Here is the latest N.C. update from Chairman Kelly Ison:
This is Kelly Ison with a Negotiating Committee update for Friday, April 5, 2002. The Committee continues to prepare for negotiations. The direction of the negotiations will become clearer after we see Mr. Siegel’s plan. At this point, it appears that he intends to use the deadline of the ATSB to push the employees toward a concession package.
R and I
We met with the R and I Committee along with ALPA National’s R and I Department this week in Herndon. We researched the background of Mr. Siegel’s comment to the other labor groups that the company must make a $770 million contribution to the pension plan in 2004. We are still not sure where his numbers come from, but in essence, the company must show an accounting liability of some number for future retirees under FASB. That liability, however, does not translate into a cash expense. As of January 1, 2001, the company has a credit balance of $61,707,092, which it can use to offset any minimum contribution requirement (if there are any) to the pension plan under ERISA. Jack Parrack will put together a document explaining the FASB liability vs. real dollars. That document should be ready soon. This issue of accounting charges vs. cash will likely become relevant in the upcoming negotiations since managements generally magnify the accounting issues and minimize the real cash issues. In other words, they typically use FASB liability to make the retirement expense look worse than it really is. Another topic was the effect and process of a bankruptcy filing under Chapter 11 as it relates to pension plans. There is a difference in a Chapter 11 filing and a distress termination. Under Chapter 11, pension plans are treated like other provisions of the contract in that management must first attempt to negotiate changes with the unions. (For more background on how Chapter 11 affects contracts, see the bankruptcy primer in the 3Q 01 Negotiating Committee report to the MEC.) Rick Moseley and staff are putting together Q&A document for MEC on pension plan distress terminations and Chapter 11 filings. Seth Rosen is also putting together a document outlining issues the company must deal with in a filing. That document should also be ready for you soon.
Fragmentation
The Committee had a conference call with Mike Abram to discuss the company’s asset sale and how it relates to the fragmentation provisions in Section 1.F of our contract. Mike and Jeff Small are drafting a letter to Mr. Siegel requesting all of the information surrounding the sale. Michael Glanzer is also pursuing the issue in the information sharing process.
Long Term Disability Problems
The Committee will participate in a conference call that Rick Moseley is attempting to set up with Tony Bralich. Management is erroneously interpreting provisions of LOA 41 to deny pilots payments under the LTD program.