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federal Reserve Bank o f D allas DALLAS, TEXAS 75222 Circular No. 81-123 June 18, 1981 Potential Air Traffic Controllers' Strike - June 21, 1981 TO ALL FINANCIAL INSTITUTIONS IN THE ELEVENTH FEDERAL RESERVE DISTRICT: The contract between the Federal Aviation Administration (FAA) and the Professional Air Traffic Controllers Organization (PATCO) expired on March 14, 1981. Since that time, the two parties have been involved in extensive con tract negotiation, but have not been able to reach an agreement. It appears that PATCO may go on strike at midnight, June 21, 1981, which could result in a sub stantial curtailment in air transportation throughout the nation. Reduced air transportation services, which would vary depending on the extent of the curtailment, may be expected to disrupt normal Federal Reserve check collection operations. This disruption would affect direct sending and con solidating banks, and Federal Reserve shipments to all other Federal Reserve of fices, as well as to some paying banks. Due to an increase in transportation time if the strike occurs, there may be delays in the return of dishonored items. Banks should consider this delay when calculating return items. If normal cash letter crediting policies and operating procedures remained unchanged, Federal Reserve float would be expected to increase substantially. Efforts will be made to limit the impact of disruptions in normal air transportation on Federal Reserve float. Accordingly, the Reserve Banks are de veloping contingency plans for that purpose. These plans may include a temporary suspension of direct sending privileges, changes in deposit deadlines, and changes in availability on cash le tte r shipments to some intraterritory and interterritory end points (including extensions beyond the current two-day maximum deferment policy). To minimize potential disruptions to the nation's payments mechanism, the Federal Reserve Banks intend to take advantage of all available transportation facilities. In addition, presentation to financial institutions in Reserve cities will be extended wherever possible. This will allow a greater percentage of work to be processed timely and preserve credit schedules. If it becomes necessary to implement the contingency plans under de velopment, the Federal Reserve will provide notice as early as possible recognizing that a national strike may dictate limited advanced notice. B a n k s a n d o t h e r s are e n c o u r a g e d to u s e th e fo llo w in g in c o m in g W A T S n u m b e r s in c o n t a c t in g th is Bank: 1-800-442-7140 (in tr a s t a te ) an d 1-800-527 -920 0 (in te r s ta te ). Fo r c a lls p la c e d lo cally, p l e a s e u s e 651 plus th e e x te n s io n r e fe rre d to ab ove. This publication was digitized and made available by the Federal Reserve Bank of Dallas' Historical Library (FedHistory@dal.frb.org) - Please address all Head Office, (214) 651-6399, Ext. 244, Louis Moore at the Gonzales at the San Antonio 2 - inquiries on contingency planning to Jess Insall at the Martin Ramsey at the El Paso Branch, (915) 544-4730 Houston Branch, (713) 659-4433 Ext. 21, or Rene Branch, (512) 224-2141 Ext. 420. Sincerely yours, William H. Wallace First Vice President