For the benefit of SayAgainSlowly, (and my own) I have taken the liberty attempting some formatting of Buzz Boy's very interesting and informative post. I hope it makes it easier to read, knowing the difficulties sometimes encountered in sending posts from down route. I apologise if I have ^%£$* anything up. I clearly have too much time on my hands.
D.
[quote]General Questions
Q. How many Aircraft and Pilots do BMI bring to BA in the event of integration?
A. 25 Shorthaul Airbus 320 series aircraft and 2 Longhaul A330 Aircraft.
BMI Mainline consists of just over 340 pilots and approximately 600 Cabin Crew.
Q.What specific concessions are BA seeking in exchange for an agreement to integrate BMI into BA?
A. Pilots are being asked to agree concessions that equate to £10M of annualised savings delivered in full by 2015. These savings would be found by a number of measures which include LHR SH productivity, New Entrant Payscales, changes to leave entitlement and an agreement to remove future Holiday Pay liability.
Q.Why is it necessary to secure agreement from BA Pilots before implementation can proceed?
A.Key elements of senior management within IAG favoured a standalone solution to the BMI purchase, seeing it as a once in a generation opportunity to create a separate “BA Express” operation at our main base. The BACC was able to influence decision makers within BA and IAG. The agreement of pilots to the changes being proposed will determine whether or not BMI is integrated into BA.
Q.Will a YES vote guarantee integration of BMI into BA Mainline?
A.Should IAG go ahead with the purchase, after regulatory approval, we have a very clear undertaking from BA CEO Keith Williams that a vote in favour of this package will ensure integration into BA Pilots are the only specific work group being consulted on the changes. All other directorates in BA have accepted that they will either meet the cost targets IAG has approved as part of a proposed integration, or they will lose out on the new BMI work. The company has indicated to us that all ground handling and engineering functions could be carried out by third party contract as necessary. BMI cabin crew may or may not be integrated into Mixed Fleet, but at any rate unit costs will not be permitted to rise above BMI levels.
Q.What stops IAG setting up a Low Cost Carrier anyway even after the BMI integration?
A.Principally the infrastructure constraints of LHR. There is no spare terminal or runway capacity at LHR and will not be so long as the 3rd runway remains off the table.
Had those within IAG pushing for a standalone option won the day, or should BA pilots reject these proposals, that would have inevitably led to the emergence of ‘BA Express’. Ultimately, key decision makers have been convinced that acceptable operational efficiencies can be found from BA as part of a turnaround plan for BMI and BA Shorthaul combined.
Following the proposed integration of BMI into BA, there will be no other carriers, UK based or otherwise, with sufficient slots and LHR operations to enable a LHR LCC to be set up in the foreseeable future.
Q.What stops IAG transferring assets out of the combined BA/BMI Operation to set up a new Low Cost operation?
A.The obvious and easiest time to do that would be now, and we have been able to influence them otherwise. For the future the simple answer is SCOPE.
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On reaching agreement for the merger with BA pilots the 27 BMI aircraft will become part of the BA fleet for the purposes of the Employment Security section (SCOPE clause) of Schedule K. As long as these aircraft are not expressly covered by SCOPE there is a very real risk of IAG seeking to deploy them in a manner highly detrimental to our interests. Once they are covered by the BA SCOPE agreement it would not be possible for IAG to do this without it being a clear breach of our Scope agreement. There have been no material breaches of our SCOPE clause by BA at any time in the past and we would expect the conditions to be honoured in the future.
Q.What is the process that will follow a YES vote by BA Pilots?
A.BA must consult with BMI pilots about the detail of integration. This is required by the Transfer of Undertakings (Protection of Employment) Regulations, known as TUPE. We will expand on a number of the specific issues on that point elsewhere in the document.
After the consultation is completed then a plan to implement will be put forward. At this stage it is not clear what the timeline of integration will be but we would expect to see the full integration done without delay given the timeline set for getting the new combined operation to breakeven by 2015.
In the meantime, once the regulatory approval allows the transaction to be completed, other departments will be enacting changes that bring the BMI work “in-house”.
Seniority
Q.What will happen to BMI mainline pilots in the event that BA Pilots reject this package?
A.If BA pilots vote to reject the package, then BMI mainline pilots will not be integrated into BA Mainline. The BMI mainline aircraft will operate separately to BA Mainline, although they may do so as BA Branded aircraft, such as “BA Express”. The BACC believes that such an arrangement represents the greatest risk to BA Mainline pilots.
Q.What will happen to BMI mainline Pilots in the event of a merger?
A.They will become British Airways pilots, however the MOU signed between BA and the BACC is very clear. The integration package is conditional on “Seniority arrangements on terms acceptable to BA pilots.”
The BACC position is explicit in its commitment that “No BA pilot will be disadvantaged by the proposed acquisition and integration of BMI”. What does this mean?
We cannot pre-empt the outcome of the consultation between BA and the BMI Company Council. However, the legal protections enjoyed by BMI mainline pilots under TUPE would not extend beyond the protection of their employment and their existing terms and conditions.
For example, TUPE would not confer on BMI mainline pilots any legal right to
(i) transfer onto other BA fleets or
(ii) be integrated into the BA seniority list. This is subject to the caveat that the BMI Mainline pilots’ promotion prospects and other benefits are no less favourable than they were prior to the transfer, which, as we understand it, they wouldn’t be.
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Q.What will happen to the Seniority lists of the two companies?
A.As in the previous answers the MOU condition and the BACC position will apply.
BA will be required to inform and consult with BMI mainline pilots under the TUPE Regulations. In addition, the employment and the current Terms & Conditions of BMI mainline pilots would be protected. This means the current BMI seniority arrangements (i.e. the seniority arrangements within the BMI pilot community) would be protected. However, TUPE would not confer on BMI mainline pilots the legal right to join the BA seniority list.
Again, this is subject to the caveat that the BMI Mainline pilots’ promotion prospects and other benefits are no less favourable than they were prior to the transfer (which they wouldn’t be). There is, therefore, no legal requirement to merge the BMI and BA seniority lists even in the event that BMI is integrated.
Will BMI pilots displace any existing BA pilot from their current position and seniority?
For the reasons already outlined, we cannot foresee any situation in which an existing BA pilot will be displaced from his current seniority position and status by a BMI pilot. The BACC’s overriding aim is to ensure that no BA pilot is disadvantaged by the integration of BMI mainline.
Q.Will the BMI Integration affect the current (2012) PRIAM result?
A.No, course allocations and results for 2012 will not be affected in any way. Normal operational issues such as fleet size/network/training resources etc may still result in changes to the course allocation but none of these factors will be down to the integration of BMI.
Q.Will the BMI integration affect future opportunities in the subsequent years’ PRIAM bids?
A,The Integration of the BMI operation will result in some changes to the shape of BA and its fleets. BMI pilots will be protected under TUPE (as outlined above) and BA pilots will not be disadvantaged as a consequence of the merger. It is difficult to see any outcome therefore whereby a BA pilot PRIAM bid in future years would be adversely affected.
As the operational integration is completed, and BA begins to make full use of the opportunities afforded by this purchase, it is anticipated that more slots will be used for LH services, creating more aspirational opportunities.
Productivity Changes
Q.Why are we being asked to agree to further productivity changes?
A.IAG have the option to integrate BMI into BA or to run BMI as a separate, stand alone carrier, “BA Express”. IAG and BA have allowed the BACC to determine this critical decision.
IAG is taking a clinical approach to its analysis of individual business units. Each must, in addition to any symbiotic benefit it has (i.e. SH feeding LH), make a profitable contribution in its own right.
When considering our request to integrate BMI, IAG has analysed the turnaround plan for BMI, the effect of integration into a SH business that is not making a profit, and set a cost saving target for BA as a whole to address. Flight Operations proportion of this cost is £10M.
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Q.Why do the changes fall on Shorthaul alone?
A.They don’t. Approximately half of the £10M target comes by making improvements to the combined LHR SH productivity, equivalent to 5% of LHR SH unit costs. The balance of the target comes from the other measures such as leave days and addressing the Holiday Pay issue from 2014 onwards.
Q.Why can’t all pilots make a smaller concession to reach the target?
A.Concessions from all pilots will meet nearly half the target. The 5% of SH productivity from the combined SH business is a condition set by BA. In our assessment it represents the absolute maximum that can realistically be achieved whilst not having a disproportionately detrimental effect on SH lifestyle.
If Flight Operations were to allow “cross-subsidy” of the target, (i.e. spread the target equally across all fleets) IAG would inevitably return to the performance of LHR SH elements of the BA business and, as Stephen Riley’s letter clearly states, would still demand that steps are taken to address our overall LHR SH cost base relative to our direct competitors in the London market.
In other words, if we all give up the equivalent of £10M, (2% of the overall Flight Ops budget) IAG is ultimately still going to demand that SH unit costs are addressed. Therefore, we risk paying twice. We will seek rule changes that minimise the impact on LHR SH lifestyle.
Q.Why don’t we know the specific detail of the rule changes before being asked to vote on the package?
A.It will take several months to finalise rule changes, while decisions on integration or not need to take place at the end of January 2012. Changes will be phased in from January 2013.
BA needs to integrate the BMI SH aircraft into our current fleet. Network planning will optimise the schedules, removing cross-over, exploring new markets and finally optimising frequencies to make the best possible use of the new assets.
Agreeing specific rule changes in advance of that process being completed means that a change made today may not deliver either the full value that we expect or worse, has a disproportionately negative effect on LHR SH lifestyle.
The requirement under the agreement is to deliver, in full by 2015, the equivalent of 5% of the current LHR SH pilot costs towards this agreement. Once full visibility is achieved on the new Network, we can optimise the rule changes to make the smallest possible impact on lifestyle for the greatest value.
Q.Will LHR SH pilots be given a choice in what rule changes are to be made?
A.All BA pilots are being asked to commit to the £10M overall target which will contain productivity changes of the order of 5% of LHR SH productivity. At the point that rule changes themselves are agreed, it is anticipated that, if more than one option is available a consultation would take place to establish the preferences from the community for which changes would be made.
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Any such consultation would not have the option to reject the proposed changes as we would be committed from a YES vote in this ballot to delivering the required cost savings for integration to occur.
Q.Shorthaul lifestyle will have to suffer disproportionately to allow this agreement?
A.We will work to minimise detrimental impact. In the same way that we were able to meet the BP targets previously without substantial impacts on SH lifestyle, we believe that, given the efficiencies to be found in the new network, well targeted rule changes can deliver the efficiencies required.
Q.BA pilots are being asked to bear all the pain while BMI pilots gain from this integration?
A.Every BA pilot gains by this integration. By removing the risk of BA having an IAG owned competitor on its doorstep, we end up with greater job security and the LH growth anticipated from this deal should positively impact all BA pilots in the future.
BMI has two main issues. Firstly, it doesn’t make enough revenue because of its inability to feed in to a LH network at its home base. Secondly, its network drives relatively low productivity, with flying hours below 650 hours a year.
A sizeable part of the LHR SH Productivity increase will come from the network efficiencies found in LHR SH that will enable the BMI pilots to get nearer to the 700 hour average that BA pilots currently achieve.
Q.How many more flying hours will SH fly because of this agreement?
A.Given the current average of around 700hrs achieved on LHR SH we anticipate that the overall increase in flying will be of the order of 30-35 hours per annum. If this is achieved under the present rules, it would equate to less than 8 additional days a year at work. Some suggestion, that we would agree concessions, like the old regional agreement that allowed rosters with as few as legal minimum days off, are way off the mark and not based on the reality of what is being asked for in these proposals.
Q.So will there be extra days at work for SH pilots if we accept this agreement?
A.All pilots will give up one leave day per season. The LHR SH productivity changes will inevitably mean more days at work, but our aim is to minimise the additional days at work, as pilot feedback is absolutely clear on this objective.
Q.How are LGW members affected by the £10m package?
A. LGW members would obviously be affected by any “all-fleet” measures such as new entrant pay scales and holiday pay offset and as such LGW members will therefore be included in the BMI integration ballot.
Q.How does this fit in with the separate LGW SH fleet renewal negotiations that are currently taking place?
A.LGW members have a separate target to meet in order to justify the renewal of the ageing 737 fleet. An additional consultation exercise will take place at LGW in Feb or March. However any savings made by LGW pilots in the measures proposed in the BMI deal will be attributed to any LGW targets raised in the LGW talks.
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Q.Will BA or IAG be back after this agreement for further concessions in LH or SH?
A.The aviation industry has been through a period of immense uncertainty since 9/11 and the reality is that we have been forced to respond to a number of challenges provided by external events.
Throughout this period we have delivered employment security on some of the best T&Cs in the industry for BA pilots. We will continue to do that.
Any LHR SH rule changes will address SH unit costs. It is envisaged that 735 hrs a year is approaching the absolute maximum that can be flown by a networked SH airline given the constraints of LHR.
It has been stressed to Keith Williams that pilots are in need of period of stability. However, it would be foolhardy to believe that this agreement offers permanent guarantees, as clearly an external shock or sudden downturn would be looked at on its merits. Nonetheless, BA accepts that these measures address the known competitive SH threat. LH is efficient and cost effective within its market.
34 Point Pay Structure
Q.What are the details of the new entrant 34 Point basic pay structure?
A.The new entrant basic pay structure will have the same starting and finishing points as the current 24 structure, but it will have a larger number of pay points to reach top of scale. The annual increment is therefore lower than the current 24 point increment.
The progression up the new pay scale is linear, based on one pay point for each year of service in exactly the same way as the current 24 point scale works.
Q.Why 34 Pay Points?
A.The changes reflect the different career lengths arising from the change to the Age Regulations in 2006. It was for us an essential point of principle that the starting and finishing points for pilots were maintained in these new pay arrangements. The 10 year increase in retirement age is reflected in the extra 10 pay points to reach the top pay point.
Q.What effect does this have on Pensionable pay scales for New Entrant pilots?
A. NONE. New entrants will be on the current pensionable pay arrangements for existing BA pilots in the BARP scheme. They will achieve PP24 for pensionable pay purposes after 23 years service in exactly the same way as current BARP pilots.
Q. Does this mean that pilots on the current PP24 structure will be forced onto the new 34 Point structure?
A. NO. BA accepts that a contractual promise exists to pilots on the current structure and only after consultation could they amend the pay arrangements for current pilots. BALPA has no interest in making such a change. The company does, however, control future contract promises that it may issue and it has been a long held desire of BA to address the effects of the Age Legislation changes that afford pilots a potential of 10 extra years at top of pay scale.
Q. Is there a risk to having more than one pay structure in BA. Will it result in pressure in the future to amend the pay point 24 structure?
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We already have 3 separate pension arrangements in BA and while we would prefer all pilots to enjoy exactly the same terms and conditions, the reality is that market forces and external factors have resulted in changes from APS to NAPS and subsequently from a defined benefit scheme to a defined contribution scheme.
The BACC has been very mindful of how the new basic pay structure is determined, to ensure that it most closely reflects the pay arrangements of the existing BA pilot workforce. The changes are purely in basic pay increments to reflect longer career lengths. All evidence in BA since 2006 is that pilots choose to exercise the right to remain in employment to age 60 and beyond.
Our terms and conditions would be under greater pressure as a result of a NO vote to integration. That would only place even greater pressures on our terms & conditions in future than any in-house payscale differential between pilots on the 24 point structure and the proposed 34 point structure for new entrants. A stand-alone IAG company would have a far more radical solution to pay structures and therefore be the future growth vehicle for IAG in the UK.
Holiday Pay
Q .What does “An agreed mechanism to remove any future liability with respect to the holiday pay ruling” mean?
A. In September 2011 the European Court of Justice (ECJ) finally ruled in our favour and determined that BA should base pilots' holiday pay on “normal remuneration” or overall earnings and not just on basic pay. We are now waiting for the UK Supreme Court to determine how this ruling will be applied in practice. A hearing at the Supreme Court is expected to take place between April and July 2012.
BA is therefore faced with a retrospective claim back to 2006 which is NOT covered by the agreement you are being asked to vote on. As part of the ongoing legal process, BALPA is therefore still pursuing a claim for retrospective holiday pay going back to 2006.
As part of the £10M in concessions being sought by BA for the BMI agreement, BALPA believes a measure that mitigates any future liability from 2014 onwards is a preferred way to help meet this financial target. Any monies accrued up to that point are not covered by the proposed BMI agreement and will continue to be claimed by BALPA. It remains our clear intention to make sure that all BA members receive the retrospective holiday pay they are owed by BA as soon as possible and certainly before 2014.
Subject to this ballot being approved BALPA will negotiate a mechanism that effectively deals with Pilots reduced pay whilst on Annual Leave. It would most likely be an amendment to the Variable Pay structure that means a pilot is not worse off in months when on leave than in months that contain no leave.
Q.Will I be getting my retrospective Holiday Pay or has this been given up?
A. As indicated above, BALPA is continuing to claim retrospective holiday pay on your behalf (back to 2006) and will do everything it can to ensure that you receive the money you are owed as soon as possible. This will be subject to the outcome of the Supreme Court hearing which we expect to take place later this year. The time period of the claim will be from January 2006 to the date on which we implement the agreed mechanism for removing any future liability (probably 1 January 2014).
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We have not waived our right to retrospective payments, given up our claim to such pay, or conceded any rights in this agreement. None of the agreement being voted on here prejudices the legal victory on Holiday Pay entitlement.
When will BA pay the Holiday Pay Claim or can they be forced to pay it by us agreeing the mechanism in this agreement?
BA has indicated that it wants to wait and see what the final Supreme Court ruling is on the issue as this will determine their exact liability. The amount credited under the agreement represents a best estimate on the value of the claim, based on the ECJ ruling last year. It represents approximately 25% of the £10M target set by BA.
However until the exact liability is known BA will almost certainly wait to make payment. In the meantime Holiday Pay entitlement continues to accrue from the date of the first submission.
Q. Will I will be worse off than I am now under this agreement?
A. We intend to make sure that you receive, subject to the conclusion of the legal process, Holiday Pay in accordance with our claim. Until we reach agreement on the mechanism with BA you will continue to accrue entitlement. Under this agreement we will see the following benefits rather than BA seeking to simply recover the monies in some other manner.
Firstly we meet a significant proportion of our cost target, almost a quarter in fact, by reaching agreement on a payment that we have so far not received.
Secondly, we intend to use this opportunity to address some of the large variability in pay between months where leave is taken and those where a full month is worked. For most pilots having greater certainty of earnings is of benefit.
Q.Can BA use our agreement here as the basis to challenge the ECJ ruling?
A. NO. We have categorically not waived our entitlement to Holiday Pay under this agreement.
The Ballot Process
Q.What will happen next?
A. The BACC will be holding General Members Meetings on Tuesday 10th, Wednesday 11th , Thursday 12th and Tuesday 17th at Heathrow. There is also a GMM at Gatwick on Monday 16th January. Full details have been sent separately about these.
On, or immediately after January 13th the BACC will be issuing a unique Voter ID to either the email address that we hold on file for you or, for those members who choose to receive paper communications only from BALPA to their home address.
The ballot will be conducted electronically. Full details of the voting process will be contained within this communication.
Q.Why is the ballot being conducted electronically and not by post?
A. A postal ballot would require a minimum of 21 days to complete and given that full details of the proposed package were only sent on January 4th members will need sufficient time to attend the GMM’s and then vote. IAG have been clear that a decision from pilots, that will determine whether integration occurs, cannot be allowed to delay the process of seeking regulatory approval. To ensure the longest possible briefing period while meeting this requirement we will use a widely accepted ballot tool to conduct this ballot.
Q.Is this ballot binding in the same way as a postal ballot?
A.The ballot result is binding in exactly the same way that the BACC would consider the result of a consultative postal ballot. The software being used is recognised and used by a number of other unions as being very effective for consulting with members. It is software that BALPA has used in other CC’s to conduct both survey and ballot processes.
Q.When will the ballot close?
A.Full details will be contained within the ballot briefing package.
Q.When will the result be published?
A.Immediately after the closure and the results have been collated.