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6.16.12 – (LAA) – AMR Bankruptcy, APA and TWU Mediating Negotiations Conclude with No Agreements, Potential Pension Freeze, Mandatory Food Service Training, Bid Sheets, Hybrid Relief Selections, 737 Staffing

This is Leslie Mayo, National Communications Coordinator, with an APFA Update for the Week Ending June 16, 2012.

Have a question or a comment about AMR’s Bankruptcy?
For “Proof of Claim” questions†or call†817.540.0108, ext. 8212
For AA or US Airways Term Sheet questions –
For general bankruptcy questions –
Be Informed:
Read more†news on US Airways + AA
Read more†AA Bankruptcy News
Read more from†Wall Street Analysts

APA and TWU Mediated Negotiations Conclude With No Agreements
After two days of mediated negotiations with Judge James Peck, the two remaining groups represented by TWU – the Mechanics and Related, and Shops, that did not ratify their last best offers a few weeks ago, did not reach a deal with AA this week. The pilots spent two weeks negotiating and did not get a deal either, however, they were given a “last best offer” from AA and will be discussing it at their Board Meeting next week. The judge’s decision will be issued electronically on Friday, June 22, but at this point, APFA has no idea what time of day it will be published. As soon as it is, APFA will send out a robo call and a hotline as well as other communication tools.

How Many Million is Too Many Million?
Some of you may have been wondering why it seems like our CEO isn’t hearing what everyone else is saying: that the best option for AA’s survivability – a merger with US Airways. Actually, as it stands, I’m sure he hears fine. He just chooses not to listen. Instead, he plugs along promoting the Standalone Plan regardless of its lack of viability.

Some of you may also know†why†he’s doing this. For those who don’t, here it is in a word: millions.

In order to exit bankruptcy, the Company must file and receive approval for a Plan of Reorganization (POR). This is the roadmap that lays out the company’s post-bankruptcy existence as well as the percentage creditors will recover on their claims.

First, the POR will likely provide for cancellation of the stock that was issued before the bk filing. The POR will state the total value of the company, the number of shares of new stock to be issued, and the price of that stock. For example, if the POR Sets the value of the Company at $1 million and the number of shares at 10,000, the price of each share will be $100. (In nearly all cases, unsecured creditors’ recovery is in the form of stock.) If the POR provides for a 50% recovery and an unsecured creditor has a claim of $1,000 the value of that claim will be reduced to $500 for which the creditor receives 5 shares of stock (5 x $100).

Finally, the POR will disclose the number of shares the officers will receive for their anticipated success after the bankruptcy. Of course, as was the case before the bk filing, the AMR officers expect to be showered with gobs of compensation. To accomplish this, they will receive large amounts of stock. When Doug Steenland (then-CEO of NW Airlines) and Glenn Tilton (CEO of UAL) exited bankruptcy it was with $27 million and over $30 million respectively. And that was after the first day upon emerging from bankruptcy. The “real” money is based on the fact that the valuation of the company is invariably understated. Consequently, when the stock starts to trade on the open market, investors appreciate the real worth of the company and are willing to pay more than the price of the stock. Back to our example, if Wall Street believes the real price of AA is $2 million, that doubles the amount of compensation our CEO would make right off the bat.

Tom Horton wants the same treatment as the CEOs of United and Northwest received. If he remains in control of AMR until it emerges from bankruptcy he just may get it. And if he†then†announces a merger with US Airways, AA’s stock will skyrocket. We know this because, based merely on the possibility of a merger with AA, US Airways’ stock has increased by about 150% over the past several months.

Alternatively, if Horton is not in control at exit and instead US Airways is sponsoring the POR, which would include the distribution of stock, Horton will receive far less than the tens of millions bestowed upon other airline CEO’s.

That should about explain it.

AA and US Airways in the News
Yesterday’s US Airways’ shareholders’ meeting in New York was attended by the leaders from all three of AA’s unions.†Click here for an article†from the Chicago Sun-Times. APFA President Glading was†interviewed by CNBC†at the conclusion of the meeting. The video was broadcast nationwide throughout the day.

CEO Doug Parker made the following statement:†ìThey canít fix this,î†he said of Americanís slip from the countryís No. 1 to No. 3 airline.†ìThis is a structural weakness that bankruptcy canít fix.î†He also said Americanís plans to expand and grow its network donít make sense.†ìTheyíve announced an intention to grow in the markets where theyíre the weakest, not the strongest,î†he saidÖ†(more)

To view US Airways’ SEC 8-K filing including the slides shown at the Shareholders’ meeting in New York supporting a merger with AA,†click here. For a company so hell-bent on promoting the strength of its standalone plan, threats of mergers should bear no weight. The opposite is true:


Potential Pension Freeze
The Company has not published any information about their plans to freeze our pensions (or not) in the event our contracts are abrogated next Friday. Nor have they announced when they will implement their proposed 401(k) match substitution. Until that date, whenever that may be, you will continue to accrue Years of Credited Service (YCS) that count toward calculating your pension.

Remember, it only takes 734 paid hours in a calendar year to accrue a full†YCS. Some high-time flyers may even receive a YCS for 2012, if they receive 734 paid hours before the Freeze Date. (Check your HISK for progress.) Others may receive just a fraction of a year. For example if you only had 550 hours in 2012 before the Freeze Date, you would have .749 of a full year of YCS.

If a Pension Freeze is implemented, use the Pension Estimator on Jetnet to view your final pension according to the date you plan to retire.

Mandatory Food Service Training – First Time in 17 Years
Yesterday, AA announced a fun, new, mandatory food-service training for International Flight Attendants who intend to fly IFS trips in the near future. All training must be completed by November or you will not be able to bid IFS beginning in December. Training is scheduled for August through October with November as the make-up month. Article 9.F.10 permits the company to require training. However, it’s important to note that this is the first mandatory food-service training since 1995. Training pay is covered in Article 3.H. This training will be for JFK, IMA, IDF, IOR and LAX-I flight attendants. BOS-I attendees will train with JFK and RDU attendees will train with IMA.

July Bid Sheets and Hybrid Relief Selections
International FAs will see Hybrid Relief lines on most bid sheets in July 2012. This is done to try to prevent the busting of VC Relief lines. When VC Relief lines are busted, it creates additional Open Replacement lines and increases the Reserve List. FAs will bid for these rather than the forced creation of Open Replacement Schedules. Hybrid Relief lines will be ID’d with a 4600-series selection number. These lines may include some AVBL days and additional trips to complete the relief line.

During the first four days of the month, AVBL days will be released using the rules for Open Replacement. Beginning with the fifth day of the month (July 6, 2012) the rules for releasing AVBL days will revert to those of Regular Reliefs. Review pg. 28 of the On Duty Contract Guide or Appendix I, Article 9.C.2.b. (3) and (4).† All other rules remain the same, i.e. monthly maximum, etcÖ

Unlike other selections and reliefs, Flight Attendants will not be assigned Hybrid Reliefs. Only Flight Attendants that bid them will be awarded them.†Please note: APFA did not create this option to assist the company with coverage, rather it was created based on feedback from our members who wanted an alternative to Open Replacement.

737 Staffing From Safety & Security
AA has told us it plans to begin reconfiguring the 737s to include a reduction in passenger seating capacity in order to offer ìpremium main cabin seatingî among other things. This will result in a reduction of the FAA required minimum crew from four to three Flight Attendants. Previously, AA had looked into the possibility of reducing the required FAA-minimum crew by “blocking seats in main cabin” during the reconfiguration. However, the company has told us that this is no longer being considered.

If any Flight Attendant should encounter an incident involving a violation of minimum crew, please report the event to the†Cabin ASAP Program†as well as to†APFA’s Safety and Security Department.

That’s it for this week. Thank you for calling the APFA Hotline.

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