Continental Seeks Federal Mediation

22nd Jun 2005

Continental Airlines today issued the following bulletin to employees to update them on
the status of negotiations with its flight attendants, represented by the
International Association of Machinists:Continental Airlines today applied to the National Mediation Board for the
immediate appointment of a federal mediator to assist the company in reaching
an agreement for pay and benefit reductions with its flight attendants,
represented by the International Association of Machinists (IAM).
  Under the Railway Labor Act, either party may apply for mediation if an
agreement is not reached through direct negotiations.
  “All of us work on the same team,” said Larry Kellner, chairman and chief
executive officer of Continental Airlines.  “Bringing in a federal mediator is
the next step in the process of reaching an agreement that’s fair to the
company, fair to the flight attendants, and fair to all co-workers.  It’s
important that our flight attendants join the rest of our co-workers in
participating in pay and benefit reductions.  Their share of the reductions
remains necessary to help ensure our survival and success.”
  In addition to this employee bulletin, Continental has issued an employee
Q and A explaining the federal mediation process.

  What is federal mediation?
  Federal mediation is a process that is designed to help the parties in a
collective bargaining negotiation to successfully reach agreement.  When
parties have not reached agreement through direct negotiations, they can ask
the National Mediation Board (NMB) to appoint a federal mediator to help them
resolve their remaining open issues.

  How long will federal mediation last?
  We intend to work with the federal mediator to move the process along
quickly.  Continental Airlines needs these savings as soon as possible, and
flight attendants need to join their co-workers who have already taken their
pay and benefit reductions.

  Can the federal mediator force either Continental or the IAM to agree to a
  No.  The federal mediator will help the parties reach an agreement but has
no authority to impose terms.  The federal mediator will help both sides to
understand the issues and work out their differences.

  The company previously said that it wants to avoid federal mediation, so
why are we applying to start the process?
  We wanted to give the flight attendants every opportunity to achieve their
share of the reductions in the least contentious manner possible—just as we
did with all other work groups.  Our culture of dignity and respect requires
no less.
  However, since we have been unable to resolve all of the issues necessary
to reach an agreement, we are seeking the assistance of a federal mediator to
move the process along quickly to reach an agreement.
  We want to conclude our flight attendant negotiations with an agreement
that’s fair to the flight attendants, fair to the company, and fair to our co-
workers who have already provided the reductions that enabled us to pursue our
growth plan.  The federal mediation process will enable us to do this.


  Will the federal mediation process permit the flight attendants to take
smaller pay and benefit cuts than the rest of Continental’s employees?
  No.  The current levels of pay and benefits for flight attendants aren’t
sustainable.  The longer the federal mediation process takes, the deeper the
pay and benefit reductions for the flight attendants will need to be in order
to achieve the needed cost savings from this group and to be fair to our co-
workers who have taken reductions.

  Will federal mediation disrupt our operations?
  No.  Federal mediation will not affect our operations.

  What if we don’t reach an agreement with the help of the federal mediator?
  We’ll work hard to reach an agreement with our flight attendants during
this process.  The best solution is to quickly reach an agreement that the
flight attendants will ratify and that contains their fair share of the
  However, the Railway Labor Act (RLA), which is the federal statute that
governs labor relations at airlines, provides for a clear process if parties
are not able to reach agreement.  When the NMB has determined that the parties
are at an “impasse,” it will offer binding arbitration on the open issues.  If
either party does not accept the NMB’s offer of binding arbitration, a 30-day
“cooling off” period begins, during which an agreement may be reached.  Once
the cooling off period expires, the company may be forced to impose the
required pay and benefit reductions without agreement, and the flight
attendants would be able to engage in a strike.

  What are the chances of a strike?
  None of us should speculate on a strike.  We have many opportunities to
reach an agreement with our flight attendants and are committed to continue to
work in a fair and constructive manner with the IAM to reach an agreement.



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