Sky Talk

American responds to pilots: Court has already addressed Section 1113, only two items need revision

In response to a filing made by the Allied Pilots Association on Thursday, American Airlines reiterated its position that the bankruptcy court should only consider two items at a hearing on the pilots contract scheduled for Tuesday.

"We disagree with APA’s effort to reopen the Section 1113 process for another lengthy trial and have filed a response to the union’s Court filings asking the Court to not allow that. We are moving forward with the process clearly delineated in Judge Lane’s decision, in which he invited the company to revise two specific elements on pilot furlough protection and codesharing before renewing our 1113 motion," said American spokesman Bruce Hicks.

The company said it has withdrawn its proposal to change pilot furlough protections and has proposed less code-sharing with other domestic carriers.

"Now that we have addressed the two narrowly defined issues identified by the Court, American believes there are no other issues for the Court to consider and APA’s attempt to introduce evidence and arguments pertaining to already settled issues should be rejected by the Court," Hicks said.

-Andrea Ahles

Unsecured creditors committee supports American's request to limit Tuesday's hearing to two items

The Unsecured Creditors Committee said it agrees with American Airlines' request to limit Tuesday's court hearing on the pilots contract to only consider two items.

In a filing made on Friday, the committee said that it continues to support American's motion to have its pilot contract rejected by the bankruptcy court as concessionary work rules are necessary to help the carrier restructure successfully.

"The Committee's view is that the Debtors' judgment to pursue the Renewed Section 1113 Motion is sound, and that, absent a prompt consensual agreement, abrogation of the APA CBA is necessary to the Debtors' successful reorganization so that the Debtors can validate the assumptions in their stand-alone business plan, move forward to expeditiously compare that plan to available strategic alternatives, and implement the agreements American has already reached to modify eight of its nine CBAs," the filing said.

American and the Allied Pilots Association are scheduled for a 1 p.m. hearing on Tuesday to discuss American's refiled motion to reject its pilot contracts.

"We appreciate the confidence shown by the Unsecured Creditors’ Committee as we move through the 1113 process with our pilots. With all eight of our other agreements in place with the TWU and the APFA, changes for our independent employees underway and the completion of the management and support staff redesign, we need to move forward with our restructuring and returning American to industry leadership," said American spokesman Bruce Hicks.

-Andrea Ahles

American says "other parties" have also signed non-disclosure agreements

In a note sent to employees on Friday, American Airlines said "other parties" aside from US Airways have signed non-disclosure agreements with the carrier to exchange information.

"As part of the process, other parties have also signed confidentiality agreements, which permit for the confidential exchange of information and discussion between American and those parties. The company will move through this evaluation process toward the goals Tom Horton has already stated: to create the highest value for our creditors and the best outcome for our people," the note said.

The Fort Worth-based carrier would not disclose who the "other parties" are although in a July meeting with its unsecured creditors committee, American outlined merger scenarios with US Airways, JetBlue Airways, Virgin America, Frontier Airlines and Alaska Airlines.

American chief executive Tom Horton has said he is open to a merger possibility if it creates more value for the stakeholders of the carrier than a stand-alone restructuring plan.

Read more here: http://blogs.star-telegram.com/sky_talk/2012/07/who-should-american-dance-with.html#storylink=cpAmerican announced a few months ago that it was open to possibly merging with another carrier if it created more value for stakeholders than a stand-alone restructuring plan. The carrier sent non-disclosure agreements to JetBlue Airways, Alaska Airlines, Frontier Airlines, Virgin America and US Airways at the end of July.

-Andrea Ahles

It's official: US Airways signs non-disclosure agreement with AMR, merger talks to start

US Airways announced on Friday that it has signed a non-disclosure agreement with American Airlines' parent company AMR Corp.

The agreement allows the two carriers to exchange confidential and financial information and "work in good faith to evaluate a potential combination," US Airways and American said in a joint statement.

Additionally, the carriers said they do not expect to provide updates on the status of discussions until a deal has been made or talks break down.

"Furthermore, AMR and US Airways have each agreed while they are evaluating a potential combination that they and their representatives will not engage in discussions with other parties concerning a potential combination of AMR and US Airways," the statement said. "The companies noted that there can be no assurance that a transaction will result from these discussions."

-Andrea Ahles

APFA divies up equity stake among flight attendants

As part of its recently ratified agreement with American Airlines, the flight attendants union received a 3 percent equity stake claim in the carrier once it emerges from bankruptcy.

On Thursday, the Association of Professional Flight Attendants announced how they would split up the equity stake among its members.

The union said it will treat the equity claim similar to retroactive pay and that all flight attendants in service at American on August 19 will be eligible for a part of the claim.

"The Claim will be allocated among eligible Flight Attendants on the basis of W-2 gross earnings (i.e. earnings before any deductions) from January 1, 2009 through August 31, 2012. Each individual Flight Attendant’s share of the Claim will be equal to her/his earnings over this time period divided by the earnings of all eligible Flight Attendants during the same period. APFA believes that this method of distribution is the fairest and most practical, and is consistent with what other unions have done in bankruptcy," the union said in a hotline message to members.

The union said it plans to distribute the equity claim in the form of stock.

Keep reading for the full hotline from the APFA.

-Andrea Ahles

APFA Hotline

As part of the Last, Best and Final Offer (“LBFO”), APFA will receive a “Claim” equal to 3% of the equity (stock) issued by American as part of its Plan of Reorganization. Based on recommendations from the Union’s attorneys and financial advisors, the APFA Board of Directors has decided upon a method for the distribution of the Claim. APFA will treat the Claim in a manner similar to a distribution of retroactive pay. APFA took into account that Flight Attendants have worked under a concessionary agreement for more than four years beyond its amendable date and have not received any wages increases during that time.

All Flight Attendants in the service of American as of the ratification of the LBFO on August 19, 2012, will be eligible to participate in the Claim distribution. The Claim will be allocated among eligible Flight Attendants on the basis of W-2 gross earnings (i.e. earnings before any deductions) from January 1, 2009 through August 31, 2012. Each individual Flight Attendant’s share of the Claim will be equal to her/his earnings over this time period divided by the earnings of all eligible Flight Attendants during the same period. APFA believes that this method of distribution is the fairest and most practical, and is consistent with what other unions have done in bankruptcy. APFA intends to distribute the Claim to Flight Attendants in the form of stock if possible, but the administrative process for distributing the Claim must still be worked out over the coming months.

The APFA leadership felt that it was necessary to make a decision now regarding the method for the distribution of the Claim so that Flight Attendants would have this information as they consider the Voluntary Early Out Program (“VEOP”). We caution, however, that the amount of the Claim and the timing of the distribution are unknown at this point. Ultimately, the value of the Claim will be subject to a number of factors that cannot be quantified at this time (for example, the timing of emergence, market conditions, AMR and industry performance, and capital requirements). The value of the Claim will be estimated by American toward the end of the bankruptcy process as part of the Plan of Reorganization, and ultimately the stock market will set the value of the Claim based on the market price for stock in the restructured Company. In addition, the Claim is based upon American’s LBFO. The term-sheet agreed to with US Airways also provides for a claim in the event that US Airways acquires American, but the amount of that claim has not yet been determined and would be the subject of further negotiations with US Airways and the UCC.

Procedures For the Distribution of APFA 3% Equity Claim  - 8.29.12
APFA will be receiving 3% of the equity issued by American Airlines to holders of unsecured
 claims (“Equity Claim”) as part of the Company’s Plan of Reorganization in the pending
 bankruptcy proceedings. APFA intends to distribute that Equity Claim as follows:



Eligibility: Flight Attendants in the service of American Airlines (“American” or “Company”)
 as of the date of the ratification of the LBFO, August 19, 2012, will be eligible to participate in
the distribution.

W-2 Earnings Basis: The distribution formula will be based on each Flight Attendant’s W-2 
earnings. W-2 earnings will be defined as total gross earnings paid by American and APFA for
 service during the applicable measurement period. APFA will rely on records provided by 
American and its own payroll records in order to determine W-2 earnings.

Measurement Period: The applicable measurement period will run from January 1, 2009, to 
August 31, 2012. This measurement period is intended to the extent administratively feasible to
 coincide with the period from the amendable date of the APFA CBA (May 1, 2008) to the
 ratification date of the LBFO (August 19, 2012).

Distribution Formula: An individual Flight Attendant’s share of the distribution will be equal to
 her/his total W-2 earnings during the measurement period divided by the aggregate total W-2 
earnings of all eligible Flight Attendants during the measurement period.

Claims for Prior Early-Out Payments: Upon filing for bankruptcy, American ceased making
 monthly payments to individuals entitled to benefits under the 1995 Special Early Out Bridge to
 Retirement Program and the 1996 Early Out program, in violation of the APFA CBA. APFA 
asserted claims on behalf of these individuals in its proof of claim filed in the bankruptcy 
proceeding and therefore these claims were settled as part of the LBFO. The amount of these
 claims can be ascertained from the terms of the APFA CBA. Accordingly, these claims will be
 paid from the Equity Claim at the same pro rata rate as generally paid by American to unsecured
 claimants in the bankruptcy proceeding. These claims will be paid before the W-2 based distribution 
formula is applied to allocate the Equity Claim.

Form of Distribution: APFA intends to arrange for the distribution of the claim to eligible Flight
 Attendants in the form of stock in the reorganized Company. If it is not administratively feasible 
for APFA to make the distribution in the form of stock, APFA will arrange for the liquidation of
 American-issued stock at the earliest time practicable and arrange for distribution to eligible 
Flight Attendants in dollars and subject to any applicable withholdings.

Timing of Distribution(s): The timing of distribution(s) of equity by American will be dictated
 by the Company’s Plan of Reorganization and the timing is currently unknown to APFA. APFA
 will endeavor to make distributed amounts, whether in stock or dollars, available to eligible
 Flight Attendants as soon as practicable after distribution by American.

Administrative Costs: To the extent that there are administrative costs associated with the 
distribution of the claim, such as fees associated with maintaining stock accounts for the
 purposes of the distribution, the Equity Claim amount may be used to cover these administrative 
costs.

Unclaimed/Undeliverable Distributions: APFA will make reasonable best efforts to insure that
 all distribution amounts are received by eligible Flight Attendants. If distributions remain
 unclaimed or undeliverable six months following the final distribution of any amounts from the 
Equity Claim, then these unclaimed or undeliverable amounts will revert to APFA to be used for 
the general benefit of the membership.

De Minimis Distributions: APFA may determine not to make de minimis distributions. A de
 minimis distribution is defined as a distribution where the value of the amount to be distributed
 does not exceed the administrative costs associated with making the distribution. The value of
 any de minimis distributions may be reallocated based upon the distribution formula if 
practicable, or otherwise will revert to the APFA to be used for the general benefit of the 
membership.

Amendments to the Equity Claim Procedures: In the event of a material change in 
circumstances related to the Equity Claim or the discovery of facts presently unknown to APFA, 
the APFA Executive Committee, subject to the approval of the Board of Directors, reserves the 
right to amend these procedures as may be appropriate in light of the changed circumstances or
 new information.

APA says judge should consider more evidence at Tuesday hearing

The pilots union said the bankruptcy judge should look at more than just furlough policies and code-sharing agreements at a hearing on the pilots' contract scheduled for Tuesday.

The argument that the court should consider more evidence was made by the Allied Pilots Association in a filing on Thursday. The APA was responding to American Airlines' request that the bankruptcy judge only consider the two areas where the judge deemed the carrier overstepped in its term sheets.

"To the extent that the Company’s August 16 proposal re-promulgates old Term Sheet demands from the first Section 1113 proceeding, the Court’s inquiry should focus on whether any of the facts the Court relied on in its first Decision have changed so as to warrant a different conclusion with respect to particular modifications sought in the Company’s New Application. Toward that end, APA will identify critical changes in the Company’s business strategy and labor concession targets, as well as significant developments in the industry, between May 25, 2012 and August 17, 2012, the filing date of American’s New Application. Those changes require updated analysis in the context of American’s New Application," the APA filing said.

American has asked the court to reject its pilots contract and allow it to impose concessionary work rules that are necessary for the company to restructure while in bankruptcy. On August 15, the judge ruled that American could not reject its pilot contract because it did not prove it was necessary to expand codesharing with other domestic airlines and change pilot furlough protections as part of its restructuring plan.

“Our focus right now is on moving forward with the process clearly delineated in Judge Lane’s decision, in which he identified only two areas – pilot furlough protection and codesharing – that needed to be modified before renewing our 1113 motion. Our revised term sheet withdrew the company’s prior proposal to change pilot furlough protections, leaving the current contract terms in place, and proposed substantially less codesharing," said American spokesman Bruce Hicks.

He added, “we maintain that the changes outlined in our term sheet are necessary for our successful restructuring, and will help us reach our goal toward emerging as a stronger company. If the Court approves the rejection of the contract, we will begin to implement the terms from the term sheet that will enable us to achieve our necessary cost savings and continue moving forward toward a successful restructuring.”

-Andrea Ahles

APA president: a new agreement can be reached if American understands the value of its pilots

Allied Pilots Association president Keith Wilson has been on the job a little over two weeks and on Thursday he faced the media for the first time, talking about the possible rejection of the pilots contract by a bankruptcy judge and how American Airlines has halted negotiations with the union since August 15.

During an hour-long session with reporters, Wilson said he met with AMR chief executive Tom Horton last week to discuss the union's concerns and willingness to try to reach a new contract with American while the carrier is in bankruptcy.

He also said he met with US Airways chief executive Doug Parker and president Scott Kirby, who have publicly stated they may launch a possible takeover bid of AMR. However, he confirmed that US Airways stopped talking with the APA on Monday as he assumed the Tempe-based carrier may be close to signing a non-disclosure agreement with AMR that would prohibit US Airways from directly negotiating with American labor unions while the two carriers shared financial information prior to a possible deal.

Here's a few tidbits from Wilson's media interview.

Excerpts from Wilson's opening statement

"The main thing we’re trying to do is to ensure the professional value and that our skills are appropriately compensate and valued by our employer. That’s our main goal is to ensure the quality of work life and the profession as we know it. I stepped up basically for that reason…

"The union and the pilots believe that we are all in search of a consensual deal with American Airlines, there are issues that we have, the pilots want recognized, American has their issues and we’ll explore trying to find a mutually satisfying solution to both sides. It’s in our best interest it’s in the management’s best interest. It’s in the shareholders or stakeholders, not the shareholders right now, the stakeholders of the corporation that a consensual, mutual agreement is signed by the pilot force prior to exiting bankruptcy. We do not believe that the corporation can successfully exit bankruptcy while they might be able to exit bankruptcy without a contract, we do not believe it will be a successful exit because we will be back under the railway labor act and the uncertainty of that probably doesn’t bode well for investor confidence going forward…

"To reach a consensual agreement I think it’s important that management values the training and the services and skills that we provide to the corporation. And as evidenced by the value put on United and Delta and Southwest and other major carriers that we compete against. And on that same vein one of the issues that we believe as an association and as pilots in general, size does matter in the aviation business and a consolidated airline coming out of bankruptcy will be much stronger and much more highly competitive with the two major carriers that are left standing outside of us with United and Delta flying international."

Can you get a deal with the current AMR management?

"I do believe that we can reach an agreement, I won’t put a number on that. I think we need to reach an agreement. I think the company needs to start to understand value versus pricing and the value of what we bring to the corporation in our training and our skills. And if they look outside, they’ll see that other corporations when they do value that get an intangible return in the product that the pilots and the flight attendants and the TWU mechanics and ground people give the corporation. You can look no further than across town to Southwest and how that culture breeds a very good product."

Why do you want to conduct a strike vote?

"The strike vote is one of our legal mechanisms and I look at it, the strike vote will tell the world and tell the corporation exactly where the pilots’ mentality is. That we are unified and steadfast in our belief and it’s a vote. The board of directors and we will not strike unless we’re legally allowed to strike. I’ll make that perfectly clear. The association will do and investigate all legal avenues that we have available. One of those legal avenues is the ability to maybe help influence consolidation through whatever airline."

How would you describe your leadership style?

"My method is one of, as my mother says, you’re always the prototypical middle child. I’m always trying to find solutions to things. So I will try to hear both sides of the argument. Our argument is what we’re passionate about which is the value and respect for the skills and experience we bring to the corporation. I understand on the outside that external factors always influence corporations so things have to be adjusted….I think the path is one of trying to listen and from my standpoint to look at the arguments from a logical, objective thought and develop a consensus. We believe the corporation has not been fully engaged up until recently. And whether they are still engaged now because they have the avenue of the 1113, they haven’t reengaged us after the 15^th of August…So it’s going to take both sides to have the ability to look at each others argument and try to figure out some common ground. So that’s what I’m hoping to do."

Why do you believe that if the judge rejects your contract that American should implement the last-best-final-offer and not the term sheets filed with the court earlier this year?

"The issue is what do they need to successfully reorganize. And they’ve proven through the negotiation that they were willing, therefore their needs were met, by the terms under the LBFO, the last best final offer. So our position, and I think rightfully so, from a union position, if that’s all you needed and I use this term with my daughter, there’s a difference between a need and a want. And there’s a need that the corporation might have and we recognize some of that and we’re willing to talk about those. The wants are something that we believe border on punitive....We understand there are needs in every negotiation, we have our needs. And we have wants and I understand there’s a difference. And we have to understand where each side is coming from. We can’t impose our wants upon the corporation. They can and that’s where the perception would be one of punitive."

Do you believe that American can emerge from bankruptcy successfully?

"I think this company will come out as a viable and vibrant company. We hope that the corporation sees that bigger is better in this environment, that to have three major network airlines surviving, we’d like to be one of those survivors. I think that’s important. They’re the management team of the corporation and they’ll make those decisions and hopefully we can reach a consensual agreement and we can then look forward to working with the management of the corporation at that time to ensure it’s a viable and vibrant corporation. Again, the pilots of this association are married to this corporation for the rest of our careers, without question."

-Andrea Ahles

 

American and US Airways flight attendants jointly support a merger between the carriers

The flight attendants unions at American Airlines and US Airways announced on Thursday that the two unions will work together in support of a merger between the two carriers.

The Association of Professional Flight Attendants (American) and the Association of Flight Attendants-Communication Workers of America (US Airways) issued a joint statement this morning saying they will address merger issues, like seniority integration and new contracts together.

"Both unions firmly believe that an American Airlines/US Airways merger is in the best interest of the Flight Attendants at both carriers, and are committed to working to further the goal of that merger," the statement said. "In addition, AFA and APFA share a strong interest in addressing the challenges that will be presented if a merger occurs."

The agreement says the two unions will discuss collective bargaining agreements, share information, talk about representation issues and establish a protocol for seniority integration.

US Airways is interested in merging with American, but has yet to sign a non-disclosure agreement where the two airlines would share financial information prior to a possible deal.

-Andrea Ahles

Laura Wright stepping down as Southwest's CFO

Southwest Airlines announced that its chief financial officer Laura Wright is retiring.

Tammy Romo, who has been senior vice president of planning, will succeed Wright as CFO and senior vice president of finance.The change will take place on Sept. 20.

Gary Kelly, Southwest's Chairman and CEO, said that over 25 years with Southwest, "Laura has played a key role in the strong financial positioning of Southwest Airlines during the most challenging and difficult times our industry has ever faced."

Here is more from the press release:

Wright said the decision to retire was made easier by Southwest's succession planning. "We have an able successor already in place with Tammy, and an amazing Finance leadership team that won't miss a beat. I have a long list of things I'm anxious to tend to, including more time with family. With Gary's leadership and the strategies in place, I leave with confidence regarding the bright future of this great Company."

Kelly said: "Although I will personally miss Laura, I am respectful and understanding of her decision. I am also exceedingly pleased that Southwest has the demonstrated depth of management talent and leadership capability that will enable our Shareholders, Employees, and Customers to continue to be proud to be a part of the ongoing Southwest Airlines story of success."

The leadership changes will be effective Sept. 20, 2012. Wright will remain with the Company through yearend to assist with the transition. As CFO, Romo will retain her leadership over the Financial Planning and Analysis, and Strategic Planning functions from her current role.

-- Steve Kaskovich

American recalls over 200 flight attendants

American Airlines will recall 211 flight attendants who are on furlough to begin flying in mid-November, the carrier said on Wednesday

The flight attendants being recalled are likely to be based in New York, Washington D.C., Dallas/Fort Worth and Miami. They are the last group of flight attendants that are still on the furlough list, the Association of Professional Flight Attendants said.

"We regularly evaluate our staffing needs, and because we anticipate a large number of flight attendants will elect to participate in the Voluntary Early Out Program, we are taking this proactive step to ensure we remain adequately staffed throughout this process," said American spokesman Bruce Hicks.

As part of its newly-ratified contract, the company agreed it will not limit the number of flight attendants who can accept the early out program.

The APFA said the recall is due partly to high sick list numbers and to fill international slots that may be open as flight attendants opt to retire early.

"We welcome our flight attendants back to service and recognize they play an integral role in providing an outstanding onboard experience for our customers," Hicks said.

Keep reading for the full message from the APFA and the statement from American.

-Andrea Ahles

American spokesman Bruce Hicks

“American is pleased that we are able to recall the remaining 211 flight attendants currently on furlough.  We regularly evaluate our staffing needs, and because we anticipate a large number of flight attendants will elect to participate in the Voluntary Early Out Program, we are taking this proactive step to ensure we remain adequately staffed throughout this process.

“As we agreed with APFA, the company will not limit the number of flight attendants who can accept the Early Out option, and this recall is important to ensure proper staffing as we determine how many flight attendants will accept the offer, as well as the impact of our restructuring changes.

“We welcome our flight attendants back to service and recognize they play an integral role in providing an outstanding onboard experience for our customers.”

APFA Hotline

APFA is pleased to announce that the remaining 211 flight attendants on furlough are being recalled to active status effective November 16, 2012. AA will be sending the recall notices on Thursday, August 30th and those being recalled will have until Monday, September 10, 2012, to respond. Recall training will be six weeks during October and November and bases will be assigned in November. AA anticipates the recalls will be based at LGA, DCA, DFW and MIA.

To provide some background behind these recalls and what has motivated the company to proceed in this manner we can tell you that there are four primary factors involved:

1. The extraordinary response to the VEOP;
2. The newly-ratified agreement providing for less of a headcount reduction than the Term Sheet;
3. The high sick list numbers that have not subsided over the past several months;
4. The significant amount of training not only as a result of the potential combined int'l and dom operations but also to backfill the Int'l slots that will be left from those opting for the VEOP or TSP; and
5. The deferred implementation of some of the new contractual items that will eventually result in staffing efficiencies.

We will upload the Q&As and other pertinent information to the Recall Page on apfa.org for our remaining furloughed FAs as soon as they are finalized. Congratulations to the 211 remaining AA flight attendants on this opportunity to rejoin your coworkers on the line.