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Wesley G. Kennedy, Esqu]~Re Fax- the 8Huttj~ America Pilots ]Prank ]Petxamalo. Jr.. Esquire for the Chautauqua Pilots

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Wesley G. Kennedy, Esqu]~Re Fax- the 8Huttj~ America Pilots ]Prank ]Petxamalo. Jr.. Esquire for the Chautauqua Pilots iB/24/2085 88:58 548-347-8834 PAGE 82. i:! : ::" ARBITRATION OPINION AND AWARD RICHARD R, KASHER, ARBITRATOR OCTOBER 19, 2005 ¯ ..° In the Matler of an Arbitration Between INTERNATIONAL BROTHERHOOD OF TEAMSTERS, LOCAL 747 REPRESENTING THE PILOTS OF CHAUTAUGUA AIRLINES and INTERNATIONAL BROTHERHOOD OF TIEAMSTERSf LOCAL 264 REPRESENTING THE ¯ PILOTS OF SHU’I’rLE AMERICA, INC, Both Wholly Owned Subsidiaries of REPUBLIC AIRWAYS HOLDINGS, INC. involving the Integration of the Seniority Lists Of Chautauqua Pilols and Shuttle America Pilots Algl~earsJnaZs Wesley G. Kennedy, Esqu]~re Fax- the 8huttJ~ America Pilots ]Prank ]Petxamalo. Jr.. Esquire For the Chautauqua Pilots i./, Ilntmductlon and Jtll~lSdicltjon On or about ~yr.~y 15. 1998 a company known as W~dord Capital, LLC (herelnaftcr ~e.xford’), a private equity irwcstor, purcl~z.sed a i. majority interest tu Chautauqua Airlines, a .regionaI airline which began operations in 1973. On oz-about May 6, 20.05 We~ord acquired Shuttle E’d ~3HSH~ "~ G~HH3I~ NHg~:RI qOnZ RI ~ON ;:LI .1B/24/2805 88:58 548-347-B834 PAGE B3 ~:. Chmutauqum/Shuttlo Ame¢i~ Pilot 8eniorlty.lnlqrstion Pqe 2 A~e~ea, Inc., a reglonal a~It~e that began operations on or about November 6. 1998. ~othe~ sig~-dfleant date, from the perspective of the Shuttle America Pilots. is Aprll I, 2005. That la the date when It became generally known that another corporate entity, Republic Airways i. Holdb~gs, Inc. (hereinafter "Holdfugs’], acquired Shuttle America. =LLt Both ChaUtauqua Airlines and Shuttle Amezlca. Inc. thus became .!’. ?. whoUy .owned subsidiaries of Holdlngs. Holdings also had a controlling i- interest in another afrllne company known as Republlc Airlines, Inc. Chautauqua PLlots are represented by Lnternattonal Brotherhood of Teamsters, Local 747 (hereJ~fter "Local 747-). and Shuttle America Pilots are represented by International Brotherhood of Tca~ustcrs. Local 264 (hereinai~er "Local 204"I. The Local 747 collective bargatnlng agreement. Chautauqua Pilots / ’.i Exhibit No. 2, Tab I, provides in Article i, Section H., Successorship and ~i!!: Mer_~, Subp~phs 3 and 4, relevantly, aB follows: ~- ~:.~ .t: 3. In the em~ut of a merger of the airline operstiunn between the C~u~pemy and another air carrier the Company will ::!if! require, u a oondlt/oll Of ~y sneh operatlonal mergex that provisions be Included requlrlng that. the surviving carrier shaU prov/d~ for fa/r and equitable integrat/on o( the pre- :me~rger pilots’ aeniorU~7 Hats in a~arda~ee with Aze1~em 3 n~d 13 ~ the ~egheny Mohawk ~ {labor protective pr~onsl. 4. Integration of the pilot groups shall not occur until the peat s~iorlty l~ts are merKed pursuant to the proeedures as described above. i. t,’l i:. B3HSI;I>I "B Q~II:JHZ)I~ N,::I91:.:~,I ’qO0~ 61[ ":1,o0 1812412005 08:513 540-347-0034 PAGE. 84 i’, ;;-.; !!/ Chautauqus/ShutUe Amerlr.m Pilot Seniority IntmBmflon :i.i Page 3 :! When the two pilot merge~, committees were unable to reach ! ..t a~e~t concer.nl, ng a merged sO, ntorlty list the 18eue wa, s submitted to arbitration in accordance with the Allegheny Mohawk LPPs. In accordance with the labor protective provisions the below-signed Arbitrator was selected and deslgnated to resolve the manner in which the seniority of the Chautauqua Pilots and Shuttle America Pilots would :i! !:!!~ be Int~grated. The st~mdard of "fair and equitable" wa~ recogn~-d as applicable in the context of this axbitratlon proceeding. Due to the fact that the Saab turboprop aircraft, the sole aircraft type being flown by the Shuttle America Pilots. is scheduled to be phased .i:: out of operation at the end of November, 2005, counsel and the Arbitrator agreed to an e.xp©dlted schedule for hearing and the issuance of an Award Integrating the seniority l~m. Hearings w~re conducted on October 7. 8 and 9. 2005 in i! Was htugton, DC, At said hearings the Chautauqua Pilots and the Shuttle America Pilots were represented by counsel, who were afforded a :ili full opportunity to present relevant evidence through the testimony of ,i?; wltnesses and m documentary proofs. A broad range of cross- examination was permitted, and counsel raised points and contentlon~ in support of their respective positions in closing arguments, Prior to 1999 Chautauqua serviced USAtrways with Oetstleam and Saab aircraft, both turboprop aircraft, I~. 1999 Chautauqua began "~i.i S’d -i.:J y 10’/24/2885 88:58 540-347-0834 PAGE 05 !ii ii> :J. Chaulauqua/Shu~tle America Pilot ~enlmlty Integr~lon Page 4 ordering Embraer regional jets m the so-called "145 family’" e~rle~s; ?. atrcraR that were configured to scat between 37 and 50 passengers. Betw~n 1999 and 2002 Chautauqua, in addltlon to its code-share relationship with USAirw~ys, entered into code-share relatlonshlps with America West Airlines. Trans World Airlines, American Airlines and Delta Airlines. [n March, 2004, as the result of a series of regional service agreements between United Airllne.q, on the one hand. ~nd Chautauqua, Republic Airlines and Shuttle America, on the other hand. It was Contemplated that Republic Airlines would provide service to United Airlines usi~ larger. 70-seat reglonalJ~ts, in the so-called Embraer "170 faintly’, Because Republic Airlines had not yet received an operating :.’i certificate from the Federal Aviation Admlntstration. Chautauqua Pilots /!: flew the 145 family regional Jets on the.Chau.tauqua operating certificate, and because of a code-share limitation in the agreement between Chautauqua and American AirKnes, Chautauqua Pilots began flying "7:" 2’ rcglonal Jets in the 170 family on the Rep.ub.lJc Airlines operating certificate. When it became apparent, due to another code-share ILmitatlon, that limitation being found in a code-share agreement involving Delta !." Airlines and Republic Alxlines, a llmltation that restricted Republic from .!: .-.! operating regional Jets with more than 70 seats, tt became nece~ary. S-d ~3HSU~ "~ O~UH3I~ -~dBb:~T SDOE 6T ~oO ::.¯:. :....,- 1812412885 88:58 548-347-8034 PAGE 86 i .,!: ! !: i: Chautauqu~Shuttlt Amedca :i Pilot 9eniorlty Intm3ratlon :ii Page 5 / i:ii from Holdings’ perspective, toacqulre Shuttle America in order to have available a third operating certificate under which 170 family regional Jets, configured with 7~ seats, could be flown without violation of the Delta code-share agreement. In fact, as noted above. Shuttle America :! with its operating certificate was acquired on or about May 6. 2005. That is the "transaction" which led to this arbitration proceeding. As of March 31, 2005, approximately five weeks prior to the % acquisition of Shuttle America. Chautauqua Pilots operated 100 regional Jets in the "145 family" and 16 regional Jets in the "I 70 family" At this "t time Chautauqua employed approximately 1,200 pilots, dorraciled at eleven bases, and provided service for Chautauqua\~ and Republic’s code-share partners, which included American Airlines. Delta Airlines, i USAirways and America West Airlines. At the same time, Shuttle America’~ 90 pilots, domiciled at one base, operated approximately I1 Saab 3408 as a regional affiliate of United Atrlitms, providing service from Washtngton’s Dulles Airport. Due to the time constra~t~, th~ Arbitrator will not address each of .? .%- the relevant documentary exhibits or recite the ~~tlmony of the .y witnesses which supported the two pilot groups’ proposals. However. all such evidence has b~en considered. This Opinion and Award will recite 2.;.i the propomals of the parties, and highlight the more compelling 1" . .Ji 21; &’d Zi3HSEI>I ’~ Q~I!gHOIEI ~d,’-’l,:~I SOOg 6I "~,o0 i:i.!! ...................................................................... .~. ......... ....... ,~,° ......... 10/:24/2805 08:58 548-347-8034 PAGE 87 .:: i: . Chomauqux/ShutUa America PIIM Seniority Iwmgmtlon Page ti arguments of Local 7’47 arid Local 264 counsel made in support of theft respective proposals. .The Proposals Iliad the Pilots" Positions ....... The ChautSLmlUl l~ots’ l’ropoR1 The Chautauqua Pilots propose placing all Shuttle ~xnerlca Pilots .~-: at various places on the Chautauqua. Pilots scnlotlty llst ahead of approximately 100 Chautauqua Pilots hlred after the May 6, 2005 acquisition, The Chautauqua Pilots point out that the September, 2005 Chautauqua Pilots’ sel~iorlty list contains the name.s of 1,278 pilots with hire dates ranging from July 29, 1974 to August 30. 2005. The Chautauqua Pllots further point out that John McGbee. wlth a senlo~tty date of May 12. 2005, rcsides at seniority numbe~ I ~ 82, and that he is .,.i: ’7"" the first of appraxlmately I00 pilots hired by Chautauqua aftcr May 6, :’~ ::’~.~ 2005. The Chautauqua Pilots propose that Shuttle America Pilots bc ..~ placed ahead of Pilot McGhee and have a "cushion" of at least I00 ~.~’: seniority numbers between their most Junlor pilot and the last Chautauqua Pllot on the list, seniority number 1278 ,’Kur~ Kramer], with a hire date of August 30, 2005. Chautluqua/Shutlle America Pilot Sanlorlty lnlagrit!on i! Page7 :! .ji The Chautauqua Pilots propose that. having eatabllsh~i seniority ov number 1182 as the ~floor", 49 fon~aer Shuttle America Captalns [Chautauqua PilOts’ Er,.hlblt No, 12] be asslgned tu a "block" after seniority number 905 (Brook Iverson. who has a seniority date of July 16, 2004) and assign those 49 Shuttle America Pl.lot6 the next numbers In sequence after seniority number 905. The Ctmutauqua Pilots then propose "rattoing in" the re1~nhag .:-’..; Shuttle America Flrst Officers with the remaining Chautauqua First .:i Officers on a 7:1 ratio ba-qls. In support of their propo~LI the Chautauqua Pilots point out that there is a =significant" difference, in the stz~ of the two carriers" route systems (Chautauqua PilotB Exhibit No. I, Tab 11. The Chautauqua Pilots further point out that as of December 31, 2006 It is anticipated .i" that the Chautauqua fleet will havc inc~reased fcom 116 to 172 aircraft; ¯ ?;: that at the time of the trax~aetlon Shuttle America was operating I I .:;! Saabs and had no fleet plan; that Shuttle America had recently emerged :i:~!! from bankruptcy and was in "Jeopardy of being shut down’; that Shuttle :!ii America, while it had made several inquiries concernLng obtaining -2:.~ :.
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