Last week the Company informed AFA the return of certain aircraft per the Plan of Reorganization filed with the bankruptcy court will lead to an overstaffing situation. The overstaffing projection based on the return of these aircraft is a surplus of 300 flight attendants. In order to offset the surplus, the Company has contractual rights to employ one of several options; a Voluntary Furlough (VF), an Involuntary Furlough or a new VFLR. A VF probably would not net the results the Company seeks and while an Involuntary Furlough would the contractual costs would likely exceed those of a VFLR. The Company's choice to reduce the headcount is a new VFLR, called the VFLR II. AFA was approached last week and given details of the Company's intentions to offer the VFLR II as well as terms for the program. The proposed terms for the VFLR II were different than the original VFLR previously negotiated and are contractually allowed. While the Company has the right to offer a new VFLR at their discretion and on their terms they do not have the right to alter the terms of the original VFLR. The initial VFLR was oversubscribed by 323 bidders thus triggered a VFLR offering for 2006 and beyond if the VFLR continued to be oversubscribed. The Company believed the September VFLR II met the terms of the 2004 agreement and therefore would not have to honor the oversubscription requirement of the original VFLR. Our position was no matter what was needed in September the Company is still bound by the agreement to offer a subsequent VFLR in 2006 to fulfill the oversubscription provision. In an effort to secure our agreement the Company countered by enhancing the eligibility requirements for the VFLR II and changing the release payment schedule. Unlike the terms of the initial VFLR, the Company offered to include those flight attendants active on July 7, 2005 for the VFLR II. The release payment would be delayed 90 days to meet the cash requirements of the bankruptcy court. In exchange the Company wanted AFA to eliminate the oversubscription language of the original VFLR and allow it close after they offered a VFLR in 2006 for the oversubscribed amount of 323 even if it became oversubscribed. Not only is the ink not dry on this contract but the contract has not even been sent to the printer. The MEC did not want to give up any language at this time. The decision was made to send the Company proposal back, agreeing to the eligibility and payment terms of the VFLR II but keeping the oversubscription language for the original VFLR with a modification to allow the Company to end the program if they awarded a VFLR to all who applied for the 2006 offering. The net effect would therefore be no oversubscription and would allow the Company to end the original VFLR on our terms. The Company accepted and the result is a VFLR II with a September 1, 2005 release date and the continuation of the original VFLR in 2006. When the bid closes for the 2006 VFLR the Company can award a VFLR for all those who apply in excess of the 323 or consider the overage an oversubscription and be bound by the original contract language to continue the program.
Since release of this information we have received several comments suggesting this additional VFLR II violates seniority. The possibility exists someone who is junior to a December 1, 2005 VFLR awardee may get an award in the September 1, 2005 VFLR II. That possibility absolutely exists and will probably happen. Therefore, it is important to remember the Company has the right to offer a new VFLR in addition to the original at any time under their own terms and conditions. Each VFLR is a separate program, offered at a different moment in time and for different reasons. The September VFLR II is to reduce the headcount and thus unemployment will not be contested. Future VFLR programs could be used to release more senior members in order to bring back a lower paid employee. No one will be able to switch release dates as each program is a separate entity.
With respect to the delay in the $10,000 release payment the Company told AFA they face a cash problem and must conserve enough cash to exit bankruptcy. Once the Company is out of bankruptcy and the merger is consummated the outside investor cash and restricted cash will be made available to the Company and the payments can be made. The Company is in a race to exit bankruptcy before the available cash position dwindles below levels acceptable to the ATSB. Better not see any management severance or retention payments before that time either. For those original September 1 and December 1 awardees there will be no delay in your release payments as that money has been approved by the court and allocated by the Company.
VFLR UNEMPLOYMENT CLAIM PROBLEMS
There have been several reports of the June VFLR awardees having problems with securing unemployment compensation. All other VF programs have been able to apply for and receive unemployment compensation. North Carolina officials told me the VFLR would be treated the same. Yet, this program has caused problems and I have found out why. The problem has been isolated to communication between unemployment officials and the USAirways vendor, UTCA, hired to administer unemployment claims. UTCA has apparently been returning claim information requests indicating some claimants have voluntarily quit rather than having accepted a furlough due to a headcount reduction. I have been told by North Carolina officials an indication of a "quit" will automatically generate a review and a letter or phone call to the claimant will be generated indicating the need for an appeal hearing. If you receive such a notification please contact AFA and follow all instructions for the appeal hearing. The Company agreed not to contest unemployment and should have provided UTCA with details of the VFLR and a list of those awarded the VFLR. The Company claims they are not contesting unemployment and have provided each awardee a letter verifying the furlough was due to a reduction in headcount. While their contractual obligation may be fulfilled by the letter, if UTCA acting on behalf of USAirways is relaying incorrect and misleading information they are at the very least impeding and in effect then contesting the claim. This is unacceptable and borders on a contract violation. The information received from UTCA is enough to generate a review and can temporarily override the letter of explanation provided by USAirways. North Carolina officials have told me they have received conflicting responses from UTCA indicating a quit on one response and a reduction in headcount on another but are unable to provide me copies of the UTCA responses due to privacy laws. If you are called for a hearing you are entitled to see and make copies of all correspondence related to your case. Please attend the review and ask for copies of all paperwork involving your case and fax all information to me. When I questioned the Company about this I was assured they are "comfortable" with UTCA. I bet they are. While not an outright contestation of unemployment, the pencil whipping tactics by USAirways representatives have the same effect. In previous VFs this type of information was never communicated by USAirways and therefore unemployment eligibility was not questioned. Why now? Money, that's why. Unemployment insurance is costly to a corporation and the more claims the more cost. This is no different than a medical insurance company's decision to deny a claim and hope you go away. Don't go away and don't give up. I won't. You are entitled to unemployment compensation and we will not let bureaucratic hoops deny your rights. This problem is consistent with everything USAirways tries to do to us and is one more slap in the face to AFA and our members. Please continue to report any problems to me and I will continue to contact unemployment officials and the Company. I have also been in contact with several members of Congress regarding this issue.