UPS(Compensation comparison)

DALTrade ya some apples for some of your

oranges…For those who've asked…. That’s a joke :-)

Originally posted 12-17-02

This is NOT to be misconstrued as an attempt to attack, smear or demoralize any individual or group at UPS or the IPA. Contract data is publicly available to all of us. I have just collated

it to make it easily digestible.

It is not intended to divide our group but strengthen it.

NOTES:

•Bar graphs and pie charts usually have tabulated data that follow. (In other words… click ahead if you are confused or want more

data.)

•DAL hourly rates are based on 2004 figures. (This is the time

frame when we probably will sign our contract.)

•IF DAL extends beyond 4/30/05 (amendable date), then add another 3% to the DAL CPT rates for each year thereafter (3 yrs max ?).

Disclaimer• I do not claim to be an expert on these subjects. This material is for

educational & reference purposes only.

• Errors of any kind are not intentional and should be reported ASAP to my e-mail address below.

• All normal and abnormal disclaimers apply (C’mon.. I’m only human). Use at your own risk.

Sincerely,

Franco Fratangeli

100% IPA - 100% UPS

IPAmemberFranco747@att.net

Prior to “9-11”, what could a less profitable company like DAL afford to pay their less flexible pilot group?

(BTW, this is NOT an insult to DAL pilots.)

As each day passes, DAL & other airlines appear to be getting closer to attaining profitability… again.

Also note that carriers such as AAL & NWA, that have old & less than “financially pilot friendly” contracts, are in similar financial turmoil (AAL signed in 1997; NWA in 1998).

AAL has lost the most money in the last 12-months

UAL & USAirways are in bankruptcy court.

(12-16-02)

Sounds gloomy for everyone, but keep the next slide in mind...

NET Profit (Loss) in $Billions(UPS has been in the Billions since 1998)

($2.90)($2.50)($2.10)($1.70)($1.30)($0.90)($0.50)($0.10)$0.30$0.70$1.10$1.50$1.90$2.30$2.70

1997 1998 1999 2000 2001 2002

UPS

UAL

DAL

FDX

AAL

NWA

(1st 3Quarters only)

FDX exclude d. See financial slides towards the end. Last 12-months of data given.

Here’s what one financial source said about UPS’ 2001 revenue breakdown...

• Domestic packages accounted for 78%

• International packages accounted for 14%

• Non-package accounted for 08%

OK… OK… here’s the data.

CPT HOURLY ratesCurrent UPS rates vs. DAL 05-01-04

$130$150$170$190$210$230$250$270

UPS CPT DAL 767 CPT

CPT HOURLY rates(Same data as previous slide)

$130$150$170$190$210$230$250$270

UPS CPT DAL 767 CPT

DAL pays 40% to 86% more thanmore than UPS’ HOURLY rates.CAPTAIN HOURLY RATES

(05-01-04)

Years ofService

UPSCaptain12-31-03

DALB-75705-01-04

DeltaB-72705-01-04

2nd yr3rd yr4th yr

131.69/hr136.83147.67

245.27/hr247.28249.31

221.70/hr223.62225.56

+86.24%+80.72+68.82

5th yr6th yr7th yr

154.09159.22164.36

251.41253.35255.24

227.60229.45231.35

+63.15+59.12+55.29

8th yr9th yr

10th yr

169.50175.92183.62

257.36259.18261.96

233.30235.09237.75

+51.83+47.32+42.66

11th yr12th yr

185.00190.00/hr

264.76267.52/hr

240.43243.08/hr

+43.11+40.80%

% INCREASE needed to attain DAL B757 Pay.

(UPS ++ “%” = DAL)

Hold on…. There’s more to this than meets

the eye.

DAL’s Min Guarantee is lower than UAL’s & UPS.

Min Guarantee

UPS

975 per year

DAL

Min Guarantee varies…set by Co.set by Co.• 780 to 840 per year domestic

• 780 to 864 / yr Int’l

• DL Express: 780 to 900/yr

Hard annual limits of:• 945 hrs/yr for all domestic• 957 hrs/yr Int’l

PPDs shown on next slide

Min Guarantee per 13 PPDs

UPS

75-hrs per PPD

DAL

Min Guarantee varies…set by Co.set by Co.• 60 to 64:36-hrs/ PPD domestic

• 60 to 64:36-hrs /PPD Int’l

• DL Express: 60 to 69:13-hrs/PPD

Hard annual limits of:• 945 hrs/yr for all domestic• 957 hrs/yr Int’l

The Caps at DAL dictate the Min Guarantee.

The higher the max the higher the guarantee.

IMHO, if we had similar line guarantees, line construction caps and open time credit caps like other airlines, the folks here today would have upgraded already or much earlier than what’s currently planned.

This is only a few pieces to a much larger puzzle ;-)

(In MY Humble Opinion)

The following slide...

• Light blue line shows Delta’s lowest Minimum Guarantee (780 hrs per year).

• Dark blue line shows Delta’s higher Minimum Guarantee (840 hrs per year).

Almost all the slides will show both the low and high Min Guarantees.The HIGH min column also seconds as a reserve Min Guarantee.

NOTES:

How it affects Captain pay.YEARLY Base Pay for Line-Holders

$125,000

$145,000

$165,000

$185,000

$205,000

$225,000

UPS Captain DAL 767 CPT--Low MinDAL 767 CPT--High min --(Also the Nml RSRV Min Guar)

30% difference between 12th and 2nd year HOURLY rates at UPS.

CAPTAIN HOURLY RATES(05-01-04)

Years ofService

UPSCaptain12-31-03

DALB-75705-01-04

DeltaB-72705-01-04

2nd yr3rd yr4th yr

131.69/hr136.83147.67

245.27/hr247.28249.31

221.70/hr223.62225.56

5th yr6th yr7th yr

154.09159.22164.36

251.41253.35255.24

227.60229.45231.35

8th yr9th yr

10th yr

169.50175.92183.62

257.36259.18261.96

233.30235.09237.75

11th yr12th yr

185.00190.00/hr

264.76267.52/hr

240.43243.08/hr

% spread12th -to- 2nd

30.69% 8.32% 8.8%

Roughly…..At UPS, 12th year minus 30% equals

2nd year CPT HOURLY rate.

$190.00-30.69%

=$131.69

8.3% difference between 12th and 2nd year HOURLY rates at DAL.

CAPTAIN HOURLY RATES(05-01-04)

Years ofService

UPSCaptain12-31-03

DALB-75705-01-04

DeltaB-72705-01-04

2nd yr3rd yr4th yr

131.69/hr136.83147.67

245.27/hr247.28249.31

221.70/hr223.62225.56

5th yr6th yr7th yr

154.09159.22164.36

251.41253.35255.24

227.60229.45231.35

8th yr9th yr

10th yr

169.50175.92183.62

257.36259.18261.96

233.30235.09237.75

11th yr12th yr

185.00190.00/hr

264.76267.52/hr

240.43243.08/hr

% spread12th -to- 2nd

30.69% 8.32% 8.8%

Roughly…..At DAL, 12th year minus 8.3% equals

2nd year CPT HOURLY rate.

$267.52-8.316%

=$245.27

How does that % split affect you or me?

Well, if you’re an FO...

How it affects FO HOURLY rate. (05-01-04)

$70

$90

$110

$130

$150

$170

$190

UPS FO DAL 757 FO DAL 727 FO

How it affects FO HOURLY rate. (Same data as previous slide)

$70

$90

$110

$130

$150

$170

$190

UPS FO DAL 757 FO DAL 727 FO

(Assuming NO change in the % used at UPS to get FO rates from CPT rates)

How large of a percentage raise does a 12th year UPS CPT need to get our 2nd year FOs to 757

DAL parity?

A = 24.35%B = 58.78%C = 71.78%

--The answer is on the next slide.--

Let’s do the math together...

The answer is C = 71.78%

I’m not saying a 71.78% raise is what we need or want for our 12th yr CPTs.

I’m trying to point out that with our current one-rate pay model, a flat % raise won’t reproduce a true 767 pay model that other airlines enjoy.

We will need to reduce the % split between the 12th & 2nd yr CPTs rates to roughly 8% to justly provide a flat % raise.

If we don’t, we will then need to give the Jr years a much larger % raise in comparison to the 12th yr folks to attain parity for ALL seats.

NOTE:

• 12th yr UPS CPT = $190

$190

+ 71.78 % (Raise)

=$326.38

$326.38

-30.69 % ( % difference between 12th yr & 2nd yr CPT at UPS )

=$226.21

$226.21

x 58 % ( our % applied to 2nd yr CPT to get FO hourly rate )

=$131.21 per hour

(2nd yr parity at DAL = $131.22)

Note: Only displayed out to two

decimal points for easy viewing.

• So again... A 12th yr UPS CPT needs a 71.78 % raise ($136.38 raise) to attain 2nd yr 757 FO parity at DAL (DAL 2nd yr 757 FO = $131.22/hr 5-01-04) .

• Using the same logic (see next slide for math), the raise needed to attain 3rd year parity (the biggest % split

in FO rates) is 87.03%... or a $165.37 raise for our 12th yr CPT.

(DAL 3rd yr 757 FO = $153.56/hr 5-01-04) .

• 3rd yr FO Parity

$190 (UPS 12th yr CPT)

+ 87.03 % (Raise)

= $355.35

$355.35

- 27.98 % ( % difference between 12th yr & 3rd yr CPT at UPS )

= $255.92

$255.92

x 60 % ( our % applied to 3rd yr CPT to get FO hourly rate )

= $153.56 per hour

(3rd yr parity at DAL = $153.56)

Note: Only displayed out to two

decimal points for easy viewing.

How the low/high min guarantees affect the puzzle...

How it affects FO pay.YEARLY Base Pay (05-01-04)

$70,000$80,000$90,000

$100,000$110,000$120,000$130,000$140,000$150,000$160,000

UPS FO DAL 757 FO--LOW min

DAL 757 FO--HIGH min

5th (3rd) year DAL 757 FO exceeds our 12th year FO…base

UPSFO12-31-03

DALB-757 FO05-01-04**LOW min

DALB-757 FO05-01-04HIGH min

2nd yr3rd yr4th yr

74,471K/yr 80,047 89,271

102,351K/yr119,776122,701

110,224K/yr128,990132,140

5th yr6th yr7th yr

94,653 99,353104,160

125,697128,840132389

135,366138,751142,573

8th yr9th yr

10th yr

109,074114,923119,955

135,501136,858139,152

145,924147,386149,856

11th yr12th yr

120,852124,118K/yr

140,844142,513K/yr

151,678153,476K/yr

9th (6th) year DAL 7227 FO exceeds our 12th year FO…base

UPSFO12-31-03

DeltaB-727 FO05-01-04**Low min

DeltaB-727 FO05-01-04HIGH min

2nd yr3rd yr4th yr

74,471K/yr 80,047 89,271

92,515/yr108,318111,017

99,632K/yr116,650119,557

5th yr6th yr7th yr

94,653 99,353104,160

113,794116,688120,003

122,547125,664129,234

8th yr9th yr

10th yr

109,074114,923119,955

123,115124,137126,289

132,283133,686136,004

11th yr12th yr

120,852124,118K/yr

127,896129,503K/yr

137,734139,465K/yr

It takes a UPS FO 7 years to attain a

“six figure” BASE salary -vs- DAL’s 2 or 3 years.

UPSFO12-31-03

DALB-757 FO05-01-04**LOW min

DALB-757 FO05-01-04HIGH min

DeltaB-727 FO05-01-04**Low min

DeltaB-727 FO05-01-04HIGH min

2nd yr3rd yr4th yr

74,471K/yr 80,047 89,271

102,351K/yr119,776122,701

110,224K/yr128,990132,140

92,515/yr108,318111,017

99,632K/yr116,650119,557

5th yr6th yr7th yr

94,653 99,353104,160

125,697128,840132389

135,366138,751142,573

113,794116,688120,003

122,547125,664129,234

8th yr9th yr

10th yr

109,074114,923119,955

135,501136,858139,152

145,924147,386149,856

123,115124,137126,289

132,283133,686136,004

11th yr12th yr

120,852124,118K/yr

140,844142,513K/yr

151,678153,476K/yr

127,896129,503K/yr

137,734139,465K/yr

• A domestic reserve pilot has a higher guarantee than line holders. (60-hrs more per year)

• A 2nd year 727 reserve FO (low min guar) is only $369 shy of that six figure base-line salary.

NOTE:

Coincidentally, the extra 60-hrs is what the HIGH min column displays. With that in mind, a 3rd yr 757 RESERVE FO makes more than our 12th year FO.

A 6th yr 727 reserve FO also makes more than our 12th yr FO.

UAL pays 14% to 61% more thanmore than UPS’ Base Salary.

UPSFO12-31-03

DALB-757 FO05-01-04

**LOW min

DALB-757 FO05-01-04

HIGH min2nd yr3rd yr4th yr

74,471K/yr 80,047 89,271

102,351K/yr119,776122,701

110,224K/yr128,990132,140

37.43%49.63

48.01%61.14

5th yr6th yr7th yr

94,653 99,353104,160

125,697128,840132389

135,366138,751142,573 27.10 36.87

8th yr9th yr

10th yr

109,074114,923119,955

135,501136,858139,152

145,924147,386149,856

24.22 33.78

11th yr12th yr

120,852124,118K/yr

140,844142,513K/yr

151,678153,476K/yr 14.82% 23.65%

% INCREASEneeded to attainDAL 757 Yrly base.(UPS ++ “%”= UAL)

“What If…”

“What If scenario…” If we only had an 8 % difference from the

12th year CPT to the 2nd year 767 CPT HOURLY rates, like at most major airlines, FO pay at UPS

would resemble this...

Current FO HOURLY rate -vs-

“What If” 8% scenario

70

80

90

100

110

120

130

UPS now ups "WHAT IF"

Using today's 12th year CPT rate --7/13/02 to 12/31/03--

Current FO HOURLY rate -vs-

“What If” 8% scenarioUPS FO

07/13/02 to12/31/03

UPS FO“What If”scenario

1yr xx.xx xx.xx2yr 76.38/hr 101.41/hr3yr 82.10 105.824yr 91.56 110.295yr 97.08 113.026yr 101.90 115.787yr 106.83 118.588yr 111.87 121.409yr 117.87 124.2610yr 123.03 125.2611yr 123.95 126.2912yr 127.30/hr 127.30/hr

Current FO YEARLY BASE -vs-

“What If” 8% scenario

70,000

80,000

90,000

100,000

110,000

120,000

130,000

UPS now ups "WHAT IF"

If you are an FO, you could have made “X %X %” more under the “What If” scenario.

UPS FO12/30/00 to07/12/02

UPS FO“What If”scenario

Percentage MOREyou could have made.Current + % = “What If ”

2yr 74,471 K/yr 98,874 K/yr 32.763yr 80,047 103,174 28.894yr 89,271 107,532 20.455yr 94,653 110,194 16.416yr 99,353 112,885 13.627yr 104,160 115,615 10.988yr 109,074 118,365 8.519yr 114,923 121,153 5.4110yr 119,955 122,128 1.8111yr 120,852 123,132 1.8812yr 124,118 K/yr 124,118 K/yr 0.0

You could deduce the same % increase in your W2… YOUR call.

A 3rd yr “What If” FO would almost make the same base as a current 7th yr FO.

UPS FO12/30/00 to07/12/02

UPS FO“What If”scenario

2yr 74,471 K/yr 98,874 K/yr3yr 80,047 103,1744yr 89,271 107,5325yr 94,653 110,1946yr 99,353 112,8857yr 104,160 115,6158yr 109,074 118,3659yr 114,923 121,15310yr 119,955 122,12811yr 120,852 123,13212yr 124,118 K/yr 124,118 K/yr

The old saying…

“our 727 guys make more than the other 727 guys in the

industry…”

doesn’t hold water anymore.

727 Captain HOURLY Rates Current UPS rates12-31-03 -vs- DAL 05-01-04

$125

$145$165

$185

$205$225

$245

UPS CPT DAL 727 CPT

Captain YEARLY Base Pay.(05-01-2004)

$125,000

$145,000

$165,000

$185,000

$205,000

UPS CPT DAL 727 CPT--LowDAL 727 CPT--HIGH

Captain YEARLY Base Pay.End of Contract

Yrs ofService

UPS DAL757 CPTLOW Min

DAL757 CPTHigh Min

DAL727 CPTLOW Min

DAL727 CPTHigh Min

2nd 128,398 191,310 206,026 172,926 186,2283rd 133,409 192,878 207,715 174,423 187,8404th 143,978 194,461 209,420 175,936 189,4705th 150,238 196,099 211,184 177,528 191,1846th 155,240 197,613 212,814 178,971 192,7387th 160,251 199,087 214,401 180,453 194,3348th 165,263 200,740 216,812 181,974 195,9729th 171,522 202,160 217,711 183,370 197,475

10th 179,030 204,328 220,046 185,445 199,71011th 180,375 206,512 222,398 187,535 201,96112th 185,250 208,656 224,716 189,602 204,170

A 2nd year DAL B-757 CPT will make more than our 12th year CPT (5-1-04)

Yrs ofService

UPS DAL757 CPTLOW Min

DAL757 CPTHigh Min

2nd 128,398 191,310 206,0263rd 133,409 192,878 207,7154th 143,978 194,461 209,4205th 150,238 196,099 211,1846th 155,240 197,613 212,8147th 160,251 199,087 214,4018th 165,263 200,740 216,8129th 171,522 202,160 217,711

10th 179,030 204,328 220,04611th 180,375 206,512 222,39812th 185,250 208,656 224,716

(Keep in mind our CPT rates directly reflect FO & SO rates.)

If you wanted to look at it from another angle...

Captain YEARLY Base Pay (05-01-04)

How much more DAL makes per YEAR.

% Increase to attain base pay.(UPS + “%” = DAL)

Yrs ofService

UPS DAL757 CPTLOW Min

DAL757 CPTHigh Min Low min High min

2nd 128,398 191,310 206,026 +54.44% +60.45%3rd 133,409 192,878 207,715 +44.57 +55.694th 143,978 194,461 209,420 +35.065th 150,238 196,099 211,184 +30.526th 155,240 197,613 212,814 +27.297th 160,251 199,087 214,401 +24.23 +33.798th 165,263 200,740 216,812 +21.469th 171,522 202,160 217,711 +17.86

10th 179,030 204,328 220,046 +14.1311th 180,375 206,512 222,398 +14.49 +23.2912th 185,250 208,656 224,716 +12.63% +21.30%

Remember that this is minbase pay & NOT W2s.

What about reserveCPTs…?

Reserve pilots have higher Minimum Guarantee

• Reserve pilots make 5-hours more than the line guarantee per calendar month. (DL Express locked in at 900/yr. That’s 5-hrs more than their

low min)

• That’s 840 to 900-hours per year versus 780 to 840-hours for domestic line holders. (All DAL figures)

• That’s 60-hrs more per year if you are on reserve or another $16K if you are a 12th yr CPT at DAL.

• Thus, a 12th yr CPT = $224.7K to our $185.3K...

(21.29% more than UPS instead of 12.63% [see previous slide/LOW])

Additional Night Time Override/Incentive HOURLY Rate• Captain…..$15.00/hr

• First Officer…..$10.00/hr

• Second Officer…….$5.00/hr

• Domestic flights between 2300 and 0559 (Last departure time)

Additional Night Time Override/Incentive HOURLY Rate

• Captain…..$15.00/hr

• First Officer…..$10.00/hr

• Second Officer…….$5.00/hr

• (Don’t forget work rules)

If you are going to run the engine hotter and under more strenuous conditions, shouldn’t you consider the toll it takes on it.

Once your engine falls apart, you’re done.

What’s our bottom line versus the other airlines?

“Just the facts ma’am...”

Did you know that UPS’ NET Profit for the year 2000 exceeded that

of UAL, DAL, AAL and NWA combined?combined?

2000UAL

+ 271 Million

NWA+

290 Million

DAL+

897 Million

AMR 752 Million

= 2 .210 B illion

UPS 2 .795 B illion

When American, Delta and United, etc were profitable, they paid their

crewmembers “Top Wages.”

At this time, they are still paying them the same

“Top Wages”/HOURLY Rates.

That may not last, but we are notnot in the same financial position.

********* NOTE *********

UAL & USAirways are in Chp 11.

How did UPS stack up against some of those top

paying carriers?The following slides are based upon data compiled from UPS’ website, http://moneycentral.MSN.com

and The Value Line (available at your local library).

Since FDX uses a different Quarterly reporting system, I’ll show data based on the

last 12-months.

2002 Figures

UPS, UAL, DAL and FDX Revenue ($Billions)

$11.0

$13.0$15.0

$17.0

$19.0$21.0

$23.0

$25.0$27.0

$29.0

$31.0

1997 1998 1999 2000 2001 last 12Mo

UPS

UAL

DAL

FDX

AAL

NWA

12-16-02

UPS, UAL, DAL and FDXOperating Profit Margins

7.0%8.0%9.0%

10.0%11.0%12.0%13.0%14.0%15.0%16.0%17.0%18.0%19.0%20.0%

1997 1998 1999 2000 2001

UPS

UAL

DAL

FDX

AAL

NWA

Negative % shown on upcoming table

UPS, UAL, DAL and FDXNET Profit Margins

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

9.0%

10.0%

1997 1998 1999 2000 2001 Last 12-Mo.

UPS

UAL

DAL

FDX

AAL

NWA

Negative % shown on upcoming table

Bottom line… What is our bottom line?

NET Profit (Loss) in $Billions(UPS has been in the Billions since 1998)

($2.90)($2.50)($2.10)($1.70)($1.30)($0.90)($0.50)($0.10)$0.30$0.70$1.10$1.50$1.90$2.30$2.70

1997 1998 1999 2000 2001 Last 12-Mo.

UPS

UAL

DAL

FDX

AAL

NWA

(LAST 12-months 12/02)

All that data on 2 pages (p. 1 of 2) (I.E. 2000 Net Profit for UPS was 2.795 Billion -vs- UAL’s 271 Million dollars)

UPS1997 1998 1999 2000 2001 Last 12 months

$ 22,458 24,788 27,052 29,771 $30,648 31,100 Revenues ($ Million)12.3% 17.0 19.0 19.9 17.5% ? Operating Profit Margins (%)

4.0% 7.0 8.6 9.4 7.9% 7.7% NET Profit Margins (%)$ 909 1,741 2,332 2,795 2,475 2,394 Net Profit ($ Million)

UAL1997 1998 1999 2000 2001 Last 12-months

$ 17,378 17,561 18,027 19,352 16,138 13,770 Revenues ($ Million)17.1% 17.7 11.9 8.0 NIL NIL Operating Profit Margins (%)4.2% 4.7 4.3 1.4 NIL -14.9% NET Profit Margins (%)$ 728 827 775 271 -1,788 -2,051 Net Profit ($ Million)

DAL1997 1998 1999 2000 2001 Last 12 months

$ 13,590 14,138 14,711 16,741 13,879 12,860 Revenues ($ Million)16.5% 18.1 19.2 17.5 NIL NIL Operating Profit Margins (%)6.3% 7.1 7.5 5.4 NIL -12.8% NET Profit Margins (%)$ 854 1,001 1,101 897 -1,030 -1,646 Net Profit ($ Million)

(I.E. 2000 Net Profit for UPS was 2.795 Billion -vs- UAL’s 271 Milliondollars)

UPS1997 1998 1999 2000 2001 Last 12 months

$ 22,458 24,788 27,052 29,771 $30,648 31,100 Revenues ($ Million)12.3% 17.0 19.0 19.9 17.5% ? Operating Profit Margins (%)

4.0% 7.0 8.6 9.4 7.9% 7.7% NET Profit Margins (%)$ 909 1,741 2,332 2,795 2,475 2,394 Net Profit ($ Million)

FDX1997 1998 1999 2000 2001 Last 12 months

$11,520 15,873 16,773 18,256 19,629 21,010 Revenues ($ Million)12.8% 12.9% 13.1% 13.0% 12.6% ? Operating Profit Margins (%)

3.0% 3.6% 3.8% 3.8% 3.8% 3.6% NET Profit Margins (%)348 577 631 688 663 759 Net Profit ($ Million)

AAL (AMR)1997 1998 1999 2000 2001 Last 12 months

$18,570 19,205 17,730 19,703 18,963 16,910 Revenues ($ Million)17.1% 18.9% 12.7% 13.2% NIL NIL Operating Profit Margins (%)

5.3% 6.8% 3.7% 3.8% NIL -16.5% NET Profit Margins (%)985 1,306 656 752 -1,408 -2,790 Net Profit ($ Million)

NWA1997 1998 1999 2000 2001 Last 12 months

$10,226 9,044.8 10,276 11,415 9,905 9,140 Revenues ($ Million)15.2% 3.3% 11.1% 10.4% NIL NIL Operating Profit Margins (%)

5.9% -2.7% 2.6% 2.5% NIL -5.8% NET Profit Margins (%)$605 -242 262 290 -532 -526 Net Profit ($ Million)

(p. 2 of 2)

Do you think

HOURLY pay parity

and or

an 8% spread

(from 12th year to 2nd year CPT HOURLY rates)

seem fair or unfair for a profitable airline with a flexible work force like

us?

What is fair and equitable under the current conditions/profits?

It’s your call...

• Do you think your hour of work is worth less than theirs?

• Are you content knowing that it’ll take you more hours of credit to achieve the same or even less pay?

• I’m just providing BASE-LINE

contractual data with NO variables.

• DAL is the #1 paid airline (hourly rate).

• If DAL figures appear too daunting, we could always compare ourselves to the 4th, 5th, or 6th best paid airlines & or use concessionaire rates.

Again, it’s Your call…..

For those that do not believe in educating themselves today… think about this.

(Continue to view airline contract lengths and signing dates…7 slides ahead.)

New data follows

The industry average of renegotiating a contract is 2-years

after it’s amendable date.

We start our “early” negotiations roughly two-months shy of 2003...

UPS amendable date : 2003

Avg.2-yrs to renegotiate: +2

Hypothetical new contract: 2005

Let’s say our new contract is 3-years long.

Hypothetical new contract: 2005

Our new contract: +3

Hypothetical amendable date: 2008

After you sign up for the new deal, you find out that it’s not exactly

what you expected.

How long will it take to renegotiate changes?

Let’s say it takes another 2-years to renegotiate that contract.

Hypothetical amendable date:2008

Avg. 2-yrs to renegotiate: +2

Hypothetical new contract: 2010

Hypothetically, it could be 2010 before we can fix anything we did

not educate ourselves about today.

Do you think we owe it to our families and ourselves to do the

homework?

Again, something to think about…..

Hypothetically, 2010may be the first chanceof seeing changes to any

misunderstandingsresultant from

misinformation or lackof education today.

Amendable date: 2003

2-yrs to renegotiate: +2

2005

New contract: +3

Amendable date: 2008

2-yrs to renegotiate: +2

2010

BTW, here are some of the contract lengths and signing dates since 1997.

AAL = 4-yrs, 4-months (Signed 05-01-97)

DAL = 5-yrs (Signed 05-02-00)

NWA = 4-yrs + a new 1-yr extension (Signed 09-13-98)

UAL = 4-yrs, 4-months (Signed 04-13-00)

UPS = 5-yrs, 9-months. (Signed 03-17-98)

(By The Way)

What one of our paid consultants thinks about our situation.

• This comes verbatim from the IPNN from Randy Babbitt (our caparison consultant):

• "One thing that is always difficult-and I would ask everyone to consider as well-there is a tendency when they make these comparisons to look at the airplane that they are on and then see what their pay would be if they were at another carrier. But they have to add about a teaspoon of reality to that because, in lots of cases, what appears to be a very nice number simply does not exist. For example, it's real nice to look at a 12 year captain's pay at Delta airlines on a 777. However, the junior captain at Delta on a 777 has 24 years. So, it's not much of a comparison. This survey actually takes the time in one particular section to show the current career progressions that are actually going on at the various carriers. So, I would suggest that everyone look at that and be realistic. It's easy to say 'gee wiz, I could be making 20% more if I were at another carrier with that pay rate' but in fact, the longevity required to get to that particular seat might be upwards of 25 or more years. United would be a good example now. It would take almost 30 years to get onto a 747 as a

captain. So, it doesn't do much good to make that comparison if it simply doesn't exist."

Things you may want to consider about his line of logic.

• Do we deserve less because we work for a younger airline?

• Do we deserve less because we haven’t been professional pilots as long as the other folks (his overall statement)?

• Does UPS produce a lower profit because they are a younger airline?

• Does UPS charge less because it’s a younger airline?

• Does UPS pay less to it’s other employees and vendors (fuel, AC & vehicle supplies, etc.) because it’s a younger airline?

• IF not, then why should you/we get less?

Oh heck a few more thoughts...• If we had differential pay he almost has a point…. But we don’t.

– Like Babbit said: “...it doesn't do much good to make that comparison if it simply doesn't exist." So, let’s only look at 767 pay :-)

• We have been told that we ALL are paid 767 pay; that is an untrue statement. And to now muddy the water, “career progression” has been introduced. Moreover, Mr. Miller stated that the large % split, between the 12th & 2nd year CPTs, was a self-induced problem the EB would deal with in the next contract (The Co. only had so much money to spend last time around). That next contract is upon us today. What should we do?

Also, if we vote in differential pay, will those with less than 25 yrs of service have to stay away from the heavy AC (Consultant's point)? Should we just stay away regardless of the pay model -or should we/they retire those AC since JR pilots can now bid them? (His logic would dictate that you wouldn’t fly the AC anyway.)

I assume the comparison he and the others have put together will be great, but I also think that the logic he is using, on this matter, is in error.

Specifically, this is something the company should be “selling” us and not our union. Being advised about it is a totally different matter. It appears they may have crossed that line.

Which direction do you want to go?

• 767 parity from the bottom up (12th yr CPT rate minus roughly 8%… not the 30.69% we have today.)

• Differential Pay parity

• Two tier pay scale (727 & something a little better than 767 rates)

• Do you want to continue the bastardized version of the 767 pay model we have today? (IMHO, this option leaves a lot of folks behind.)

• Other

---It’s YOUR call---

• This is only one piece of the puzzle.

• The attention and priority it receives is up to you.

• As they say, one man’s trash is another man’s treasure.

• Also note that almost all the passenger airlines are having financial woes regardless of what their hourly rates are.

IMHO, contracts like UAL’s & DAL’s are good IMHO, contracts like UAL’s & DAL’s are good examples of what can be achieved when the financial examples of what can be achieved when the financial health of the company is strong and the group is health of the company is strong and the group is focused and motivatedfocused and motivated.

With the financial strength of UPS and the uncertainty of the passenger airlines, IPA members have been afforded a unique opportunity to negotiate an industry-leading contract.

This group, like those who’ve forged the path before us, will have to decide the road we choose. We have before us three roads to choose from. One that would lead to what parity would have been if the countries’ recession, 9-11 and other factors (not pay related) had not degraded the passenger flying industry’s profit. Another that would raise the bar one step further and lastly a mediocre one that reaches for parity based on concessions.

Let wisdom be our strength and unity our spirit.

Again, this comparison is not intended Again, this comparison is not intended to divide our group but strengthen it.to divide our group but strengthen it.

Author’s final thoughts...Author’s final thoughts...

A user interactive “CONTRACT SCHOOL” is also available on line. Please visit/click Greg Lebo’s “Tools” icon at the IPA’s main web page or go directly there via http://tools.ipapilot.org/contract/