Subject: Retention and funding of legal services to challenge proposed changes to our pension plan
Greetings.
Our MEC's April vote to accept management's plan for targeting our pension funds and against providing for membership ratification of this significant policy change shows how out of step this MEC is with a large proportion of the pilot group.
The R&I committee is currently considering which of several management options to select for implementation. If this is all on the up and up, then why are these choices not being made clear to the pilot group and why are the specific effects on individual pilots being obscured?
Many pilots have suggested that we look into legally challenging the unprecedented money grab inherent in ALPA's stated targeting goals. Taking that to heart, I invested considerable effort in researching the options and retained a legal firm, using my personal funds, that is top notch, well respected and able to work with us. The firm is: Lewis, Feinberg, Lee, Renaker and Jackson, P.C. (Lewis) You can visit their website at: www.lewisfeinberg.com.
In early May, 2007, I put out an appeal to several hundred pilots for contributions to create a legal fund. Moving forward with researching our legal options with Lewis was contingent on the commitment of NWA pilots to step up, put our resources together and fund the legal work. Response from the pilot group to that initial appeal has been strong. With that show of commitment, I have moved forward and instructed Lewis to initiate formal legal inquiry into the pilots' pension fund at NWA.
While the initial response has been good and the number of pilots pitching in continues to climb, we need to continue reaching out and broadening the circle of pilots willing to act.
Toward that goal, this letter is a request that you contribute $150 into an account that has been established for this purpose. The money in that account will be used solely to pay Lewis and to meet incidental costs incurred by the Steering Committee, which currently includes Eric Danfelt (CA SEA) and myself. Any amounts that remain in the account after conclusion of the work by Lewis will be returned to you on an equal basis.
The goal of this legal research is to see if we can turn up any legal means by which to challenge the targeting of our pension funds. The most likely issues revolve around age discrimination as defined by ERISA. If we find such grounds, we will likely bring them first to the attention of NWA and ALPA and attempt to resolve them at that level. If that were to be unsuccessful, we would consider initiating a lawsuit.
It is important for you to note that we are engaging Lewis only to obtain advice and representation regarding our legal rights in connection with our pension issues at NWA. This does not mean that Lewis will necessarily litigate on our behalf - that would require both the finding of sufficient grounds as well as a separate arrangement with Lewis. This engagement is to begin legal research and may include communicating with ALPA, NWA and/or administrators of our plans. This does not infer one way or the other as to whether we will find sufficient cause to actually litigate on these issues. But it is the first step to getting our house in order if we are to go that route, whether such litigation would be on ERISA issues or on issues of fair representation by ALPA.
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We would prefer to see our union leadership return to providing fair representation to all seniority levels and negate the need for such independent legal oversight. The prevailing philosophy in our MEC of improving this contract for some at the expense of others does not bode well for the solidarity that we need to effect real contract repair. But, so far, those points have fallen on mostly deaf ears in our MEC. Perhaps the show of resolve represented by such legal action can pave the way for our MEC finding their way back to acting in ALL pilots' best interests.
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So, we are willing to keep working on defending our collective interests if you are. One thing is for sure: we'll have no case unless we work together and step up to the plate here.
Please make your check out to "NW Pilots' Legal Fund"for the amount of $150 and send it to:
The NW Pilots' Legal Fund
PMB 349
14241 NE Woodinville-Duvall Road
Woodinvillle, WA 98072-8564
If you have any questions, feel free to contact myself at 206-406-4141 or Eric Danfelt at 480-767-2007.
One more thing. We are sending this letter out Bcc for privacy. Please feel free to forward this appeal to whoever you think may be interested. This is going out to a fairly large number of pilots, but we do not have everyone's email.
Regards,
Michael Tanksley
CA - ANC
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
Friday, August 10, 2007
ALPA says ignore the elephant in the room (June 07)
Greetings.
We have recently received Part 1 of 4 ALPA efforts to explain and defend their targeting scheme. (Retirement Transition Update #1)
It comes as no surprise that this Part 1 has done nothing to actually describe the specifics of what is being proposed. It certainly does not include the seniority list of the individual effects of targeting as the MEC agreed to provide for us at the April MEC meeting.
What Part 1 does do is use a bully pulpit to reiterate ALPA’s justifications for targeting our DC funds without any counterpoint whatsoever.
While there are numerous points that deserve critique, the elephant in the room that ALPA spent a full third of Part 1 trying to shoo away is the vulnerability of our DB benefits to a distress termination.
Let us be clear in understanding that our frozen DB plan is very much at risk when looked at from a historical perspective.
To illustrate this point, let’s quickly review the past couple of decades and look at all of the major airlines that have entered Chapter 11 bankruptcy proceedings and see how they have fared.
After Braniff entered chapter 7 liquidation, the first airline to file Chapter 11 was Continental, which entered and exited bankruptcy two times before moving ahead.
Next came TWA. TWA also entered Chapt. 11 a second time and was staring into the abyss a third time when AA bought them.
Pan Am went through several bankruptcies, the number dependent on what one defines as the real Pan Am. It is, of course, gone.
Then came Eastern. Eastern is gone.
After a brief lull in the late 90’s, we had USAir and then United enter Chapter 11. Both of these carriers entered and exited bankruptcy 2 times and both are still on very shaky ground.
Quite a consistent track record for airlines entering Chapter 11 bankruptcy: in bankruptcy at least two times or gone altogether. And how many of these have maintained a pre-existing DB plan through it all? None!
So our ALPA guys have the audacity to suggest that out DB plan is secure. All it takes is for NWA to go back into bankruptcy again, which history suggests is more likely than not, and they can distress terminate at will.
Considering that DB plan security is a cornerstone of ALPA’s defense of its plan to take the pension money from 2000 senior pilots and give it to the more junior pilots, it appears that the justifications for the targeting scheme start on very shaky ground.
Moving on:
A continued flat allocation of the paltry 5-8% DC money falls far short of making up for the 40% pay cuts and work rule concessions that the senior pilots are suffering along with the rest of the pilot group.
ALPA makes it sound like the senior pilots would be getting some sort of windfall if the DC money continued to be flatly allocated. This is the height of absurdity when considered with the bigger picture of our total contract and its effects on our lives and finances. At least the younger junior pilots will have time to make up for what we all hope is a short term downwards blip in our contract at NWA. Which leads to the next point...
Targeting fixes the inadequate pension twice for the junior pilots at the expense of the senior pilots
Numerous times in Part 1 and other ALPA communications it is made clear that the pension program and pay scales at NWA are sub-standard and improving those will be a major focus of future negotiations with NWA. What this means is that, barring catastrophe, the inadequate pension provisions are likely to see significant improvement in coming contracts. This can basically fix the current pension shortfall for our most junior pilots, precisely the ones who are receiveing the largest windfall from targeting. Meanwhile, any such improvements will come too late for the more senior pilots.
The targeting assumptions do not take such future improvements into account, (let’s be careful to avoid mixing the engineering of the charts in Part 1 with the actual assumptions that are proposed to be used to target our pension) so junior pilots get senior pilots’ pension money to fix a shortfall that is likely to be addressed in future contracts anyway - contracts that will do nothing to make up for the huge losses in income and benefits that the senior pilots are suffering along with the rest of the pilot group right now. And there is a large cadre of mid seniority pilots who are being led to think that targeting is good for them but are likely to get the short end of the stick as well.
Pilot pension traditionally continued to increase in value to the pilot right up to retirement, even for pilots with over 25 years longevity.
It is slight of tongue for ALPA to claim that “once a pilot completed 25 years of service, his accrued benefit would never thereafter increase...” This statement applies to only one aspect of the larger calculation of a pilot’s pension benefit. It is misleading to take it out of that narrow context as done on page 5, footnote 4 of Part 1. And the obligation by the pension fund to fund that benefit increases right along with it.
Past pension benefit increases, as well as the attendant funding obligation increases, occurred in part due to annual increases in pay rates that were reflected in the FAE calculations. It also occurred due to the progressive reduction of early retirement penalties. In this last respect, benefit and funding obligations per pilot still increase even under the frozen plan.
So, ALPA’s intimation that pilots with over 25 years no longer required the company to put money into the pension fund for them is false.
These points are just a few of the many problems with ALPA’s defense of its targeting scheme. The assumptions used in creating the charts were not revealed and numbers that we do know, such as the 8.8% rate that is used for actuarial calculations on funding our DB plan, were probably too high an assumption for ALPA's purpose in calculating the future value of junior pilots’ DC money. But take a 5-8-12% DC contribution and apply 8.8% compounded over 20 years, as many of the junior pilots have ahead of them, and Part 1’s chart numbers would look very different. Or maybe not? Since the details are still being kept in the closet by ALPA, we can't be sure.
Why does ALPA continue to keep the details of the targeting formula secret? Management knows what they are. Whose side is ALPA on here anyway?
The bigger tragedy inherent in targeting is the schisms that its underlying philosophy is creating in this pilot group. This whole business of taking from one group to fix the contract for another is an abrupt departure from the historic philosophies of MECs at NWA, which saw us successfully through some other very difficult times. If this philosophy is allowed to stand, it provides a dark picture of the future prospects of all pilots at NWA.
Enough for now. It's time to spend a little time with my family.
Until Part 2,
Mike Tanksley
We have recently received Part 1 of 4 ALPA efforts to explain and defend their targeting scheme. (Retirement Transition Update #1)
It comes as no surprise that this Part 1 has done nothing to actually describe the specifics of what is being proposed. It certainly does not include the seniority list of the individual effects of targeting as the MEC agreed to provide for us at the April MEC meeting.
What Part 1 does do is use a bully pulpit to reiterate ALPA’s justifications for targeting our DC funds without any counterpoint whatsoever.
While there are numerous points that deserve critique, the elephant in the room that ALPA spent a full third of Part 1 trying to shoo away is the vulnerability of our DB benefits to a distress termination.
Let us be clear in understanding that our frozen DB plan is very much at risk when looked at from a historical perspective.
To illustrate this point, let’s quickly review the past couple of decades and look at all of the major airlines that have entered Chapter 11 bankruptcy proceedings and see how they have fared.
After Braniff entered chapter 7 liquidation, the first airline to file Chapter 11 was Continental, which entered and exited bankruptcy two times before moving ahead.
Next came TWA. TWA also entered Chapt. 11 a second time and was staring into the abyss a third time when AA bought them.
Pan Am went through several bankruptcies, the number dependent on what one defines as the real Pan Am. It is, of course, gone.
Then came Eastern. Eastern is gone.
After a brief lull in the late 90’s, we had USAir and then United enter Chapter 11. Both of these carriers entered and exited bankruptcy 2 times and both are still on very shaky ground.
Quite a consistent track record for airlines entering Chapter 11 bankruptcy: in bankruptcy at least two times or gone altogether. And how many of these have maintained a pre-existing DB plan through it all? None!
So our ALPA guys have the audacity to suggest that out DB plan is secure. All it takes is for NWA to go back into bankruptcy again, which history suggests is more likely than not, and they can distress terminate at will.
Considering that DB plan security is a cornerstone of ALPA’s defense of its plan to take the pension money from 2000 senior pilots and give it to the more junior pilots, it appears that the justifications for the targeting scheme start on very shaky ground.
Moving on:
A continued flat allocation of the paltry 5-8% DC money falls far short of making up for the 40% pay cuts and work rule concessions that the senior pilots are suffering along with the rest of the pilot group.
ALPA makes it sound like the senior pilots would be getting some sort of windfall if the DC money continued to be flatly allocated. This is the height of absurdity when considered with the bigger picture of our total contract and its effects on our lives and finances. At least the younger junior pilots will have time to make up for what we all hope is a short term downwards blip in our contract at NWA. Which leads to the next point...
Targeting fixes the inadequate pension twice for the junior pilots at the expense of the senior pilots
Numerous times in Part 1 and other ALPA communications it is made clear that the pension program and pay scales at NWA are sub-standard and improving those will be a major focus of future negotiations with NWA. What this means is that, barring catastrophe, the inadequate pension provisions are likely to see significant improvement in coming contracts. This can basically fix the current pension shortfall for our most junior pilots, precisely the ones who are receiveing the largest windfall from targeting. Meanwhile, any such improvements will come too late for the more senior pilots.
The targeting assumptions do not take such future improvements into account, (let’s be careful to avoid mixing the engineering of the charts in Part 1 with the actual assumptions that are proposed to be used to target our pension) so junior pilots get senior pilots’ pension money to fix a shortfall that is likely to be addressed in future contracts anyway - contracts that will do nothing to make up for the huge losses in income and benefits that the senior pilots are suffering along with the rest of the pilot group right now. And there is a large cadre of mid seniority pilots who are being led to think that targeting is good for them but are likely to get the short end of the stick as well.
Pilot pension traditionally continued to increase in value to the pilot right up to retirement, even for pilots with over 25 years longevity.
It is slight of tongue for ALPA to claim that “once a pilot completed 25 years of service, his accrued benefit would never thereafter increase...” This statement applies to only one aspect of the larger calculation of a pilot’s pension benefit. It is misleading to take it out of that narrow context as done on page 5, footnote 4 of Part 1. And the obligation by the pension fund to fund that benefit increases right along with it.
Past pension benefit increases, as well as the attendant funding obligation increases, occurred in part due to annual increases in pay rates that were reflected in the FAE calculations. It also occurred due to the progressive reduction of early retirement penalties. In this last respect, benefit and funding obligations per pilot still increase even under the frozen plan.
So, ALPA’s intimation that pilots with over 25 years no longer required the company to put money into the pension fund for them is false.
These points are just a few of the many problems with ALPA’s defense of its targeting scheme. The assumptions used in creating the charts were not revealed and numbers that we do know, such as the 8.8% rate that is used for actuarial calculations on funding our DB plan, were probably too high an assumption for ALPA's purpose in calculating the future value of junior pilots’ DC money. But take a 5-8-12% DC contribution and apply 8.8% compounded over 20 years, as many of the junior pilots have ahead of them, and Part 1’s chart numbers would look very different. Or maybe not? Since the details are still being kept in the closet by ALPA, we can't be sure.
Why does ALPA continue to keep the details of the targeting formula secret? Management knows what they are. Whose side is ALPA on here anyway?
The bigger tragedy inherent in targeting is the schisms that its underlying philosophy is creating in this pilot group. This whole business of taking from one group to fix the contract for another is an abrupt departure from the historic philosophies of MECs at NWA, which saw us successfully through some other very difficult times. If this philosophy is allowed to stand, it provides a dark picture of the future prospects of all pilots at NWA.
Enough for now. It's time to spend a little time with my family.
Until Part 2,
Mike Tanksley
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