APA

The proposed changes to the APA contract are designed to achieve the required financial target savings by eliminating inefficiencies and operational barriers, while minimizing impacts to base pay rates and pilot jobs. Our company bears an extraordinary responsibility to do this right, and do this once. Based on our future business plans for the airline, we believe these changes are necessary to best position our company for future success and growth.

We conducted a comprehensive review of our operations, our competitive position and our financial structure and designed a business plan to allow us to exit restructuring and vigorously compete and win. Our goal is to reach a consensual agreement with APA. The company will treat all stakeholders fairly and equitably and bargain in good faith with APA to reach a deal.    

All Employee Restructuring Objectives

• Reduce employee costs
• Our approach to employee savings is focused on preserving base pay rates as much as possible by increasing productivity
• Implement universal changes to active and retiree medical for current employees
• Remove and relax restrictions on our business
• Remove structural barriers that limit flexibility and ultimately growth
• Replace pension benefit with a Defined Contribution Benefit
• Implement new first-dollar profit sharing plan

Overview of Pilot Proposals

• Targeted Annual, Permanent Cost Savings: $370 million per year (20% of pilots’ total costs)
• Approximately 400 pilot furloughs
• Lessen restrictions on codeshare and regional flying
• Increase pilot schedule max time to align with other carriers
• Improve scheduling through Preferential Bidding System
• Eliminate various premium pay options; provide sequence protection
• Reduce dependency on reserves
• Implement case management for sick absences
• Introduce pay banding
• Replace Pilot A and B (retirement) Plans with a defined contribution plan with 13.5% company contribution

 

Rationale

• Successful restructuring goes beyond competitive benchmarking. Any previous estimates of our employee cost gap aren’t relevant to our current situation. We are facing a far different challenge in the restructuring process, one that requires that we get to a cost and operational structure that allows us to successfully implement our business plan.  
• We’ve worked hard to minimize impact on pilot base pay rates and jobs by focusing our strategic cost-saving efforts on productivity in contract areas like scheduling, reserves and time away from work.
• Restrictive contract provisions like Scope have limited our ability to compete with carriers that have more operational flexibility. The proposed changes to Scope will improve American’s ability to compete and will help better position the company for growth of the mainline.