The Allied Pilots Association told pilots on Tuesday that there could be a new contract deal in the coming days with American Airlines.
In a negotiating update sent out to pilots midday, the union said American has already made improvements to its last-best-final-offer that pilots rejected in August.
"By
rejecting the original TA, the membership gave us the tools to be able to go
further in the bankruptcy process than any other pilot group has dared to go.
Ultimately, we believe management will make the moves they need to make on the
remaining key deal points so we can embrace an industry-standard contract and
look forward to rebuilding our careers," the update said.
The update continued, "There is potential for an agreement
with AMR in the days ahead, but it all comes down to a number of moves
management will need to make on key deal points to bring us into the realm of
industry standard."
The union added that American and the unsecured creditors committee are still supporting a 13.5 percent equity claim to be given to the pilots union. The flight attendants and Transport Workers Union received 3 percent and 4 percent equity claims, respectively, in their ratified contracts.
The APA's board of directors is scheduled to meet on Wednesday through Friday this week to discuss the negotiations progress. The union is also holding an informational picket at Dallas/Fort Worth Airport on Wednesday at Terminal D around 11:30 a.m.
Keep reading for the full APA negotiating committee update.
-Andrea Ahles
Fellow
pilots,
This update will be somewhat longer
than normal as we try to give you as much information and perspective as
possible regarding the current circumstances.
Sometimes, at the end-game, things
tend to get quiet, as the parties struggle to determine whether a deal is
genuinely attainable. Dynamics at the negotiating table are an endless emotional
rollercoaster. Sometimes things get so contentious that we need to take healthy
breaks and park certain subjects and even change up the personalities on both
sides to keep things moving forward in a professional manner. At other times, we
build momentum and a healthy amount of progress is made.
Suffice it to say that we (the
Negotiating Committee, National Officers and Board of Directors) hear you loud
and clear. With your vote, you are the final authority in the decision-making
process. We are mindful of that fact every day we spend at the negotiating
table.
In this current round of
negotiations, we have confirmed what many of you believed — that there are
improvements to be had compared to management's “last, best, final offer”
(LBFO). A number of those improvements have already surfaced at the table. By
rejecting the original TA, the membership gave us the tools to be able to go
further in the bankruptcy process than any other pilot group has dared to go.
Ultimately, we believe management will make the moves they need to make on the
remaining key deal points so we can embrace an industry-standard contract and
look forward to rebuilding our careers.
Reaching a deal in bankruptcy means
we strive to achieve the maximum value possible in a process where an agreement
must ultimately be approved by a bankruptcy judge. Before approving an
agreement, a judge must evaluate a number of legal standards and inputs from the
debtor and the Unsecured Creditors’ Committee (UCC). On a number of issues, the
UCC recognizes our genuine concerns and they continue to confirm their
commitment to our 13.5 percent equity claim, as long as an agreement is reached
“promptly and such agreement is within reasonably justifiable economic
parameters.”
To receive bankruptcy court approval
for our claim, we need to reach an agreement approved by the bankruptcy court
judge. If no agreement is reached, AMR has the
right to impose work rules and we must litigate for our claim. While we may be ultimately successful, this approach
carries risks, especially without the weight of the UCC on our side and in light
of some difficult case law.
So what are the options
ahead?
At the risk of stating the obvious,
that "Green Book with Delta Rates" or "Delta Rates on Date-of-Signing With No
Gives on Scope" are things we would love to deliver in this process, but not
anything we can realistically expect the UCC to support or the bankruptcy judge
to approve. The only path to those goals would be to acknowledge that we won't
achieve an agreement inside bankruptcy, and that we are willing to accept
whatever rocky ride lies ahead and whatever time it takes to reach those
goals. That is a potential path, but it carries with it a great deal of risk and
uncertainty. We must all decide on our path together. We should be mindful that
our advisers tell us the current market appears to value our equity claim at a
level that would provide a six-figure cash payout per pilot on average. Our
advisers anticipate that such a payout could be realized at or near AMR’s
emergence from bankruptcy for those pilots who elect for a payout at that time.
We’re unwilling to accept any deal based solely upon an equity stake, but part
of the decision involves weighing the potential "bird in hand" against the "path
less traveled" where we would have to litigate for the claim.
Is an industry-standard contract
achievable inside bankruptcy? Our opinion is yes. But we don't want to play cute
with words or try to spin things, so let's review the surreal process over the
past 12 months and examine what "industry standards" include.
When AMR filed Chapter 11 bankruptcy,
we were flooded with phone calls and e-mails asking us how much we thought the
pay cuts would be. After negotiations with AMR in February and March 2012 failed
to produce any results, US Airways management entered the picture and we
negotiated a conditional labor agreement (CLA) with them that served several
purposes. The CLA preserves a very substantial amount of the Green Book, with
nearly half of the concessions accounted for by freezing our defined-benefit
pension plan. The CLA is a historic document and puts more tangible pressure on
AMR management than any other labor group has ever been able to exert on a
management inside the bankruptcy process.
Following a very contentious court
process in May 2012, we entered into court-directed mediated talks with AMR. No
agreement was reached and we were left with an LBFO to take to the membership
for a vote. The overwhelming “no” vote was less about the contents of the
potential contract ― and more a collective decision to go down a different path
than the one put in front of us. We are now approaching the point where we will
need to collectively make another major decision together.
"Industry standard" likely connotes
different things to different pilots. Universally, we all seem to agree that we
want Delta pay rates—pay rates that more appropriately compensate us for the
enormous responsibility we assume each time we sit down in a cockpit. From
there, it gets more complex.
The following are elements of the
tentative agreement we all recently voted upon that could be fairly
characterized as industry standard:
- Green Book duty rigs (close to
Delta)
- No night pay
(same as Delta and United)
- International override only paid
for trips flown (same as Delta and United)
- Frozen defined benefit plan with
14% follow-on plan (vs. terminated plan and 15% at Delta, terminated plan with
16% at United, 9.2% 401(k) match at Southwest)
- Distance learning paid at 1 for 3
rate (same as Delta)
- Sequence protection notification
and obligation period (close approximation to Delta provisions)
- Rapid reaccrual limited to hours
used (same as carriers who have rapid reaccrual)
- Elimination of 46-hour max sick
charge on reserve (other carriers charge for trips missed. Delta has a unique
annual sick program)
- Sick sellback at retirement to a
health retirement account up to $25,000 (no retiree medical at
Delta)
- PBS (Delta,
United, Continental, America West)
- 84-hour monthly average line value
(same as Delta, lower than United, Southwest, FedEx, UPS, US Airways and America
West)
- Active
medical cost-sharing approximately 20% (same range as Delta)
- Pay banding (yes at United, no at
Delta)
- We were the
only pilot group with no contractual sick verification
- Total vacation value at 10-year
point and 24-year point, in line with industry average for legacy
carriers
- Reserve 18
days for 73 hours (most carriers 18 days or more. Industry average
18.6)
- Scope:
79-seat jets (Delta, 76-seat jets, 86k max MTOW)
- Codeshare: 50% limit of domestic
ASMs (Delta fairly restrictive, United must only notify union of
code-shares)
Our point is that a pursuit of Delta
pay rates must be accompanied by an intellectually honest acknowledgement that
many provisions in the Delta contract (and most likely the new United agreement)
are concessions from the Green Book. We encourage all pilots to review the
Delta Contract Comparison for more details on what constitutes
“industry standard.”
So what’s next?
There is potential for an agreement
with AMR in the days ahead, but it all comes down to a number of moves
management will need to make on key deal points to bring us into the realm of
industry standard. If an agreement comes to fruition and is approved by the
membership, we would secure the claim. We would also strengthen our position on
the UCC to influence strategic alternatives, the selection of future management
and the makeup of the reorganized airline’s board of directors. Our advisers
have had extensive discussions with large financial creditors that hold
substantial unsecured claims and are confident in the alignment of interests
around the need for the appointment of a new board of directors at the airline.
The board would then appoint management to lead the reorganized
company.
We all need to evaluate any agreement
on its merits and as something we might live with for some time. We also need to
view an agreement as a potential path to the US Airways CLA. Your Board of
Directors has given the Negotiating Committee clear guidance on what to pursue
at the bargaining table. The onus is now on management to take the conversation
where it should have gone a long time ago.
We are proud to represent all of you
at the negotiating table in this very challenging process.
Your APA Negotiating Committee
