Allied Pilots Association president Keith Wilson took a few moments on Friday afternoon to talk about why he's going to vote yes on this tentative agreement and how the equity stake could give the union the ability to influence who leads American out of bankruptcy.
Here is a transcript of the conversation.
ST: Describe the timeline and procedures for the vote now that the board has agreed to send it out for a ratification vote.
Wilson: We have certain policy manual and constitution bylaw procedures, the constitution and bylaws basically gives the members 14 days once we send out the ballots and that will be done electronically but prior to that and prior to any of the road shows which are required under our policy manual to basically present the documents to the membership in a group show arena, there is a 14 day window, and so today or first thing tomorrow, the membership will receive electronically and have access to the tentative agreement and supporting documents and evaluation document that the board has to approve and that will be on the website and then we’ll mail a hard copy of that explanation document, we call it. They have 14 days to review that before we start any of the road shows at the domiciles. That means the road shows will be the first week in December and there is overlapping that is a 14 day balloting window and that will start on Nov. 23 and run to the 7th of December. There will be 14 days in which they can review it and then we’ll have road shows and in that time, plus the road show time, they’ll have time to cast their ballot and we’ll count the ballots sometime on the 7th.
ST: Do you think there were enough improvements in this offer versus what was rejected in August that pilots will approve this new deal?
Wilson: That’s what we hope. We think that there are improvements and one of the things that we have also been able to do is do a lot more due diligence on our equity stake and what it means to the individual pilots and that information will be forth coming so the membership has a better idea of what that value is to the overall value of the tentative agreement. And just for the record, I’m not sure if you know, I voted no for the original tentative agreement back in August based on the belief that I thought we could have done better and I intend to vote yes on this one having worked on it and being very familiar with all the details so my review has been going on for weeks and I’m convinced we have obtained as much as possible in our current circumstances.
ST: The code-sharing clause allows American to have half of its domestic capacity through code-sharing. That appears to be a drastic change from what you have had in your past contracts.
Wilson: The alternative we see is the term sheet which was a lot more liberal than that and we’ve made improvements on a lot of our scope issues. They’ll have to review that relative to what was available…Unfortunately with the other carriers, Delta and United, they have different code-share limitations. We’ve always had a fairly robust relationship with Alaska. We’re not sure if that is going to continue on because Alaska is marrying up very strongly with Delta. We’ll have to see where that falls. And like I said if you look at the United Continental agreement that they had previously, they were much more liberal. We think we made some inroads than what it was before. Again the term sheet had it at a much higher level. We think we’ve improved upon that.
ST: When you first became president, you said you wanted an industry-standard contract. In your opinion, is this an industry standard contract?
Wilson: While I hear that and that’s what we’re striving for, it is most definitely a path to a strong industry-standard contract. If you look at over the duration of the contract you’ll see we do achieve that in many ways and we’ll have documentation that proves that to the membership as we go on, relative to their value in this contract brings them relative to the other major network carriers.
ST: The contract length is still six years and that was an issue for some pilots and why they voted down the previous deal. Why was that not addressed?
Wilson: That is one of the Achilles heels of this agreement is that the duration was very hard to even address relative to the other work groups at American. It was just something we realized we couldn’t expend any more capital on that when we’re trying to get agreements in some other places. I think we made a major change to that with the mid-contract adjustment calculations which are vastly superior. So that will bring that industry standard and parity relative to the other two major carriers at that third year point in going forward so that is what we’re looking at.
ST: If the pilots approve this contract does it change the union’s support for a potential merger with US Airways.
Wilson: It hasn’t changed. Our support for the US Airways merger has not changed. The board of directors and the association’s position is that we still believe and we use the term strategic alternative but to be realistic the major strategic alternative left on the field is US Air and we support that. Our previous vote with the CLA, the labor agreement we agreed to with US Air was a unanimous vote. We are still in favor of exploring that. We think that’s the best avenue as we move forward to have a new American Airlines that is a consolidated airline that brings us up size-wise to the United and Delta corporations. So it hasn’t changed in that respect.
ST: When you look at this contract and what was changed from the previous offer, do you have a dollar amount on the cost savings that you are giving American?
Wilson: The agreement remains in align with the UCC constraints and we believe we still have those savings that were there before. There were some changes to the contract which gave us value but at the same time there was a change on the remote home basing which is what we believe is going to improve the quality of life for commuters because they won’t be commuting they’ll be at what we call home-base flying and that’s a substantial savings for the corporation from what the corporation has identified. We believe we have hit the same target as before yet we did produce value. Also the valuation was very subjective when it came to some of our sacrifices that we had listed before. As we evaluated those, those were up for discussion and we are where we are.
ST: What does the equity stake mean for each individual pilot and how are you going to discuss it with pilots during the road shows?
Wilson: The equity distribution committee is working hard on that as we speak. The only day they’re taking off is a few hours on Thursday to eat some turkey with their families. But other than that they’ve been working this week and they’re working all next week and they’ll give a presentation to the board prior to the road shows, the week after, so we can get a better handle on the options and how the methodology of the distribution might occur. The board will make the final determination and how they do that is still up in the air. We should have some examples prior to the end of the voting period for members to kind of get a feel for where they might fall into that distribution area and that is to be determined and they’re working very diligently because we know that’s an important factor, it’s one of the big pluses for this contract is this equity distribution to the members.
ST: Is the union going to hold on to its equity stake for a time so it can be involved in picking the new board of directors and management team of the airline when it emerges from bankruptcy?
Wilson: The board will make that decision. Those are some of the issues they’re dealing with, the timing of the monetization of the claim and also the influence we may have at the UCC table as they go forward with the restructuring, as they exit bankruptcy for the governance of the corporation. That’s important to us and the members. It’s a fine line and we will be walking that tight rope and after try to maximize the value prior to monetizing it.
ST: What do you think is the most important improvement in this new contract?
Wilson: One of the things besides what we consider the drastic improvement in the mid-contract adjustment for pay – it really does when you see the statistics. We get right in the middle of the United, Delta area in three years and also the A319 – but the regional jet issue and how we maintained keeping within the industry standard which is the 76 seat limit and the weight of 86,000 pounds which is both what United and Delta have in their new contracts. We were very glad to see we could convince everybody on the other side that this was a path we had to go. And we said many a time, we were not going to subsidize an unlevel playing field and we think what we got in the scope along with the number of airplanes they can add relative to our fleet is reduced relative to previous scope clauses. So we think that is a big improvement and that’s going to keep jobs and growth here.