deal possible and are placing it in your hands to decide which path we take from here. While several vocal pilots have tried to kill this deal before you were ever allowed to see it, we feel it is important that you get to make the decision for yourselves. It can be easy to get sucked into forum and social media debate where incorrect information is offered as truth and history is misrepresented and revised. We ask that you take the time to read and understand what is actually in the LOA and why it is structured the way it is. Ask your own questions; don’t allow the loudest voices in the room (a comments section or a forum thread) to speak for you. Ask yourself if the people trying to influence your vote are looking out for the best interest of the entire pilot group or their own self-interest? Make sure you understand what you are voting on and make sure you have taken the time to think about each path critically, without outside influence.

As you make your way through the language, we wanted to provide some of the highlights in this edition of The Brief as well as some of the background information.

Furlough Protection
This LOA commits the Company to no furloughs prior to the June 2021 Bid Period (if UAL doesn’t accept the CARES Loan this extends to December 2021). Beyond June 2021 (until termination of the LOA, which is no later than Oct 2022), if the Company furloughs anyone hired prior to August 20, 2016, the MPG/LPA reductions terminate. We are sure many of you will wonder why we picked this date and why the no furlough protection doesn’t last longer.

While we would have preferred to structure this deal to prevent all furloughs for the duration of the LOA, we felt the additional MPG reductions that would have been required would have been untenable for the pilot group as a whole. Currently, given no evidence of an imminent recovery, the Company is largely focused on cash conservation. The Company is not using a traditional cost benefit analysis for manpower decisions and instead is largely making decisions based on near-term cash savings. Our hope is that if we can prevent furloughs until at least next summer, there will be enough evidence of a recovery in the near future that the Company will decide not to furlough at all.

Once there is some amount of improvement due to increasing business demand or the relaxation of international travel restrictions, we believe the Company will return to making furlough and displacement decisions based on a long-term economic and business strategy. Essentially, we are buying an extra eight months to see if there is an improvement. Absent a recovery, the Company will be limited to around 2,000 furloughs if they want to continue to use the provisions contained in this LOA.

To be clear, without this LOA, the Company is positioned to execute on their furlough plan, which they have been telegraphing for months. Based on PDRs and e-mails we have received from our pilots, some think the Company isn’t furloughing past 2,850, and others have even written us saying they don’t believe the Company will furlough at all. Those people are wrong. While we appreciate pilots’ skepticism of Company communications, we have the benefit of our own System Schedule Committee and ALPA Economic and Financial Analysis Department who confirm that we are currently overstaffed by significantly more than the currently announced furloughs, given the state of the industry. The Company has clearly stated that the current furlough target is 3,900 pilots and, absent a robust recovery, we are not convinced it will stop there. Under this deal, if they still decide to furlough more than about 2,000 next summer, they will lose all their benefits from this LOA.

Removal of Six Seats from 76-seat Aircraft
Some pilots have suggested that the only reason UAL management is willing to agree to furlough mitigation would be to prevent removing seats from the 76-seaters once they furlough past January 23, 2016 hire date as required in Section 1. To address this concern, we required the Company remove the seats while the Company utilizes the reduced MPG provision.

Additional Restrictions on United Express Flying
Under the UPA, United Express block hours are limited to 120% of UAL mainline narrowbody block hours. This restriction does not apply on a monthly basis but rather as a rolling 12-month lookback. Under this LOA, in addition to the current UPA restrictions, United Express block hours would be limited to 100% of UAL mainline narrowbody block hours each month, measured during PBS bidding. For reference, had this LOA been in place prior to August of this year, UAL would have had to reduce United Express block hours or increase United mainline narrowbody block hours in August, September, and October. In September, United Express flew 24,296 hours more than United mainline narrowbody (or 142% of mainline narrowbody block hours). Under this LOA, that would not be allowed, even though it did not violate the rolling 120% metric.

Pilot Voluntary Separation Leave – Round 2
Under PVSL-1, the Company awarded PVSLs for over 500 pilots, and in the end, 455 pilots decided to keep their awards. In this next round, the P-VSL will be open to any pilot who is at least 50 years old with at least 10 years of service. More than 6,600 pilots will be eligible for this program, and the Company will award this to the 655 most senior pilots that bid for it. The terms are largely the same as PVSL-1. It pays 50 hours per month plus eight hours into the pilot’s PRAP account. The monthly payments are limited to 24 months, but active rate medical is available for up to 60 months, or age 65 if earlier. Unlike PVSL-1, the pilot’s pay rate will be the pay rate at bid opening, or the June 29, 2020 rate, whichever is higher. Like PVSL-1, this package offers a Company-paid retirement move and travel benefits.

Restrictions on Stock Buyback
The Company is already under restrictions from the government not to buyback UAL stock. This provision was added to the LOA in case UAL pays the government back early, thus lifting the Cares Act prohibition of stock buybacks.

Pay Rate Protection & Displacement Cancellations
While these provisions are in two different sections, they are closely tied to one another. We wanted UAL management to cancel as many displacements as possible and incentivize them to keep pilots in their pre-pandemic seats. There are about 2,800 displacement cancellations listed in this LOA. We don’t know how the airline is going to change over the next two years so we can’t forecast what vacancy bids or displacements might occur in the future, but as mentioned above, we anticipate the Company will shift to a more long-term view of future manpower planning. The pay protection back to pre-20-07D positions is an insurance policy against the Company making further large displacement bids by removing any pilot payroll savings that they would receive from future displacements. Additionally, there is an incentive for the Company to offer vacancies prior to next March to get as many people back in their pre-displacement seats as possible. The last thing the Company wants is to be stuck with the pay protection and not to have the benefit of those pilots back in their pre-displacement categories.

Work Reductions (MPG & LPA impacts)
We know there will be many questions around this topic. Why did we create three groups? How did we come up with the MPG values? There were significant debates within the MEC as to the best way to structure this. Nobody wanted to consider reduced MPG values. The reality is that it’s the best way to address the fact there is simply not enough flying for the pilots we have on the property. We tried to create a solution that required collective effort while acknowledging the reality that, absent mitigation, no one in the Junior group will remain on the property. Additionally, if flying doesn’t get back over 50% of 2019 levels in the next few months, the furloughs are likely to extend well into the Middle group. This provision is designed so that as flying levels return, the MPG is increased.

As a reminder, a lineholder receiving the lowest possible monthly pay of 35 hours can be certain they will not be required to work more than seven days in the month. Reserves will continue to be paid 4:03:20 per reserve day with a minimum of nine reserve days. That means the lowest possible monthly pay for a reserve is 36.5 hours for nine days of work. There is also a mechanism in the LOA that ensures reserves can’t be at the minimum pay and work levels while lineholders in the same groups are built higher. This is important to minimize lineholder and reserve disparity within the same group.

Guaranteed Renewable Three-month COLAs
We realize these reduced MPGs won’t work for individuals who have found better employment options outside of United. The guaranteed COLAs contained within the LOA will allow anyone who opts for a COLA to stay on active rate UAL insurance while pursuing other opportunities. Pilots will have the option of taking continuous monthly COLAs, or opting for longer duration COLAs, to take multiple months off over the holidays or next summer.

Industry True-Up
This is designed to provide some insurance in case UAL schedules more conservatively than DAL, AA, or SWA and the aggressiveness of those other carriers pays off for them. We will calculate this quarterly, and if UAL was too conservative, we will go back and retroactively apply a higher MPG in the months they undershoot the industry.

Permanent UPA Changes
Most of these changes lock-in as soon as we sign the agreement, while the LTD improvement locks-in once the Company utilizes the reduced MPG/LPA section. In the event we ever get funding from the government, the MPG reductions would be postponed while these permanent improvements would still go into effect.

First Class Deadhead
Basic flights will now be booked in First Class. If First Class isn’t available, pilots are waitlisted and booked into First Class if it becomes available and are added to the upgrade list ahead of passengers. Many of you are likely wondering how First Class deadhead was included in an LOA that is mostly about furlough mitigation and career recovery. We told the Company that for pilots to take this deal seriously, management would have to agree to something that they never thought they could agree to. First Class deadhead is the epitome of such an item. We have been trying to get the Company to agree to this for over a decade and have gotten nowhere - the Company has refused to even entertain the idea. This is a permanent change to the UPA that locks in as soon as we sign this agreement, and while some other major US airlines don’t even deadhead in their version of Economy Plus, we felt this was a good way for management to signal a new beginning as part of this LOA and acknowledge our support through this crisis.

Non-Profile Reserve
This is a provision UAL had prior to the post-merger UPA. We are restoring the ability for the top 20% of reserves to build their PBS schedule without staffing constraints.

Post-Award Training Pay
Currently, if you are assigned training after PBS is awarded, pilots are only paid for trips missed. This can result in being sent to training for no pay at all. With this LOA, pilots will be paid trips missed or three hours per day (like training awarded before PBS), whichever is greater.

Long Term Disability Benefit Increase
Under the UPA, pilots on LTD receive a benefit of 50% of their pre-disability pay rate times 85.5 hours a month, capped at an $8000 benefit. There was a time when very few pilots were impacted by this cap, but pay rates have risen so much since the UPA that almost every pilot is now subject to the cap. As part of this LOA, as soon as the Company utilizes the reduced MPG/LPA, we lock in a permanent increase of this cap to $11,000 per month ($132,000 annually) effective October 2021. The LTD benefit remains tax free as it is today, unlike many other airlines where the LTD benefit is taxable.

5% Pay Raise
We think the pilot group is better off as a whole under this LOA, and once airline demand returns, it will be important that United pilots are assured in sharing the Company’s future success beyond getting pilots back to higher paying seats quicker. As soon as UAL hits a 5% profit margin over a four-quarter period, we get a 5% raise. At those rates, we will have the highest pay rates of any passenger carrier, on every piece of equipment. For reference, UAL exceeded a 5% margin every year from 2014 through 2019. While those were all measured as calendar years, this provision allows us to look at consecutive quarters across calendar years to allow this trigger to occur sooner.

CARES 2.0 / Other Government Assistance
Many of you have asked why we don’t wait to see if the U.S. Government provides an extension to CARES funding or provides some other assistance to the airlines that prohibits furloughs. We have discussed this at length with our ALPA Government Affairs experts. By all accounts, it seems that the government won’t conclude these discussions until after a number of our pilots are already on furlough, if they agree to do anything at all. This LOA is structured so that if additional government money does come, the MPG/LPA reductions are delayed while United receives assistance, and we still get to keep the improvements listed above. Even if you believe government money is coming, understand that by ratifying this LOA, we will still get the displacement cancellations, pay protection, First Class Deadhead, and the pay raise even though the MPG reductions are delayed or eliminated due to government assistance. In fact, our best-case scenario is a ratified LOA followed by a CARES extension. The Company would not agree to these things if they were confident government money would be coming. The Company is buying the equivalent of an insurance policy from us. We think we are better off under this LOA whether or not the government money comes.

Deal Termination
Because we share the scars of past downturns, we have included a number of items that can terminate the temporary provisions in this LOA while we still keep the permanent improvements. As a final backup, in no case does this LOA go past the October 2022 Bid Period. There are many items that could happen prior to this date to make the temporary items terminate sooner than that.

One concern we heard repeatedly before the details of this agreement were released was about entering bankruptcy with a degraded contract. We have spent a great deal of time studying this question and talking to experts on bankruptcy laws and procedures and airline economics. It is our firm belief that bankruptcy doesn’t help you out of a revenue problem, which is what the industry currently faces. Additionally, United does not hold a lot of unsecured debt that could be restructured in bankruptcy, unlike the early 2000s. We believe UAL now has adequate cash to make it to the end of 2021 unless things get much worse. If things get even just a little better, that easily extends into 2022. With all that said, our best protection against temporary provisions becoming permanent in bankruptcy is structuring the changes around items that the Company wouldn’t want or need in perpetuity, even in a bankruptcy.

Remember that the Company saves significantly more money by furloughing than they do under this LOA. If we find ourselves on the steps of bankruptcy court, that will still be true. We don’t believe an airline in bankruptcy will still be interested in carrying excess pilots in order to take advantage of recovery opportunities. In fact, in such circumstances, we would anticipate that UAL would be maximizing furloughs well beyond the 2,000 pilots furlough limit in this LOA and flying the remaining pilots as many hours as possible well before a bankruptcy filing was imminent.

Make sure you get your questions answered about this LOA before making a decision. Educational materials, virtual town halls, and FAQs will all be available to you to provide accurate information about the LOA. There is nothing worse than learning the correct facts after the vote has closed and regretting the way you voted. Even if you are unhappy with the ultimate outcome resulting from the vote, if you take the time to learn the facts, you will feel better that you made the best decision you could for you, your family and all United pilots given the information available.

Respectfully,

First Officer Jeff Brown
Captain Dan Fandrei
First Officer Adrian Rivero

UAL MEC Negotiating Committee
 

BobDDuck

Island Bus Driver
A huge amount of credit is due to the NC and rest of the team over there. This is really a game changing package that is designed to fit into the uncertainty of current times.

But also kudos to United's labor relations team for being willing (and smart enough) to think outside of the box to work towards this deal. There are a very limited number of properties that would be capable of doing that.
 

arkflyr

Well-Known Member
Our group of forum Rhodes scholars is already saying it's a bad idea and we wouldn't take a deal like that. But they're motivated entirely by greed so, I guess I'm not surprised.


Sent from my iPhone using Tapatalk
So you are saying the circular firing squad is back at it today?

Back to United, great deal that you all were able to come up with something.
 

BobDDuck

Island Bus Driver
We just set a precedent for part time pay.

First glance tells me no thanks.
Do you know how hard the groups that got part time pay had to fight to get it? If that's your concern with this thing, explain how the math justifies that happening in the future?

This is 100% a company willing to pay more to keep a stable of pilots around so if things recover quickly, they don't get beat to the punch of restarting routes and frequencies. The second a company is sure that this down turn is going to stick around a while, this all gets jettisoned and everyone gets downgraded or furloughed to realize the cost savings. And the second the recovery takes off, a company is going to be right back to their old games of advocating against credit and bid caps and trying to minimize headcount to reduce fringe.
 

Finny

Well-Known Member
Looks like a pretty creative and innovative solution to this crisis. It’ll be interesting to see how it is voted on.
 
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