Representing the Flight Attendants
of American Airlines

Representing the Flight Attendants of American Airlines

8.16.12 – (LAA) – Statement Of AMR Corporation’s Official Committee Of Unsecured Creditors Regarding Section 1113 Matters

APFA Special Hotline Update 8.16.12  Official Statement from the Unsecured Creditors Committee – August 16, 2012
The following is an official statement issued by the Unsecured Creditors’ Committee (UCC) released Thursday, August 16, 2012. 

FOR IMMEDIATE RELEASE
STATEMENT OF AMR CORPORATION’S OFFICIAL COMMITTEE OF UNSECURED CREDITORS REGARDING SECTION 1113 MATTERS
August 16, 2012 — The Labor Subcommittee of the AMR Creditors’ Committee met today to review the Bankruptcy Court’s Section 1113 decision issued on August 15, 2012 with respect to the Allied Pilots Association (APA). Contrary to initial press reports, the Court upheld AMR’s Section 1113 motion in its entirety, except for two specific contract proposals relating to code-sharing and pilot furloughs. These proposals have already been modified by the company in the recent agreement voted on by American’s pilots and the Committee believes that the Court will promptly sustain the company’s position when the Court considers the company’s revised motion in early September. As important, the Committee believes that American Airlines’ and American Eagle’s employees should not misinterpret the Court’s decision issued yesterday, which actually upholds American’s positions on all issues common to the company’s labor organizations and rejects arguments from the unions relating to the company’s business plan, potential mergers and proposed changes to benefits for all of American’ unionized employees.While the Committee believes that it is now clear that the Bankruptcy Court will abrogate any collective bargaining agreement that is not consensually resolved, the Committee also firmly believes that consensual labor agreements are in the best interests of all of AMR’s stakeholders. Accordingly, the Committee agreed today to reaffirm the following views and took the following actions:1. As evidenced by the seven ratified agreements achieved with the Transport Workers Union of America, AFL-CIO (TWU) at American Airlines, the Committee believes that employees represented by the labor organizations will fare better and receive more value in agreements they accept consensually than will be the case in any situation where contracts must be abrogated and employment terms are imposed as permitted under the Bankruptcy Code.2. The Committee has concluded that there is no additional economic value beyond the current company offers that can be provided to the company’s labor organizations without endangering AMR’s reorganization and the rights and economic interests of nonunion creditors and parties in interest. Accordingly, the Committee decided today that it will oppose any new efforts to transfer additional economic value from general unsecured creditors to American’s unionized employees.3. In order to support prompt, consensual agreements between American and its unionized employees, the Committee today agreed to reluctantly support the equity stakes negotiated by APA, the Association of Professional Flight Attendants (APFA) and TWU at American Airlines and the unsecured claims negotiated by the Air Line Pilots Association, International (ALPA), The Association of Flight Attendants-CWA (AFA) and TWU at American Eagle. This was a difficult decision for the Committee to reach because of the dilutive effect these equity stakes and unsecured claims may have on other creditors, but the Committee’s action recognizes that consensual agreements benefit everyone. However, the Committee’s support will continue only to the extent that consensual agreements are reached promptly. The Committee will not support equity stakes or claims for any labor organization that does not ratify a collective bargaining agreement nor will the Committee support any further economic value to labor organizations beyond the current proposals.4. As a result of Judge Lane’s ruling with respect to the APA, the Committee supports the company’s plan to re-file its 1113 motion as to the APA tomorrow (August 17, 2012), and will support a prompt hearing on that motion during the week of September 3, 2012.The Creditors Committee, through its Labor Subcommittee, has closely monitored the negotiations with APA, AFPA and TWU at American Airlines and with ALPA, AFA and TWU at American Eagle. The Committee strongly supports the company’s Last, Best and Final Offers made to each of the labor organizations. The Committee is satisfied with the progress the company is making in its restructuring as evidenced by its non-labor cost savings, and its revenue performance and operational results, which have been the strongest in many years.Today’s message from the Creditors’ Committee to American’s and American Eagle’s labor organizations is clear: the Creditors’ Committee recognizes the valuable contributions of the companies’ employees. The Committee supports the consensual deals that have been negotiated — including equity stakes for American Airlines’ labor organizations and unsecured claims for American Eagle’s labor organizations – assuming that consensual deals are ratified promptly. If such deals cannot be reached, the Committee will not support any further economic value being provided to the labor organizations. The Committee will also expect that the company will promptly obtain orders abrogating any remaining collective bargaining agreements that have not been consensually resolved and will proceed in an orderly and expeditious manner to implement the terms and conditions outlined in its 1113 term sheets.Consensual deals or abrogation of unresolved CBAs is necessary to AMR’s successful reorganization so that the company can validate the assumptions in AMR’s standalone business plan and continue to explore strategic alternatives in close collaboration with the Committee to compare against the standalone plan. The Committee’s hope and desire is that consensual labor agreements will be achieved with all labor organizations. Such a result in the best interests of all stakeholders and the actions taken by the Committee today are intended to help achieve that outcome.

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