In my message to you last week, I outlined how our unprofitable partner
contracts and escalating expenses caused the decline of our business. Over
the past several months, we took many difficult steps in an attempt to get
Pinnacle Airlines back on track, including making officer and management
reductions across the board, winding down our partnership with US Airways
and pursuing modifications to our contracts with Delta, United and our
labor groups.
Unfortunately, our concerted efforts did not result in a viable solution.
This was not the outcome I had in mind for any of our stakeholders,
especially our workforce, but we must now make the best of a very
difficult situation.
In light of these circumstances, today we have recommenced negotiations
with our organized labor groups to amend our existing collective
bargaining agreements. In doing so, we have asked union leaders for
concessions that are integral to the long-term viability of Pinnacle
Airlines, which include seeking consensual wage, work rule and benefit
changes. As before, we plan to have all workgroups (union and non-union,
front-line and management) participate in these cost reduction efforts
necessary to return Pinnacle to profitability.
Although some terms will vary from one group to another, the following
items would apply to non-union employees once labor agreements have been
modified:
· 5% Wage reductions
· Reduction in the company match to the 401(k) retirement plans -
effective in 2013
· Elimination of our traditional PPO health plan, replaced by two
consumer-driven health plan options – also effective in 2013
· Shift extended sick leave (ESL) to100% employee-paid, consistent with
Pinnacle’s ESL benefits prior to 2012 - also effective in 2013
· Require employee contributions of 25% to the long-term disability (LTD)
insurance plan - also effective 2013
Unionized employees will receive more specific details on the requested
changes from their representatives in the coming days. In terms of timing,
work rule changes and wage concessions would take effect when our labor
agreements have been modified. The proposed benefits plan changes (health,
401(k), ESL and LTD) would take place in 2013.
It is difficult to ask any devoted Pinnacle employee to accept wage and
benefit reductions. But we are seeking concessions that we believe are
necessary to our reorganization, and fair and reasonable given the
circumstances of our business, and will do everything in our power to
maintain an equitable and measured approach to negotiations throughout
this process.
A great number of challenges are now behind us, but still more lie ahead,
and I humbly ask for your continued patience and courage as we work toward
a consensual resolution.
As always, we will keep you informed as we move through this process. On
behalf of the entire management team, I am deeply grateful for your
commitment to Pinnacle, and ask that you do your best to remain focused on
your responsibilities in the coming weeks.
All the best,
Sean
