October 17, 2007

Dear Fellow Air Wisconsin Pilot:

Many of us have witnessed the change in atmosphere here at Air Wisconsin over the past months. Management’s unwillingness to engage in meaningful discussions concerning the restructuring arbitration remedy (despite the fact that the arbitrator found that Air Wisconsin violated the implementation provisions), the decision to pull commuters off of their trips without pay, even though many of the commuting pilots could have gotten to work, the rigid enforcement of the attendance policy, the issuance of Letters of Warning for calling in fatigued, management’s threats and intimidation, and the total lack of any cooperation on enhancing our schedules have convinced the MEC that the time has come to take action. The endless delays that have plagued the restructuring case are simply unacceptable, and we will no longer rely on a process that takes control of our working lives out of our hands.

We absolutely intend to fight with all of our ability for the proper remedy in the restructuring case, but we are also committed to pursuing a strategic plan that places our self-respect, professionalism, and futures back into our own hands.

The condition of our airline has caused each of us to wonder, “Do I have a future here?” Air Wisconsin once held the esteemed position of the premier regional airline. Not only did we have an industry-best contract, we worked for an airline that had superior performance and provided superior service, and where the vast majority of pilots were proud to come to work each day. For most of us now, that is no longer the case.

How Did We Get Here?
Management would like to foist the blame for this condition on the tough economic times that the airline has faced. There is no doubt that the years immediately following 9/11 were challenging. However, during that time, we still enjoyed a professional working relationship with management, resolved grievances quickly and informally, and our judgment as pilots was respected.

Interestingly, it is more recently that the scales have tipped wildly out of balance. And is that due to more economically trying times? Most definitely not. To the contrary, the owners of Air Wisconsin are flush with more cash, exponentially more cash, than at any other time in the airline’s history.

Most of you know that the current owners (there are six) purchased Air Wisconsin in 1993 for just $6 million. At the time, all that remained of Air Wisconsin’s operations were 12 BAe-146 aircraft.

When the current owners purchased the airline, they insisted upon concessions as a condition of the purchase. A concessionary collective bargaining agreement was executed in early 1994, and became amendable in 1999. A new collective bargaining agreement reached in 2001 provided an industry-leading agreement in all respects, including the highest wages in the industry for the 50-seat CRJ.

United Airlines, following its bankruptcy filing in 2002, gave notice to all of its regional feeders in 2003 that it would only maintain code-sharing agreements with the lowest bidders. United advised its regional partners—including Air Wisconsin—that they each had about one week to submit the new bids that would determine if the partner would retain United’s business.

ALPA and Air Wisconsin management met intensively, and a TA was reached and ratified by the membership in April 2003. The TA, known as the Restructuring Letter of Agreement, was only to be implemented if Air Wisconsin was able to reach a new “fully effective” code-sharing agreement with United. Throughout the bargaining process, management repeatedly stated that none of the savings would benefit Air Wisconsin; rather, all of the savings would flow to UAL in an effort to retain the business. The Restructuring Agreement included significant wage cuts (7–9 percent) along with substantial work-rule concessions. The total reduction in payroll was estimated to be between 12 and 15 percent. Although a “wage adjustment” mechanism pegged wage rates off of the largest independent CL-65 operators and the other United Express carriers and guaranteed that Air Wisconsin pilots would exceed those averages, there were no snapbacks on other key work rules, including the change to the trip rig.

Air Wisconsin finally came to terms with UAL in September 2003, and the Restructuring Letter of Agreement went into effect on October 1, after Air Wisconsin certified that it had reached a new code-sharing agreement with UAL that was “fully effective.”

A little more than two years later, in the fall of 2005, United announced that it was once again putting the Air Wisconsin flying “up for bid.” The announcement took the MEC by surprise. When management representatives met with the MEC following United’s announcement, they explained that United had refused to “assume” the new code-sharing agreement in 2003. The United Creditors’ Committee had not been convinced that the ARW bid to retain the flying was the lowest possible, and so the agreement was only approved—but would not necessarily survive UAL’s exit from bankruptcy. Management further explained that it had sought an “assumed” agreement, but when United refused, Air Wisconsin negotiated an alternative—a provision that allowed Air Wisconsin to retain an amount equivalent to the 10 percent lower rate it had agreed to fly for—until such time as United did assume the new code-share agreement. If United didn’t assume the code-share agreement, Air Wisconsin would keep all of the savings it negotiated from its employees.

Air Wisconsin and United were not able to negotiate a new code-share agreement, and Air Wisconsin did retain most of the “savings” that would have otherwise gone to United. This amounted to about $70 million. As it became evident that United and Air Wisconsin would not necessarily remain partners, Air Wisconsin sought out other business opportunities. At the time, US Airways was desperately searching for debtor-in-possession (DIP) financing, as it was perilously close to running out of money. Air Wisconsin, through its subsidiary Eastshore Aviation, offered to lend US Airways $125 million in exchange for the right to operate 70 CRJs as a US Airways Express feeder. When United indicated that it was going to terminate the code share with Air Wisconsin, Air Wisconsin began transitioning its aircraft to fly for US Airways. The BAe 146s, the highest paying piece of equipment on the property, did not survive the transfer.

The transition to US Airways meant that each and every pilot was displaced from his domicile and that all of the most senior pilots, those who flew the 146, took an additional 25–30 percent pay cut.

At this point Air Wisconsin’s (the owners’) fortunes began to change, and the US Airways deal proved far more lucrative than the United code share ever would have been. US Airways emerged from bankruptcy in 2005, and the $125 million loan that was made by Air Wisconsin was converted to equity. Air Wisconsin was granted 8.3333 million shares in the newly organized US Airways—in lieu of repayment. Since that stock was issued, Air Wisconsin has sold roughly 5 million shares. With 3 million shares remaining, Air Wisconsin has netted $163 million—more than doubling the initial investment. Even though the $125 million was originally pulled from Air Wisconsin’s coffers, neither the $125 million nor the $163 million profit has been returned to Air Wisconsin. Instead, it has been directly redistributed among the six owners. So, for their $125M loan they have received over $288M in stock, a profit of $163M.

Following the revelation in 2005 that Air Wisconsin did not have a “fully effective” agreement with UAL, ALPA filed a grievance, challenging the implementation of the Restructuring Agreement. In February 2007, the System Board ruled that the AWAC-UAL code-sharing agreement was not fully effective and sustained the grievance. However, the arbitrator did not rule on a remedy. He directed the parties to attempt to reach a mutually agreeable settlement, but retained jurisdiction in the event the parties were not able to settle. The parties quickly reached a stalemate and additional hearings were finally held in August 2007 to determine the scope of the remedy. ALPA’s position is that in light of the arbitrator’s finding that the implementation provisions were violated, the 2001 Agreement should go back into effect and the pilots should be made whole. Air Wisconsin argues that notwithstanding its assurance that none of the concessionary savings would benefit Air Wisconsin, and despite the fact that it retained the bulk of that money, it should not be required to pay the pilots “a single penny.”

Do I Have a Future Here?
Despite the fact that Air Wisconsin has ample resources to create a labor-friendly working environment, we have not seen any inclination in this direction. Simple requests that would make schedules more commutable are met with the response that anything that costs money won’t be implemented. Cockpits are dirty. No resources are made available to clean them. A pilot who is legitimately ill more than five times in one year will be suspended because the company is not willing to tolerate an “unreliable” employee. No consideration is given to the employee’s overall record or how positive his contributions to the company are in other areas—or even his record in past years. We wait out long layovers in the outstations without compensation under our 1-for-4 trip rig because it saves the company money. Our time is not respected. A pilot calls in fatigued on his 12th day of duty with only one day off on a schedule that has been extended due to weather, and which has included three stand-ups. The response? A letter of warning for being “unavailable.” Real concerns could be addressed by purchasing software that would streamline our trip add, drop, and trade process, and technology is available that would improve our schedules overall. The response is that there aren’t sufficient resources.

The simple fact that not “a single penny” of the money garnered from the US Airways transaction has been returned to Air Wisconsin, not even the original $125 million that came from Air Wisconsin, makes it clear that the company is being drained of cash, and makes us wonder if there is a future here.

We pilots have served the company loyally—in some cases for more than 30 years, in some cases for 15, in others just a few. Where is the company’s loyalty to us? We voluntarily negotiated and agreed to ease Air Wisconsin’s plight when they were negotiating with United to preserve this company. We believed we could trust the commitment management made when it stated that none of the savings resulting from our concessions would go to Air Wisconsin’s owners’ pockets. We were wrong.

The Strategic Plan—“Do I Have a Future Here?” Campaign
We believe that the pilots of Air Wisconsin are ready to unite around a plan that demands that certain changes be made.

We want to:

• Urge management to respect the pilot’s judgment and professionalism and stop oppressive management tactics
  • End the “Reliability Program”
• Urge management to respect the pilot’s time while on and off duty
  • Improve schedules
  • Enhance the trip rig by restoring the 1-for-3.5 ratio
  • Make schedules more commutable
  • Take steps to increase flexibility in schedules
• Compel management to resolve grievances in a timely fashion
• Stop managing pilots by threats and intimidation

The “Do I have a future here?” strategic plan is comprised of three phases. Phase One (October to November) is the unity-building effort that will encourage pilots to display stickers, lanyards, and use red pens at the appropriate time to show our collective solidarity. Phase Two (December to January) is a media outreach campaign designed to shed public light on the issues that affect Air Wisconsin pilots, primarily focusing on the attendance policy. We will also engage in informational picketing. Phase Three (February) of the plan is the last phase and calls the question. If we don’t see meaningful changes during the earlier phases of the campaign, we will ask all pilots to cease recruiting efforts on behalf of Air Wisconsin, and then we will sponsor a job fair so that our pilots can find jobs where there is a future.

No pilot will be asked to engage in any activity that is illegal or which puts his or her job at risk. We intend to conduct this campaign in a professional and forthright manner, and we unequivocally disavow the efforts of any individual to engage in anything other than the legal activities we are endorsing.

Phase I—Unity
Enclosed with this letter are two stickers and an ALPA lanyard. Please place one or both of the stickers on your flight bag or in some other visible place. Wear the ALPA lanyard throughout the campaign. At the appropriate time, we will distribute red pens that you should use to make writeups. It is important to show that we are visibly united.

Phase II—Media Outreach
We are launching a public website, www.DoIHaveAFutureHere.org. The website will focus on our concerns at Air Wisconsin, how they can be remedied and how willing the pilots are to seek an equitable remedy. We have identified and are training media representatives from each domicile, and we are already in the process of identifying press contacts. We are upgrading the Air Wisconsin ALPA website, and we are working on more communication initiatives. We plan additional educational efforts designed to encourage pilots to enforce the contract. The serious potential consequences of the attendance policy will be exposed. We will engage in informational picketing in each domicile in January.

Phase III—Don’t Fly for Air Wisconsin
We will ask pilots to cease making recommendations for pilot candidates. We will publicize the problems that have caused us to conclude that there is no future here, and we will do this in the same industry magazines in which Air Wisconsin seeks to recruit new-hires. Finally, we will hold a job fair to allow pilots to develop their careers elsewhere.

Conclusion
We want each and every one of you to become an active participant in this strategic plan. ALPA volunteers, including your MEC and LEC representatives, will begin wearing badge backers in the next few weeks to assist you in identifying them. Ask them questions, give them your feedback, and tell them what it will take for you to have a future here. Our unity is our strength.

ARW MEC
Carl Fleming, Chairman
Greg Walburg, Vice Chairman
Wayne Lougheed, Secretary-Treasurer

ARW 49
James Drapeau, Chairman
Peter Westerberg, Vice Chairman
Jared Armstrong, Secretary-Treasurer

ARW 50
Joseph Ellis, Chairman
Ryan Bergeron, Vice Chairman
Francis Scalley, Secretary-Treasurer

ARW 51
Steven Kern, Chairman
Mark Lockwood, Vice Chairman