LETTER 24
Subject: Early Out/Severance Program
Reference: Section 14 - Reduction in Force
LETTER OF AGREEMENT
between
NORTHWEST AIRLINES, INC.
and
FLIGHT ATTENDANTS
in the service of
NORTHWEST AIRLINES, INC.
as represented by
ASSOCIATION OF FLIGHT ATTENDANTS - CWA, AFL-CIO
THIS AGREEMENT is entered into by and between Northwest Airlines, Inc. a Minnesota
Corporation (the "Company") and the Flight Attendants in the service of Northwest Airlines,
Inc. as represented by the Association of Flight Attendants - CWA, AFL-CIO
(the "Union").
Subject to the Company implementing, through ratified agreements, revisions to the labor
contracts of the Company's other unionized employees that are reasonably projected to
produce $ 1,126 million in average annual savings in labor costs from January 1, 2006,
through December 31, 2010, (excluding any implementation, severance, or separation
programs) eligible employees may be entitled to "severance" under the terms of this
Agreement.
1. Eligibility
Flight Attendants who are on the active payroll or on approved leaves of absence shall
be eligible for the Flight Attendant Early Out/Severance Program. The Program shall
be offered to Flight Attendants in accordance with system seniority. No Flight
Attendant shall be forced to participate in the Program.
2. Severance Pay and Pass Privileges
Participants in this program shall receive severance pay and pass privileges on the
following terms and conditions:
a. Participation in this program is capped at six hundred (600) participants.
b. Participants shall receive severance pay of:
Years of Service Severance Pay
0 - 20 $1,000 per year of completed service
21 - 25 $21,000
26 - 30 $22,000
31 - 35 $23,000
36 - 40 $25,000
40+ $27,000
c. Any Participant whose age plus years of service is greater than or equal to sixty
(60) shall receive lifetime F5R pass privileges on the Northwest Airlines, Inc.
system.
NOTE: Severance Pay and Eligibility for F5R passes shall be based on
years of vesting service.
d. Participants shall be deemed to have voluntarily resigned from the Company.
e. A Participant who has bid and been awarded a slot in the Program may request
his/her award to be cancelled at any point prior to his/her separation date. Such
request shall be granted on a hardship basis by mutual agreement between the
Company and the Union. If the program was over-subscribed (i.e., more
than six hundred (600) original applicants for the program), and a Flight
Attendant awarded the program thereafter cancels his/her award under
this provision, the unsuccessful program bidders shall be given one (1)
opportunity, in seniority order to move up to replace such Flight
Attendant. If a move up opportunity is declined, the Flight Attendant's
name shall be removed from the list and he/she shall not be offered any
future move up opportunities.
3. Conditions for Effectiveness
This severance program is contingent upon ratification of the AFA Restructuring
Proposal.
4. Bidding for Early Out/Severance Packages
Within ninety (90) days of ratification, the Company shall make six
hundred (600) early out/severance packages available for bid. Packages
shall be awarded based on system seniority. Should less than six hundred
(600) Flight Attendants apply for and be awarded early out/severance
packages, the value of the remaining packages shall be liquidated and
divided among Flight Attendants in active status or on approved leaves of
absence as described in paragraph 6., below. Separation dates of the
awarded packages shall be based on the needs of service, with a minimum
of one hundred (100) packages awarded that contain release dates that
are prior to October 31, 2007. A minimum of three hundred (300)
cumulative packages shall be awarded with release dates prior to March 31,
2008. A minimum of four hundred (400) cumulative packages shall be
awarded with release dates prior to October 31, 2008. A minimum of six
hundred (600) cumulative packages shall be awarded with release dates
prior to March 31, 2009. In no circumstance, however, shall the number of
packages distributed by any date or in total, exceed the number of
packages originally awarded. The Company shall determine the number of
packages to be assigned release dates at each base. As release dates are
made available, they shall be awarded in seniority order, and if necessary,
assigned in reverse seniority order.
5. Surplus Severance Package Payment
In recognition of the reduction in the number of early out/severance
packages to be awarded, the Company agrees that, not sooner than thirty
(30) days and not later than ninety (90) days after ratification of this
agreement, it shall distribute approximately sixteen million seven hundred
thousand dollars ($16,700,000) equally among all Flight Attendants in
active status or on approved leaves of absence on the date of ratification of
this tentative agreement.
Any Surplus Severance Payment made pursuant to this paragraph to a
Flight Attendant who subsequently receives an early out package shall
offset the monetary award contained in that package.
6. Under-Subscription Payment
In order to ensure that all 600 early out/severance packages (if awarded)
can be properly funded, the Company has reserved thirteen million, eight
hundred thousand, five hundred and twenty dollars ($13,800,520.00) for
the purposes of that distribution. The reserve is the total potential cost of
600 early out/severance packages assuming those packages were
awarded to the 600 most senior Flight Attendants as of April 1, 2007, less
anticipated Surplus Severance Package Payments made to those Flight
Attendants. After all early out/severance packages have been distributed
and the total actual amount disbursed is known, any funds remaining in
the thirteen million, eight hundred thousand, five hundred and twenty
dollars ($13,800,520.00) reserve withheld by the Company to fund the
early out shall be divided among and distributed to Flight Attendants on
active status or on approved leaves of absence on the release date of the
last early out/severance package awarded (the "Under-Subscription
Payment").
Payment shall be made on the second (2nd) paycheck of the month
following determination of the liquidated amount.
Agreed to on this 18th day of June, 2007
FOR NORTHWEST AIRLINES, INC. FOR THE ASSOCIATION OF FLIGHT
ATTENDANTS - CWA, AFL-CIO
/s/ Julie Hagen Showers /s/ Patricia A. Friend
Vice President Labor Relations International President, AFA-CWA
/s/ Jay Hong
MEC President, AFA-CWA
/s/ Lovey Offerle
Negotiations Committee, AFA-CWA
/s/ James Yung
Negotiations Committee, AFA-CWA
/s/ David Barrow West
Negotiations Committee, AFA-CWA
/s/ Bruce Retrum
Negotiations Committee, AFA-CWA
/s/ Mark L. Littleton
Senior Staff Negotiator, AFA-CWA