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Hotline Update - February 3, 2012

It is important to remember that the company’s ridiculous proposal from Wednesday is merely an opening salvo. Of course, they would like for this term sheet to be ratified and for this process to be wrapped up in a few days, but we do not see it that way. We will not allow the company to force this plan on us. There is a great amount of work to be done by our negotiators as well as our legal and financial experts. We will not agree to terms that look anything like this. We will not put our members’ livelihoods or retirements at risk solely based on the company's overblown, unproven numbers simply to meet their timeline. The company must bargain in good faith by providing factual and provable numbers and not numbers that appear to have been taken from their very active imaginations.
 
Meantime, Horton has hatched a plan to take his proposal to our membership individually through meetings with management in our airports. DO NOT ATTEND THESE MEETINGS! They represent another management tactic to bully and intimidate our membership and we will not stand for it.
 
Although we were disappointed not to have Ed Schultz weigh in on our cause on television last night after interviewing Laura earlier in the day on his radio show, we are pleased to say the fight against AMR’s misguided, unjustified, and draconian proposal has been taken to the public via many major broadcast and print media. Leading up to and immediately following Wednesday’s meetings, and then again on Thursday, Laura Glading and the APFA Communications team implemented a strategy to engage targeted members of the media with prepared statements and interviews. The tactic proved successful as our message was carried by every major outlet locally and nationally. Putting our side of the story into the public discourse is important to affecting the outcome of this process. See a sampling of the print coverage below:
 
http://www.reuters.com/article/2012/02/02/uk-amr-idUSLNE81100S20120202
 
http://www.nytimes.com/2012/02/02/business/american-airlines-seeks-job-cuts.html?_r=1
 
http://www.bloomberg.com/news/2012-02-01/amr-poised-to-start-labor-talks-with-10-000-job-cuts-possible.html
 
http://www.huffingtonpost.com/2012/02/02/american-airlines-job-cuts_n_1249088.html
 
http://money.cnn.com/2012/02/01/news/companies/american_jobs/?source=cnn_bin
 
http://www.star-telegram.com/2012/02/01/3705622/american-airlines-plans-to-cut.html
 
http://www.bizjournals.com/dallas/news/2012/02/01/labor-leaders-skeptical-of-american-plan.html
 
Our media strategy is of course just one prong of our approach. We continue to reach out to our friends and allies in government and at other unions for support. And of course, we remain committed to negotiation strategy, particularly with regards to an early-out option for Flight Attendants to retire with security. Finally, our team of legal and financial experts have been hard at work around the clock since Wednesday scouring AMR’s proposal, disputing the veracity of management’s claims and justifications, analyzing the affect it will have on our membership, and preparing alternatives.
 
Please refer to www.apfa.org for the most current and accurate information.
 
We’ll be back over the weekend with the regular Weekly Hotline content.

Ed Show Postponed

The Ed Show informed us that we would be bumped from tonight's show.  The Susan G Komen story took precedence. 

We are working with the Producers on rescheduling and will keep you posted.

APFA Featured Tonight on The ED SHOW

As you know, yesterday was a difficult day for all of us. Once again, management showed the world that they think they can do whatever they want and their employees will pay for it. Unfortunately for them, the numbers are on our side.
 
We know what our actual costs are. We know that Flight Attendants working at our competitors earn the same if not more than we do. We cannot be expected to take another 20 percent cut to do the same job. I won’t stand for it.
 
As for our benefit packages, I am not willing to accept the termination of our pensions and the abandonment of our retiree health benefits. The company has not justified its proposal to make these drastic cuts, and I will demand an explanation. We have the support of the PBGC, key members of Congress, and other members of the Creditors’ Committee on this issue, and I’m going to make sure that everyone lines up to defend us.
 
The most disgusting take-away from yesterday’s meetings was the attitude of company executives. The fact that they walked into these meetings and, with a straight face, pushed that proposal across the table was the epitome of arrogance. Never once were we given credit for the sacrifices we’ve made over the past nine years – and continue to make. No one could explain why the $800 million cost disadvantage they claimed to have going into bankruptcy suddenly exploded to $1.25 billion.  And considering there is no credit $2.8 billion. It is repulsive and I simply refuse to accept it.
 
Know that I intend to fight the company on every misleading and inaccurate point they try to make, continue to update the Creditors’ Committee, and if necessary will bring the fight right to the judge’s bench should we not be able to reach an agreement.
 
As I said yesterday, I will not rest until the jobs and retirement plans of every Flight Attendant are secure.
 
Please take a moment to view the latest YouTube video posted on APFA.org where we deliver our message of resistance.
 
And finally, tonight we will expand our campaign against corporate cruelty to nationwide television when I'm scheduled to appear on the Ed Show on MSNBC. Please check your local listings for times.
 
Please continue to read these Hotlines and visit APFA.org for the most accurate and up to date information.
 
In unity,
 
Laura Glading

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CORRECTION:  Yesterday’s hotline stated that 1,300 Gate Agents were included in the Headcount Reduction announced by the company.  The correct information is 1,300 Agents, Reps and Planners.
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Hotline Update

February 1, 2012

Following the meetings with management today, we can now confirm the following information:

As you read this information, please keep in mind the Negotiating Team expected this to look ugly, yet it has exceeded all of our expectations. The betrayal of our Flight Attendants began in 2003 and continues today.

According to AMR management, the company needs $3.1 billion in annual cuts, with $1.25 billion coming from labor – which is disingenuous at best, as the real benefit American will realize from the contract gutting is worth $2.8 billion. The company expects to accomplish this by terminating employee pensions and shifting to a defined contribution plan, abandoning our retiree medical benefits, and reducing the size of the company’s workforce by approximately 14,000.

The company’s proposal is even more extreme and despicable than we had anticipated, however, just as I expected and not surprisingly, the justification from management simply isn’t there. They failed to justify the $800 million cost disadvantage figure they pulled out of the air and claimed to have for the past three years. Now they’ve more than tripled that amount. It’s outrageous and I’m not going to accept it. We have the facts on our side, and if necessary I will reiterate them to the creditors’ committee and the court. Management has given us absolutely no credit for the concessions we made and continue to make and now they want another bailout. Frankly, they’re not entitled to it. I am committed to fighting them on every misleading or inaccurate statement they made today. Our aggressive negotiation strategy will remain unchanged, and we will pursue an early-out option to take care of any reduction.

Headcount reduction breaks down by the following high-estimates:

Management: 1400
Pilots: 400
Flight Attendants: 2300
Mechanics: 4500
Fleet Services: 4300
Gate Agents: 1300

We’ve posted the Flight Attendant ‘Term Sheet’ proposed by the company on the Bankruptcy Page of APFA.org. Again, keep in mind as you read the document that we have no intention of coming out of this with anything resembling this term-sheet.

Although this is a part of the 1113 process and this is their first 1113 proposal, the Bankruptcy Code does not impose any time table for the negotiations that will now follow. It is not until the company determines that further bargaining would be futile and files a Section 1113 motion with the court for authority to reject the collective bargaining agreement, which the Bankruptcy Code provides for any time limits. The first deadline is that the Court has to schedule a hearing on the motion within 14-21 days after the motion is filed or longer if the parties agree. In addition the court is required to make a decision on the Section 1113 motion within thirty days from the start of the hearing. This deadline can also be extended if the parties agree.

I wish I had better news, but you can be sure that we are not going to take this laying down. There is still much work to do to ensure the best outcome.

Additional updates will be sent via this Hotline and posted on APFA.org.

In Unity,
Laura Glading

Representative George Miller, senior Democrat on the House Committee on Education and the Workforce, asks pension agency to protect American Airline retirees, employees and U.S. taxpayers

As I make final preparations for our meeting today with AMR management, I am encouraged by the outpouring of support from our friends in Washington, DC.

Both Congressman George Miller and PBGC Director Josh Gotbaum have weighed in and demanded that AMR meet its pension obligations. This is a testament to the APFA’s relentless work on the Washington front.

As many of you have heard me say in recent base meetings, Julie Frederick, Patrick Hancock and I have made engaging government officials a priority throughout this bankruptcy and today it is paying off when we need it most.

I will be issuing additional hotlines throughout the day to keep you up to the minute with any developments.

In unity
Laura Glading

WASHINGTON – Rep. George Miller (D-CA), the senior Democrat on the House Committee on Education and the Workforce, asked the Pension Benefit Guaranty Corporation today to avoid a potential termination of American Airlines’ pension plan that may leave taxpayers on the hook and threaten the retirement security of thousands of current and future American Airline retirees.

“Termination should only be a last resort and not part of any business strategy to exploit the bankruptcy process and dump pension liabilities onto the taxpayer,” Miller wrote to Josh Gotbaum, PBGC’s director. “To protect the taxpayer and plan participants, I urge you to avoid allowing a repeat of United Airlines. American Airlines employees and retirees, like those at United, have mortgages, tuition payments, and other financial obligations to meet. Participants in the American Airlines retirement plans made countless life choices in relying on the promise that a career with American would provide benefits adequate for them to comfortably live out their retirement years.”

In 2005, the PBGC and United Airlines ultimately agreed to terminate United Airlines’ pension plans. The PBGC also ceded its right to ever restore the plans to United Airlines, as well as its right to seek additional assets from United, should the company ever become profitable again. Not only did United reap profits in subsequent years, a GAO investigation found that leading up to and through the termination of United Airlines’ four pension plans, the airlines’ CEO at that time and two other executives received a total of about $55 million in salary, benefits and other compensation.

Hotline Update

January 31, 2012

Dear APFA Members,

We are standing on the precipice of a very stressful and tumultuous time in this bankruptcy. Tomorrow, AMR management will issue its initial proposal for reorganizing the contracts of the company's labor groups. Our experts and I expect this proposal to include drastic cuts across the board. Further, I expect dismay and outrage from our membership as details are made public.

Those reactions are justified but I urge you to remain calm. Our strategy for negotiations will remain unchanged.

I have said before, both in public and in bankruptcy proceedings, that American Airlines needs a fresh business plan that guarantees a new and profitable direction for the company. Without a strong plan that has been vetted by our legal and financial experts we cannot be expected to have productive contract negotiations, and the company knows this.

Among the things I will be looking for in a business plan are pay-for-performance policies for management. You all shared my disgust as management awarded themselves exorbitant bonuses as they dismantled the airline we all worked so hard to build. As the APFA President and a dedicated employee, I never want to see that happen again.

I also want to see a new strategy that returns American Airlines to competitiveness on profitable routes. Simply slashing routes that lose money is not a business plan.

Flight Attendant costs are not this airline's problem. Our salaries and benefits are competitive with our major competitors. “Convergence” has occurred and with the recent agreements at the other major airlines, we are even falling behind some Flight Attendants. Gutting our contract will not return American Airlines to profitability.

As I have said throughout the informational bankruptcy base visits, American Airlines' problem is one of revenue. Mismanagement and disorganization has made our company uncompetitive. We need top-down improvements, not bottom-up cuts. If the company cannot implement major business changes in this bankruptcy, then we do not have the right management team in place.

Make no mistake, the proposal tomorrow will be ugly. But remember that it represents the beginning of a long process for which our tenacious experts and I are well-prepared. I will not rest until the jobs and retirement plans of each member of the Association of Professional Flight Attendants are safe and secure. It is an awesome responsibility that I take very seriously.

Please refer to APFA.org and these hotlines in the coming days and months for the best and most accurate information regarding bankruptcy proceedings.

In unity,

Laura Glading
APFA President

Union President Wants Strong Biz Plan Ahead of AMR Section 1113 Proposal

APFA President Laura Glading Calls for New Direction to Accompany Contract Negotiations

Jan. 31, 2012 (Fort Worth) - Laura Glading, President of the Association of Professional Flight Attendants, issued a statement today in advance of a seminal moment in AMR's ongoing bankruptcy proceedings. Tomorrow, American Airlines will present proposals for the changes to its labor contracts under section 1113 of the bankruptcy code.

“We are standing on the precipice of a very stressful and tumultuous time in this bankruptcy." Ms. Glading said in a statement to her members. "Our experts and I expect this initial proposal to include drastic cuts across the board. Further, I expect dismay and outrage from our membership as details of the proposal are made public. I urge you to remain calm. Our strategy for negotiations will remain unchanged.”

Ms. Glading went on to say that the key aspect of this bankruptcy is the company's business plan and without a viable direction, contract negotiations will be unproductive. She and a team of legal and financial experts will review AMR's plan in the coming months, but she pointed out some of the things she will be looking for in the plan:

• Pay-for-performance standards for American Airlines management. Executives drew the ire of employees and the public in recent years when their annual bonuses did not align with the profitability of the airline.
• Growth in profitable routes. Ms. Glading called on management to do more than cut routes that don't make money. She wants to see growth and competitiveness in key routes that American Airlines once dominated.

Ms. Glading also called on management to negotiate in good faith with the APFA.

“Our Flight Attendant costs are competitive with the other major carriers. In 2003, American Airlines experienced a virtual bankruptcy and we gave back 30 percent of our salaries and benefits. The Flight Attendants are making 37 percent less in real dollars today than they were in 2003. I will continue to demand credit for those givebacks as contract negotiations continue through bankruptcy.”

Ms. Glading reiterated public statements she had made previously, stating that the problems plaguing American Airlines are not strictly cost-related. Mismanagement at the highest level has led to a revenue gap between American Airlines and its competitors.

According to Ms. Glading, “We need top-down improvements, not bottom-up cuts. If the company cannot implement major business changes in this bankruptcy, then we do not have the right management team in place.”

About APFA - Founded in 1977, the Association of Professional Flight Attendants (APFA) is the largest independent Flight Attendant union in the nation. It represents more than 16,000 Flight Attendants at American Airlines. APFA Members live in almost every state of the nation and serve millions of Americans as they travel the nation and the world. In 2003, APFA played a major role in keeping American Airlines solvent and out of bankruptcy by giving back an employee bailout of $340 million in annual salary and benefits, for a total of over $2 billion and counting. APFA had been in negotiations with American for almost four years when the carrier filed for chapter 11-bankruptcy protection on November 29, 2011. Laura Glading is serving in her first four-year term as president of the union.

Hotline Update

January 30, 2012

This week will hold the most significant developments in the AMR bankruptcy case since the November 29th filing.

According to the company, we will see a new business plan for American Airlines in a presentation on Wednesday morning in Dallas. Following that presentation, the major unions will see the company's first proposal.

Over the past several days rumors have been circulating that are filled with misinformation and reflect a fundamental misunderstanding of the procedures a debtor must follow to modify a Collective Bargaining Agreement (CBA).

First, well in advance of filing a Section 1113 motion or application in which American asks the court for authority to reject the CBA, it must make a proposal to APFA that satisfies the requirements of Section 1113. The Bankruptcy Code explicitly provides, that, “prior to filing an application seeking rejection of a collective bargaining agreement the debtor shall make a proposal . . .”

It must be based on the “most complete and reliable information available at the time” such proposal is made and must be limited to “those necessary modifications in the employees benefits and protections that are necessary to permit the reorganization of the debtor and assure that all creditors, the debtor and all of the affected parties are treated fairly and equitably.” The company must also provide APFA with “such relevant information as is necessary to evaluate the proposal.”

In its attempt to comply with these procedures, AA will hold a meeting with APFA, APA and TWU on Wednesday, February 1. In the morning management will review its business plan and describe the contract proposals, which will be applicable to all three unions. Our experts and I expect the initial proposal to be a low baseline for the coming negotiations. In the afternoon we will meet separately with AA and receive proposals that specifically address each of our CBAs. On Thursday we will be meeting with the company’s finance team to review the costing assumptions underlying each proposal. On Friday, the company will hold an all-day meeting with the unions’ financial advisors to discuss the model and assumptions underlying the business plan. Finally, in order to ensure that we have all the information needed to assess American’s proposal, we will give the company within the next week a list of the documents it must produce.

I will devote Monday, February 6 and February 7, to preparing for and attending a Creditors’ Committee meeting in New York. The earliest negotiations over the company’s proposal would begin is Wednesday, February 8.

Under Section 1113 American must “meet, at reasonable times” with APFA “to confer in good faith in attempting to reach satisfactory modifications of such agreement.” It is important to remember that the negotiations are not only taking place under Section 1113 of the Bankruptcy Code, but Section 6 of the Railway Labor Act. That is why the National Mediation Board (NMB) will continue to oversee these negotiations as it has since January 2009. An NMB-appointed mediator will participate in the sessions, which will follow the company’s proposal.

Only after the company concludes that further negotiation sessions would not yield a consensual agreement would it actually file the application to reject the CBA with the Bankruptcy Court. The hearing on the application has to be scheduled within fourteen days after it was filed, or twenty-one days if the court deems it to be appropriate or at a later date if American and APFA agree.

APFA, like the company, must negotiate in good faith. Should these negotiations fail, we must be able to show the court that we have in fact satisfied this obligation. Only if bargaining is unsuccessful will we have the opportunity to demonstrate to the court that American has not complied with each of the requirements of Section 1113 and that we had “good cause” to reject its proposal. We cannot simply refuse to bargain because we believe that the company’s proposal is deficient or that it has otherwise not satisfied Section 1113 procedures. Again the time for raising these arguments with the court is if and when the company moves beyond negotiations and proceeds to the filing of an application to reject the CBA.

As I have said publicly and during bankruptcy proceedings, the Flight Attendants at this airline are not the problem. Convergence, in terms of pay and benefits, has already occurred with our major competitors. The problem that plagues American Airlines is one of revenue, which is a product of management and organization. We need top-down improvements, not bottom-up cuts. The Flight Attendants have given up enough for this company already; it's now time for management to do their part.

Although I am pleased that management is offering a business plan along with the contract proposal, as it shows a certain degree of deference to our demands, it will still need to be vetted by our experts. Until we are convinced that the plan will ensure the success of our company and will provide every Flight Attendant with both job and retirement security, AMR cannot and should not expect productive negotiations.

Following Wednesday’s presentation, I will bring the contract proposal to the APFA Board of Directors, who will help disseminate the information to the membership. Please remember, this will be a very preliminary proposal. There is still much work to be done by the court and the Creditors' Committee, and our experts and I are prepared to fight in those venues to ensure the company's success and the fair treatment of our membership.

In unity,
Laura Glading