DETROIT MINI UPDATE
A letter from the NWA LEC officers to the pilots of ALPA Council 20
TO: All Council 20 Pilots
FROM: LEC Chairman
DATE: March 10, 2006
RE: ALPA/NWA Restructuring Agreement (Tentative Agreement) (TA); Council 20 Chairman?fs Perspective:
I hope all NWA pilots take the time to educate themselves on the March 3, 2006, TA. This agreement may, without exaggeration, be the most important contract ratification for pilots in the history of Northwest Airlines. Our pilot membership will be making the final decision. Although the MEC has decided to send this TA to the membership for ratification, the MEC has deferred a vote recommendation until the upcoming MEC meeting.
This tentative agreement is controversial because it will drastically degrade the value of our careers as Northwest pilots. Negotiations were conducted under duress, during the 1113c process, with the threat of imposed terms of employment. Our defined benefit plan (DBP) has been frozen, and we were negotiating for a follow-on contribution plan without knowing whether we will be able to prevent termination of our DBP. (We are still waiting on pension relief legislation.) Management demanded an additional $358M/year in cost reductions, with the threat of liquidation if we did not comply. Managements at other legacy carriers recently in Chapter 11 (US Airways and UAL) have been able to negotiate deep cost reductions from their pilots, as well as other labor groups. In all cases, the pilots have been burdened with substantially disproportionate concessions when compared to other labor groups and management. Both US Airways and UAL pilots have had their DBPs terminated.
The Northwest management plan of ?glast man standing?h failed. Management was unable to negotiate voluntary concessions from all labor groups, fares remained depressed, and fuel costs increased substantially. NWA filed for Chapter 11 and joined the ranks (including DAL) of those no longer standing. As is too often the case, those who are responsible for bad decisions are not held accountable. Those with no influence on those decisions are expected to concede a substantial portion of their career value to cover the incompetence and bailout of a management team that is paid very well to make much better decisions. Unfortunately, the justification for labor?fs making (what would otherwise be very foolish) concessions is to save the airline and save our jobs. We are essentially placing a very high value on a greatly devalued career.
The greatest travesty, in my opinion, is the time we have invested in what has become a bad investment. Time can never be recovered. Some of us have invested more than others. Some will cut their losses and find a better, more rewarding career. (For those pilots who can, you owe it to yourself and your family to do so.) The effect of this TA is not just the six to eight years we will be exposed to the terms, but it is career-altering for most pilots who are not in their final years at NWA. You will be better off finding something that pays more, has better benefits (including retirement), and affords your family a better quality of life. There are MANY alternative careers that will likely be more rewarding. Taxi drivers, bus drivers, teachers, postal workers, and even some secretaries make more than many airline pilots. Often pilots have advanced degrees and experience in other more rewarding professions. If a career in commercial aviation is not going to provide a respectable standard of living, acceptable work rules, and a retirement that will support us after retirement, it is time to take a stand, or move on to something better. This TA seems to protect pilot jobs, but in the process we seem to have simply traded good jobs for bad (and even more so for the more junior pilots). While we have provided alternative employment (with a subsidiary or another carrier) for our most junior pilots, we may have facilitated their furlough. There are times when job security (and our scope) can be a ball and chain. So the good news may be that our furloughed pilots will have pilot jobs available, but the bad news is the jobs will likely not be worth having for many of those pilots.
I suppose a fair question is what are your expectations of an airline career, and how has that been altered by the Chapter 11 process? We all knew we would be making substantial concessions, but what is necessary, and how much is enough? Should we expect a better TA? How much risk are we willing to take to achieve our level of expectations? If we reach our maximum level of risk tolerance, we simply have to reduce our expectations to match that tolerance. In my opinion, that is what will determine how most pilots will vote on this TA. It should be no surprise to anyone that the level of risk pilots are willing to take may depend on the magnitude of their investment. Those with the most years invested, may be more inclined to limit their risk and accept the TA as their new level of expectation. Those with fewer years invested, may be more inclined to risk more rather than accept a lower level of expectation that will have a much greater detriment to their career. Under the best of conditions, it could easily take another 20-plus years to recover from this TA. I don?ft think anyone expects to fully recover in one contract, regardless of the state of the airline.
Although we were told that $358M was enough, it was not. If we were to get credit for our revenue-enhancing concessions, the total value of this TA would exceed $500M. If given credit for the soft money, or even a substantial part of it, we would not have had to concede the deep pay cuts, we would not have had to concede the deep degradation of work rules, we could have had better benefits at less cost, and we could have had a better retirement contribution. We paid for our 5 percent retirement contribution during Chapter 11 by permitting NWA to charge our DBP with any excess PBGC insurance premiums. Our revenue-enhancing concessions supposedly paid for our future pay increases, which do little to mitigate even basic cost of living increases. So, as to the question of whether or not we paid too much for an agreement, the answer is clearly„ŸYES. As to whether of not we should expect a better TA, one with fewer concessions, the answer is again„ŸYES. And so what are the risks of the membership voting down this TA?
If the TA is rejected, the judge may allow NWA to impose; he may specify the terms; he may advocate an extension (with negotiations); and he may even reject the 1113c petition. Until the judge rules, NWA could impose terms without or before the judge's decision, but the judge does have to rule on their 1113c petition. In any case, NWA management will most likely need a consensual agreement from all labor groups before they can get exit financing. So what is the better choice, taking the terms of the (long-term) TA, or taking the risk of improving the TA in an effort to better match (higher) career expectations? I am sure you will hear about all of the worst-case scenarios of imposed terms, and those are calculated risks. If NWA needs a consensual agreement to exit Chapter 11, imposed terms are a short-term problem. We have reserved our right to all legal self-help options, and NWA has indicated they will seek an injunction to stop a strike. The outcome of that challenge and counter-challenge could take days, weeks, or months. It is in both our and management?fs best interest to achieve a mutually acceptable agreement. The pilot membership will have to decide what is acceptable. I do not find this TA to be acceptable.
Although there was enough votes to have stopped this TA at the MEC, most on the MEC wanted the TA to go to the membership for a final decision. The compromise was to pass a resolution that ensured the TA would go to the pilots, but the MEC would debate and decide on a vote recommendation at the upcoming MEC meeting. We made it clear that we expected full contract language to be completed for our review and available to all pilots before road shows and/or membership ratification. Unfortunately, the MEC chairman published his vote recommendation (yes) in Ziplines before the MEC position had been determined. The MEC chairman is obligated to represent the view, position, and (policy) of the MEC. Contrary to the Ziplines, the differences among the MEC on the TA are well known. In any case, the MEC vote recommendation will be addressed (and determined) by the MEC next week. We have conceded too much and compromised the quality of our careers at Northwest beyond what was necessary to ensure a successful airline restructuring. My recommendation to the Council 20 pilots and to the MEC is a ?gno?h vote.
The MEC Negotiating Committee has just distributed the latest Across the Table (ATT). Please take the time to review the ATT; it can be downloaded (in three parts) from the www.nwaalpa.org website. The level of concessions and cost to our career is obvious.
We (ALPA) need to find a better (and much more effective) way to protect pilots and our careers. It should be apparent to all; we have, to a large degree, failed miserably in that respect in the Chapter 11 environment. It has been a perfect storm, and we have been challenged by limited options and limited leverage, but, in my opinion, we have assumed that we have no other recourse; we have assumed the role of victims. We can do better.
Fraternally,
A. Ray Miller Jr.
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