The Process

December 7, 2012

We are pleased our pilots supported and ratified this agreement, which is an important step forward in our restructuring. Once we’ve received Court approval of this agreement, we will have new collective bargaining agreements with all of our unionized groups.

 

This agreement addresses the priorities identified by the APA during collaborative talks. Today’s ratification gives us the certainty we need for American to successfully restructure, providing opportunity and growth for all of our people and stakeholders. The modernization of our company is well underway, and we remain focused on emerging as a competitive, world-class airline.

 

Tom Horton issued a letter to all employees discussing today's APA ratification of a new agreement and what it means moving forward.

 

August 19, 2012

Ratification of the flight attendant agreement is an important step forward in our restructuring.  We know this was not an easy decision for our flight attendants and we are very pleased with the choice they made.

 

With ratification, our flight attendants will see many benefits that would not have been available without a consensual agreement, including an Early Out incentive which could potentially eliminate the need for more than 2,000 furloughs, a lump sum payment on date of signing, pay increases over the next five years, an equity stake in the new American and more.

 

Our flight attendants join our seven TWU-represented employee groups with ratified agreements providing another step forward for our people and the company.  In addition to these eight ratified agreements, this past week we concluded the management/support staff redesign, and we are moving forward with changes for our independent employees.  We also filed with the court a renewed Section 1113 motion to reject our pilot contract so we can move forward with the changes we need for our successful restructuring

 

Laura Einspanier issued a letter to all employees discussing the APFA ratification voting results.

 

August 17, 2012

To keep moving forward to achieve the savings and flexibility needed for our successful restructuring, we filed a renewed Section 1113 motion with Judge Lane today, along with the revised terms provided to the APA on Thursday. The revisions address only the two narrow points that Judge Lane said in his ruling needed to be modified – the amount of codesharing, and the inclusion of some limit on the number of potential pilot furloughs.

 

On codesharing, we revised our proposal to include what the APA had agreed to in the tentative agreement. For pilot furloughs, we will keep the current contract limits. We believe both of those changes properly address the Court’s concern and will allow the 1113 process to move forward quickly.

 

We were pleased that the Court supported the company’s position on every other aspect of our motion, so this next step may deal only with the two issues.

Denise Lynn, SVP - People, issued a message to all employees discussing the latest developments in American's work to craft new, competitive labor contracts. A video from spokesperson Bruce Hicks is also available.

 

August 8, 2012

We are pleased that the ratification of the Mechanic & Related and Stores agreements allows us to move forward, and we are, of course, disappointed with the outcome of the pilot vote on that tentative agreement.  We must now await a ruling by Judge Lane on the pilot contract that will allow the company to implement the changes necessary to move forward with our restructuring.

 

We know these were difficult decisions. For the TWU groups, the ratified agreements will help American reach our targeted cost savings and increase productivity and network flexibility, while preserving nearly 1,900 TWU jobs that would have been eliminated under the original term sheets and offering pay increases for TWU employees.  With today’s news, we now have ratified agreements with all seven TWU-represented workgroups representing approximately 24,000 employees, which is meaningful progress in moving forward together as we build the new American.

Denise Lynn, SVP - People, issued a message to all employees discussing the TWU and APA ratification voting results.

July 20, 2012

American Airlines is pleased that the Association of Professional Flight Attendants has agreed to put the company’s Last Best and Final Offer out to flight attendants for a vote. We believe this proposal will help build a new American that can compete and win. With the tentative agreement we reached with the remaining two TWU groups, we’re closer to reaching consensual deals with all of our unions and positioned to emerge successfully.

We’ve worked creatively to address the items that APFA said were priorities. This Last Best and Final Offer includes substantial enhancements over our term sheet, including reallocating profit sharing to provide pay raises and more guaranteed income up front, lowering the cost savings target from 20 percent to 17 percent and an Early Out incentive that could eliminate the need for the company to furlough flight attendants. We’re pleased our flight attendants will have an opportunity to review and vote on this final offer, and are eager to move forward to the next phase of our restructuring.

Lauri Curtis, Vice President - Flight Service, issued a message to flight attendants discussing the company's offer. For a look at how the Last Best and Final Offer compares to the company's March 22 term sheet, please click here. Videos from American Airlines spokesperson Bruce Hicks are also available.

July 10, 2012

American Airlines is very pleased to have reached agreements on proposed contracts with the TWU Mechanic & Related and Stores workgroups.  We reached agreements that address the needs of our people and still allow us to achieve the cost savings necessary for our company to compete and succeed.  

As with APA, we were able to reduce the amount of targeted cost savings for these two TWU workgroups, in this case by about $35 million annually.  Through this reduction, and a reallocation of profit sharing, we were able to provide additional pay raises, an adjustment to industry pay rates after three years, and changes in active medical benefits.     

If ratified, these agreements would allow us to create a successful future for tens of thousands of American Airlines employees as we move through restructuring and beyond.  The TWU tentative agreements, along with our tentative agreement with the APA, demonstrate that we can work creatively to reach a resolution that puts our company in a position to move forward quickly and successfully.  We are pleased the Mechanic & Related and Stores TWU members will have the opportunity to review and vote on these tentative agreements.

June 27, 2012

American Airlines is pleased the Allied Pilots Association is putting out the tentative agreement for a vote. We believe this agreement addresses the needs of our pilots while achieving the goals of our business plan, and further demonstrates our commitment to reaching consensual agreements with all of our unions. 

 

We recognize there are no easy decisions in any of this, but we are confident our pilots will carefully consider the tentative agreement. We have the opportunity to create a successful future for tens of thousands of American Airlines employees and this is a critical step in American's restructuring.

 

Judge Sean Lane will postpone his 1113 ruling on all of the unions’ contracts pending the outcome of the pilots’ vote. We must use the additional time wisely to reach agreements with APFA and TWU on the two remaining agreements rather than wait on the Judge's decision, and have negotiating dates for both groups scheduled for early next week. It's time to close this chapter and move forward with new contracts that will help build the foundation for a new, profitable and growing American Airlines.

 

Denise Lynn, Senior Vice President – People, issued a letter to all employees announcing the APA’s decision and explaining how Judge Lane’s delay on the 1113 ruling affects employees. Additionally, Capt. John Hale, Vice President – Flight, issued a message to pilots commending the APA for putting the tentative agreement out for a vote. For a look at how the tentative agreement compares to the company’s original term sheet, please click here. Videos from American Airlines spokesperson Bruce Hicks are also available.

May 15, 2012

American Airlines is pleased to announce ratified agreements with five workgroups represented by the Transport Workers Union (TWU), including Fleet Service, Dispatch, Maintenance Control Technicians, Simulator Technicians, and Ground School and Simulator Pilot Instructors. These consensual agreements preserve approximately 1,300 jobs, and provide an Early-Out package, a profit sharing plan, future pay increases, a 401(k) company match and a potential company prefunding refund.

Today’s ratification announcement demonstrates American’s willingness to address the TWU’s interests and the union’s willingness to negotiate new contracts that achieve the cost savings needed for our successful restructuring. We realize this was a very difficult decision for our TWU-represented employees.

We are disappointed that the Mechanic & Related and Stores workgroups did not ratify the company's latest settlement proposals. For these groups, we will continue to pursue our 1113 Motion to Reject the current labor agreements. It's important to note that if the 1113 motion is approved, American will move forward with implementation of the March 22 term sheets, which do not offer the job savings and improvements offered in the settlement proposals. In addition, American will be prepared to continue to negotiate in good faith with the TWU with the goal of reaching consensual agreements.

May 1, 2012

Today the TWU is sharing proposals with its members that would save more than 3,000 jobs and are the result of weeks of focused negotiations between the union and American Airlines. These offers illustrate our commitment to reaching consensual agreements with all of our unions, and if ratified, would help American reach necessary costs savings and address many of the union’s needs, including immediate assurance that thousands of TWU members keep good jobs at American.

These offers are based on the TWU’s assurances it can cooperatively reach certain cost savings without some of the previously estimated furloughs. If the membership doesn’t ratify these proposals, American will revert to the March 22 term sheets. For more information on these proposals, please click here.

March 30, 2012

American is now pursuing two parallel paths in its efforts to reach our necessary labor savings through the Section 1113 process. Our goal remains to meet these savings through consensual agreements with our unions. However, this week, American filed a Section 1113 motion to reject the current collective bargaining agreements with the Court, as provided for under Section 1113 of the bankruptcy code. Our hope is that the Court-supervised process will help facilitate agreements and allow the company to move forward with the restructuring process.

The company remained available to meet with APA throughout the week; some discussions were held on the remote satellite letter of agreement and a possible pension freeze. In addition, the company provided a presentation and demonstration on its manpower planning software. The company and APFA negotiating committees met only one day this week, however, discussions around Scheduling, Active and Retiree Medical continued. 

We continue to make progress with the TWU and have narrowed many of the issues. Last night, the company presented proposals that made important moves toward the union, including outsourcing fewer TWU jobs. We committed to the TWU to provide a comprehensive proposal responding to all outstanding items by early next week and will continue to work through the weekend to meet that deadline.

Throughout the restructuring process, American Airlines has remained flexible and available and joined the TWU in many discussions, virtually daily. Both parties remain committed to reaching agreement, as demonstrated by the considerable progress made with many of the TWU workgroups.

American is ready to continue talks with all its unions to bring these important negotiations to a successful conclusion.

March 16, 2012

The company and its unions are engaged in a well-defined, court-supervised process that is specifically designed to guide fair and equitable changes to collective bargaining agreements, and we remain focused on reaching consensual agreements with our unions.

Company negotiators continue to be responsive to union requests for information and provide proposals that are designed to achieve the necessary $1.25 billion in sustainable, annual employee cost savings. This week, American responded to direct feedback from the unions at the negotiating table and presented an amended active medical proposal to all of its unions. The amended proposal adjusts employee contributions among the three plans and changes some of the plan designs and out-of-pocket expenses, while still meeting the company’s savings target in this area.

Today, American also responded to the letters sent by the APA, APFA and TWU to the National Mediation Board (NMB) last week requesting a Board proffer of voluntary binding interest arbitration. We responded to the NMB that we believe the company’s current approach to negotiations within the 1113 process – a process that requires the Court to determine what is necessary for a successful reorganization – is in the best interest of our employees and all our stakeholders, and that we did not think it appropriate to abandon that process in favor of arbitration.

We recognize the changes needed to realize our necessary cost savings are difficult, but they are necessitated by the fact that we have lost more than $10 billion in the last 10 years and continue to lose money each month.

We are at a critical point for our airline – and have only one chance to get it right. The best outcome for our employees is an airline that emerges quickly from restructuring with the needed structural changes, begins to grow, earn a profit and create long-term opportunities for our people.

Abandoning this tried, trusted and proven process now could bring unacceptable risks and jeopardize American’s future. We urge union leaders to focus their attention on the bargaining table and work to reach consensual deals. That should be our joint priority.

 

March 7, 2012

The company is pleased to announce that in working with the Unsecured Creditors Committee (UCC) and the PBGC, it has developed a solution that will allow it to pursue a freeze of its defined benefit pension plans for non-pilot employees instead of seeking termination. For additional details, please see Jeff Brundage's letter shared with employees.

March 2, 2012

We are disappointed there wasn’t more progress this week at the negotiating table. More than a month has passed since we outlined our business plan and asked our unions to roll up their sleeves and work with us to tackle our collective challenges. As reflected in this week’s Monthly Operating Report, we continue to lose money as our cost structure is too high and uncompetitive with our industry peers. We cannot sustain this path.

With the APA, company negotiators have responded to many data requests, attached specific costs savings to our proposals and arranged lengthy briefing sessions with subject matter experts. In return, the company has repeatedly asked the APA for the same. At the conclusion of this week’s bargaining, the APA provided only a partial valuation with incomplete supporting data to verify the valuation of their own proposals. Based on the Company’s estimate of the value of the union proposals, the savings associated with APA’s proposals fall far short of what the company needs.

  

APFA negotiators opted to spend half the week attending an internal, out-of-town convention and made themselves available to meet with company negotiators for a total of 30 minutes this week. APFA has yet to respond to many of the contract items and their apparent disinterest in doing so has prevented progress on the issues most important to Flight Attendants.

Our discussions with the TWU have been constructive, but there are still major gaps to address.

Company negotiators remain intent on achieving consensual agreements, are prepared to meet at any time and have subject matter experts available around the clock. We have been and will continue to be responsive to all union requests related to the term sheets, savings targets, proposal valuations and the business plan.

Every day that passes without new agreements introduces more risk to our situation. The company is focused on achieving agreement on contract changes that meet the necessary labor savings required to create a strong foundation for a profitable and successful company. Time is running out for union leaders to be a collaborative part of the solution.

February 24, 2012

As the company laid out in its February 1 restructuring announcement, we must make major changes to our labor agreements. And we need those changes in a matter of weeks. We don’t have the luxury of time as we did in Section 6 negotiations and need resolution on these contractual changes immediately, not months from now. That requires a serious and deliberate approach to negotiations. In an effort to progress as quickly as possible, company negotiators continued to meet with all three unions this week.

American responded to APA’s questions regarding regional jet flying in the business plan and provided access to benefits experts at the union’s request. The APA put forth a proposal on Supplement CC arbitration, which is currently being assessed, as well as a modified work rules model. The company provided feedback and continues to wait for more information regarding valuations of all other APA proposals. 

This week, American received initial proposals on select Articles from each of the seven TWU-represented workgroups. The company is reviewing the proposals and their associated cost saving values. In addition, American hopes to receive additional proposals early next week from the TWU relative to subjects that apply to all of the agreements, including pension, active and retiree medical and sick leave. Upon receipt of the additional proposals, we will evaluate all of the proposals in aggregate to determine the next step. 

Discussions with APFA resumed on key term sheet items and the company’s business plan to help address our restructuring goals for the flight attendants’ contract. Our savings goal in the restructuring process remains unchanged.

American also responded to the TWU and APFA’s Early Out Proposals and informed them that the proposals represent a significant cost to the company and could not be accepted on their terms. However, American reminded the unions that we have a long-standing record of mitigating involuntary reductions through voluntary programs and remain willing to explore alternatives, at the appropriate time in this process, that don’t exacerbate our cost challenges.

Our challenge is clear: work quickly to restructure our contracts, achieve the targeted cost savings and begin implementing the changes so we can emerge from restructuring in the near term, or remain on our current path and jeopardize our business plan and ultimate success. The company continues to seek to reach consensual agreements with all of its unions and hopes that union leaders will recognize the urgency of our situation and help us quickly resolve negotiations. Negotiations with each of the unions are expected to resume next week.

February 17, 2012

Negotiations resumed this week with all of American’s unions. Company negotiators met with the APA and received a number of proposals from the union on various topics. On Tuesday, company retirement subject matter experts presented more detail on the company’s retirement proposal and answered questions from the APA. The company is waiting to receive information from the APA regarding the valuation of all its proposals, and expects to resume negotiations early next week.

                                                               

American continued to work on responses to the TWU’s requests for information this week, meeting with all seven TWU-represented workgroups throughout the week. Information sessions were also provided to the entire TWU negotiating committee on a number of topics, including pension, sick leave and medical benefits. The company plans to meet with the union on Monday to discuss questions related to sick, pension and medical benefits, and hopes to begin receiving proposals from TWU starting Tuesday.

Negotiations this week with APFA focused on evaluating proposals and items in the term sheet that support the savings necessary to ensure the company is successful when we exit restructuring. We remain focused on reaching a consensual agreement in the weeks ahead.

February 10, 2012

Company negotiators met with each of their unions’ negotiations committees this week to begin initial discussions on the company’s 1113 term sheets. Negotiations with the APA began Tuesday, with conversations focusing on work rules – in particular, Preferential Bidding – and other topics. The APA provided the company with proposals on a few term sheet areas as negotiators continued to meet throughout the week. Negotiations will continue with the APA on Monday.

American provided a presentation to the TWU on the 1113 proposed medical benefit changes, and parties also met to review the financial models for the Fleet Service and Mechanic & Related workgroups. The TWU provided requests for information for each of the seven TWU-represented workgroups, and the company began to deliver its responses. Next week, American will hold pension and sick leave benefit updates on Monday and meet with the TWU on Tuesday to discuss several of the union's questions related to the term sheets.

The company met with APFA on Thursday afternoon to answer general questions regarding the 1113 term sheet presented to them on Feb. 1. On Friday, APFA and the company met to review the pension, benefits and sick policy sections of the company's 1113 proposal. Next week, negotiations with APFA will resume on the afternoon of Feb. 15, and continue for 10 days through Feb. 24.