Company disputes contention that it overestimated cost savings

SEATTLE, Aug. 7 /PRNewswire/ -- An arbitrator has ruled that Alaska Airlines violated its contract with the union that represented ramp service agents in May 2005 when it outsourced ramp work in Seattle. Alaska's contract with the International Association of Machinists and Aerospace Workers (IAMAW) allows the company to outsource, however, vendor charges must be less than what it would otherwise cost the airline to perform the same work. Ramp services include loading and unloading baggage, and guiding aircraft to and from airport gates.

The arbitrator ruled on one phase of the case today, stating that the company violated its agreement with the IAMAW because, in his opinion, the vendor charges were not less than the company's costs to perform the work in-house. Alaska continues to believe the cost of having an outside party perform the work was significantly less than the cost it was incurring with its own staff.

In a second phase of the case, the arbitrator directed Alaska Airlines and the union to attempt to reach a remedy. If they are unable to do so, the case will go back to the arbitrator for further proceedings.

"We disagree with the arbitrator's ruling," said Herman Wacker, Alaska Airlines' managing director of labor and employment law and associate general counsel. "At this point, however, the company's focus is on working with the union to determine if we can agree on a remedy. Depending on the outcome, the company can appeal the ruling in federal court."

Starting in September 2003, Alaska Airlines and the IAMAW negotiated for some 20 months on a contract that would reflect a market-competitive rate for the carrier's ramp service agents represented by the union. In April 2005, the IAMAW rejected a company proposal that would have retained the work in-house, and Menzies Aviation assumed ramp work shortly after. The Alaska employees who were laid off received a severance package that went beyond what the union contract specified.

The IAMAW filed a grievance over the layoffs in June 2005. During more than 15 days of hearings between January and August 2007, the parties testified before the arbitrator and submitted final rebuttal briefs last December.