In a letter to pilots, Allied Pilots Association president Keith Wilson said the unsecured creditors committee was critical in getting American Airlines to accept the union's counter-proposal last week.
"Representatives of the Unsecured Creditors’ Committee (UCC) were instrumental in helping to convince management to accept our counter-proposal. Also, the UCC has continued to express conditional support for our 13.5 percent equity stake based on APA and management “promptly” reaching a consensual agreement," Wilson said in the message that was sent out on Friday afternoon.
Wilson also told pilots that while he voted against the August contract offer, he plans to vote in favor of the tentative agreement.
"I am convinced that we have attained everything possible in our current circumstances, and that pressing for more amounts to overplaying the hand we’ve been dealt," Wilson said.
Keep reading for the full letter from Wilson.
Fellow pilots,
With the APA Board of Directors’ vote to
approve the agreement-in-principle between APA and AMR as a tentative agreement,
you will shortly be deciding how to cast your ballot. As you prepare to do so, I
believe it’s important for you to understand the events that led to this latest
tentative agreement. I also believe it’s important for you to know my personal
view of the choice that we will all be making.
When our members rejected the first tentative
agreement back in August, the APA Negotiating Committee resumed negotiations
with management based on explicit guidance from the APA Board of Directors. We
made slow but steady progress until reaching a stalemate in the areas of scope
and pay. After considerable discussion and debate, the APA Board of Directors
opted to present a comprehensive counter-proposal to management.
It’s worth noting that representatives of the
Unsecured Creditors’ Committee (UCC) were instrumental in helping to convince
management to accept our counter-proposal. Also, the UCC has continued to
express conditional support for our 13.5 percent equity stake based on APA and
management “promptly” reaching a consensual agreement. Absent a consensual
agreement, our advisers characterize our prospects of securing a claim through
litigation as extremely remote.
In addition to securing our claim, our advisers
believe a consensual agreement will enhance prospects for further industry
consolidation involving American Airlines. In a report published this week, J.P.
Morgan airline analyst Jaime Baker addressed the impact of a consensual
agreement on a potential American Airlines-US Airways merger: “Investors have
inquired whether the tentative agreement between AMR and its pilots represents
‘labor détente,’ thereby diminishing the prospects for consolidation. We believe
the opposite is true. A stand-alone plan inclusive of a pilot contract is a
must-have for AMR’s unsecured creditors committee, in our view, so that it may
be compared to the merits of a merger. Quite frankly, two plans are expected to
come under consideration, and the lack of a completed stand-alone plan
threatened to weigh down the process. With that impediment seemingly cleared
(though still subject to ratification), creditors are more likely to receive
competing plans by year-end or early next.”
It’s also worth noting that bankruptcy
restructuring isn’t designed to satisfy labor’s wants and needs. Instead, it
gives the debtor sweeping powers to cut costs, often at labor’s expense. Trust
me, I’d like nothing better than to deliver an immediate industry-leading
contract, but other key players in this process—including management, the
bankruptcy judge and UCC—are in a position to limit what we can achieve during
Chapter 11.
Some of our members continue to advocate
waiting until after AMR emerges from bankruptcy and resuming negotiations at
that time. That’s one option. We should be mindful, though, that it’s an option
with considerable risk and uncertainty. It would be extremely difficult to
recapture what we would be leaving on the table—including the 13.5 percent
equity stake—much less surpass the total value. Critical items such as scope
could well be irretrievable in a lengthy, post-bankruptcy negotiation. Without a
contract with APA, management would be able to operate completely unfettered,
imposing new terms on our pilots at will. We should also be concerned about the
long-term prospects of a stand-alone American Airlines in that scenario,
particularly with the poisonous labor-management relations that would likely
ensue.
Since UCC attorney Jack Butler and Pension
Benefit Guaranty Corporation (PBGC) Director Josh Gotbaum addressed our Board
last week, I have seen some references to supposed “pressure tactics” by the UCC
and PBGC to persuade our Board to conclude negotiations. That’s not an accurate
characterization. The discussions with Messrs. Butler and Gotbaum reinforced
your APA leadership’s view that proceeding with our comprehensive
counter-proposal was the correct course of action. We made a thoughtful and
deliberate assessment of our situation based on all available information.
For the record, I voted “no” on the original
tentative agreement based on my belief that we could do better. This time I
intend to vote “yes” and ask that you give serious consideration to doing the
same. I am convinced that we have attained everything possible in our current
circumstances, and that pressing for more amounts to overplaying the hand we’ve
been dealt.
By ratifying the tentative agreement, we will
lock in our 13.5 percent equity stake, preserve the prospects for a merger
between American Airlines and US Airways, and retain vital influence over the
balance of AMR’s restructuring.
In the coming days, we will provide further
details of the equity stake and what it would mean to individual pilots
monetarily and to APA institutionally. Please carefully review all of the
information we provide before casting your ballot. After you’ve finished your
thorough due diligence, base your decision on a rational, objective assessment
of our situation. Above all, be sure to exercise your right to vote to determine
your future as an American Airlines pilot.
Thank you.
In unity,
Keith Wilson
APA President
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