APFA Hotline – April 25, 2013
APFA’S STOCK CLAIM Q&As
1. Q: What will the Unsecured Creditors of American receive?
A: When American exits bankruptcy, it will merge with US Airways and emerge as a newly combined company (“NewCo”) that will issue new common stock (a/k/a “equity”) to existing shareholders of US Airways and stakeholders of American. US Airways shareholders will receive 28.0% of the NewCo stock and American’s Unsecured Creditors and shareholders (“Existing Shareholders”) will receive the remaining 72.0%. Unsecured Creditors will receive a portion of the 72.0% of NewCo stock as consideration for their unsecured claims.
2. Q: Why is Labor (including APFA) receiving stock in NewCo?
A: As part of the concessions provided by Labor in reaching agreements with American, the Company agreed to provide Labor with an allocation of NewCo stock. The actual amount that will be received is based on a percentage of the distribution that will be made to Unsecured Creditors.
3. Q: How much of NewCo’s stock will be distributed to APFA?
A: As provided for in the Last, Best, Final Offer, APFA will receive 3.0% of the stock provided to American’s Unsecured Creditors. It is important to note that as a result of the merger, the value of NewCo stock APFA is expected to receive is anticipated to be greater than the value APFA would have received without the merger.
4. Q: How will the price of NewCo’s shares be determined?
A: The Plan of Reorganization and its accompanying Disclosure Statement filed with the Court will estimate the value of NewCo, which in turn can be used to estimate the price of NewCo shares. Upon or shortly after the date the Company emerges from bankruptcy (the “Effective Date”), the issued and outstanding shares of NewCo will begin trading and the price of NewCo’s shares will be based on the market’s valuation of NewCo.
5. Q: Will American’s Unsecured Creditors and Labor receive all of NewCo’s stock?
A: No. First, US Airways’ current shareholders will own 28.0% of NewCo’s equity. The remaining 72.0% will be allocated between Labor, Unsecured Creditors, and Existing Shareholders. Existing Shareholders will receive a minimum of 3.5% of the total outstanding shares of NewCo, which will be distributed from the shares allocated to American. Additional shares of NewCo may also be distributed to NewCo employees under incentive plans.
6. Q: How many shares of NewCo will APFA receive?
A: The number of NewCo shares that APFA will receive will be determined by a number of factors, most notably the trading price of NewCo stock for the 120 days following the Effective Date, and ultimately will not be known until approximately 120 days after the Effective Date.
In an illustrative example which assumes the total amount of NewCo shares to be approximately 750 million, 72% (or approximately 540 million shares) will be distributed amongst Labor, Unsecured Creditors, and Existing Shareholders. As mentioned above, Existing Shareholders would be entitled to a minimum of approximately 26 million shares of NewCo (3.5% of 750 million shares), which would be distributed from the American shares and leave approximately 514 million shares (the “Remaining American Shares”) to be allocated to Labor and Unsecured Creditors of American. APFA would be entitled to 3.0% of the Remaining American Shares that are allocated to Labor and Unsecured Creditors, subject to certain valuation calculations under the Plan of Reorganization. For example, the amount of shares ultimately received may be reduced due to additional distributions to Existing Shareholders beyond the 3.5% (only if the value of NewCo stock exceeds certain values) initial distribution and any distributions to employees of NewCo under employee incentive plans.
7. Q: How will APFA allocate these shares to the Flight Attendants?
A: On September 7, 2012, APFA described the methodology that will be used in allocating the NewCo shares to the Flight Attendants. That description follows these Q&As.
8. Q: When will the Flight Attendants receive their distribution of stock?
A: Distribution of NewCo shares to all Unsecured Creditors (this includes Labor) and Existing Shareholders under the Plan of Reorganization will be distributed over a period of 120 days from the Effective Date, and approximately one-half of the total distribution will be made on or within days of the Effective Date. Existing Shareholders will also receive a distribution of NewCo common stock on the Effective Date (along with US Airways shareholders) while other Unsecured Creditors (including Labor) will receive a preferred stock allocation on the Effective Date. The remaining allocation of NewCo shares to all Unsecured Labor will be distributed on or about the 30th, 60th, 90th and/or 120th day after the Effective Date, with the vast majority being distributed on or around the 120th day.
It is anticipated that the remaining allocation of NewCo shares will be made monthly, however, the completion of the distribution will be on the 120th day of AA’s emergence from bankruptcy.
9. Q: How will I receive my shares of NewCo stock?
A: As it did with the stock options in 2003, AA will establish individual accounts for Flight Attendant into which it will deposit your allocation of shares.
10. Q: Once I receive the shares of NewCo stock, can I sell them?
A: Once the stock is deposited you and you alone will have the right to decide if and when you want to sell your shares.
There will be more information in the near future regarding the distribution.
KNIVES – A TEMPORARY REPRIEVE
Administrator Pistole, in a memo to the 50,000 TSA employees this past Monday, announced his decision to temporarily delay allowing knives and large, random pieces of sporting equipment through airport checkpoints and onto our aircraft. This is good news in the short run, but by no means should any of us expect this delay to be permanent.
Pistole cited that his decision to delay was the result of a meeting with the Aviation Security Advisory Committee (ASAC) earlier that same day. Of course, it didn’t hurt that APFA along with the Coalition of Flight Attendants, Flyers’ Rights, pilots, TSA employees and airline management have placed an enormous amount of pressure on the Administrator to reverse his decision along with several members of Congress. Pistole has stated that his focus during the delayed policy/rule change will be to consult with the industry and accomplish more training. The Department of Homeland Security Secretary Janet Napolitano told Senators this week that the policy was being delayed, not reassessed.
Some good news from Congress came yesterday in the form of a request by Senators Charles Schumer (D-NY) and Lisa Murkowski (R-AK) for an IG probe by the Acting Inspector General for the Department of Homeland Security Charles Edwards. “We write to request that your office closely scrutinize TSA’s process on this critical matter going forward and complete a comprehensive special review before the change is implemented,” Schumer and Murkowski wrote.
Also, American Airlines’ Senior VP of Customer Service Jon Snook requested a delay in the implementation of knives in the cabin in a letter to Administrator Pistole last week. I have copied the letter below in its entirety due to its strongly-worded and compelling explanation for reconsidering such a policy change.
“April 17, 2013
Honorable John S. Pistole
Transportation Security Administration
U.S. Department of Homeland Security
601 South 12th Street
Arlington, VA 20598
Dear Administrator Pistole:
We at American Airlines appreciate your candor and respectful dialogue in response to our concerns about the issue of allowing small knives in the cabins of commercial aircraft. Yet, as the individual in our company with direct responsibility for our cabin crew and passengers, I feel compelled to make one last request for a delay in implementing the new policy.
One of the many important safety roles embraced by our flight attendants is that of first responders for any emergency or crisis on board aircraft – particularly those on which federal air marshals are not present. Since 2001 when cockpit doors were required to be locked, we have asked our cabin crews to assume primary responsibility for the safety and security of our passengers.
In this regard, we believe it is exceedingly important to have the strongest level of trust and collaboration between and among the TSA, the airlines, and the airline employees on board entrusted with the security and safety of our passengers. Our flight attendants know more about the in-flight cabin environment than any of us. Hence, we certainly take their views very seriously.
Speaking with the same candor that you have used with us, I don’t think that a one-way classified briefing to 12 representatives of flight attendant labor organizations is the kind of collaborative dialogue that gives confidence to our first-responder flight attendants that their unique and important viewpoint has been fully considered.
Even though the horrible events of Boston earlier this week clearly have no direct relationship to this situation, they have increased the level of anxiety of our employees. From their viewpoint, just as security is being tightened in multiple venues throughout the country, we are now on the brink of relaxing a security requirement on board aircraft without having engaged in a collaborative dialogue with those on the front line. And although it is clearly well-intended, the offer of TSA to increase the requirements for self-defense training only exacerbates the anxiety because it implies that with the new policy our flight attendants will be more vulnerable and in greater danger.
Hence, I would respectfully ask that you at least postpone implementation of the new policy until it is possible to convene a serious and collaborative two-way dialogue that will assure the trust and respect for TSA among the people on the front line responsible for safety and security.
Senior Vice President
APFA attended a roundtable discussion on Human Trafficking hosted by the Ukrainian Embassy in Washington, D.C., this week. APFA member Nancy Rivard, president of Airline Ambassadors International has been a tireless advocate for Human Rights. Nancy has been instrumental in developing a training program on identifying and handling Human Trafficking for those in the transportation industry. The Department of Homeland Security and the Department of Transportation have offered their support, understanding that flight attendants can be instrumental in identifying and reporting human trafficking.
APFA President Laura Glading submitted a statement on behalf of APFA. It reads as follows: “As far as criminal activity goes, human trafficking is amongst the most despicable. The perpetrators are modern day slave dealers operating within a vast and global network. Policing this crime is exceptionally difficult, which is why vigilance on the part of all transportation industry employees is crucial. Flight attendants have the ability to catch human traffickers in the act. With more face-to-face exposure time than probably anyone else a trafficker or victim will encounter during the crime, we have a unique opportunity to identify these atrocities as they occur. What we need is comprehensive training and increased global awareness so that we can play a more effective role in this fight.
The Association of Professional Flight Attendants is committed not only to preparing our membership to recognize and report suspected instances of human trafficking, but also to raise public awareness of the problem. Flight attendants have thwarted these criminals in the past, but putting an end to human trafficking will require a coordinated and sustained effort as well the commitment of the entire transportation industry.”
For FAs planning to retire in the near future, Nancy Rivard would like to extend an invitation to you to join Airline Ambassadors. The following message was submitted by Nancy as well as some literature on Human Trafficking.
“Dear Future AA Retirees,
I am retiring in August after 37 years with American Airlines. There are so many of us leaving under the current VEOP I want to issue each of you an invitation to stay involved with the airline community by becoming a member of Airline Ambassadors – the charity I started in 1996. We have three ways for members to get involved:
Children’s Medical Escort Program
Each month we need volunteer escorts for children coming to the U.S. to receive donated Medical Care not available in their home countries, or bringing them back home again after surgery. AA will grant AA retirees who are part of this program positive space tickets from Miles for Kids in Need. All of your expenses are reimbursed as part of this rewarding program.
Humanitarian Mission Program
Every month we offer our members opportunities to travel and make a difference directly impacting children in orphanages. We have trips every month to countries all over the world. You can join the group with other airline personnel or travel with your husband, children or friends on these journeys of the Heart. On these trips you pay for your own expenses…..but they are quite low….and usually the trips are only 4 – 5 days….so you can pair them as part of a vacation. .
Human Trafficking Awareness
Airline Ambassadors has developed a human trafficking training for the travel industry which we have given at 18 airports and other locations in the last two years. We are looking for more representatives and trainers in this important cause.”
AmericanAirlines + US Airways
“On Our Way”
APFA National Communications Coordinator