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January 08, 2013

American pilots union answers a few questions about the MOU

In a memo sent to pilots Tuesday, the Allied Pilots Association explained that it is unable to share details of the memorandum of understanding it approved until a nondisclosure agreement, which is in effect until the end of the month, expires.

“We are not certain on timing at this point, but rest assured you will have plenty of time to review the complete MOU well in advance of any merger between US Airways and American,” the union said in a Q&A memo. “We are working with the companies and the UCC on exact timing and will continue to push for release from the NDA at the earliest opportunity so we can provide you with the MOU.”

The APA said the memorandum only adds to the contract agreement the pilots approved in December and will not be an entirely new collective bargaining agreement.

Keep reading for the full Q&A from the APA.

-Andrea Ahles

Memorandum of Understanding Q&A

Your APA leadership has received a variety of questions about the memorandum of understanding (MOU) negotiations between APA, AMR and US Airways management, and the US Airline Pilots Association representing the US Airways pilots. While we remain bound by the terms of the non-disclosure agreement we signed that facilitated the MOU negotiations, we can answer the following frequently asked questions regarding the significance of the MOU and what the next steps would be if a merger takes place between American Airlines and US Airways.

Q: What is the MOU and why has it not been released to the pilots?

A: The MOU is the result of negotiations among APA, US Airways, American Airlines and USAPA, along with the participation of counsel for the Unsecured Creditors’ Committee (UCC), regarding the terms of a transition in the event of a possible merger between American and US Airways. These negotiations began after lawyers for the UCC late last year asked APA to engage in discussions with the companies regarding a potential MOU that would govern a pilot transition into a merged entity.

At that time, the merger negotiations had been governed by a confidentiality agreement that the UCC, American and US Airways had negotiated. That agreement prohibited the parties from further negotiations with APA or USAPA during merger negotiations. Accordingly, previous talks among US Airways management, APA and USAPA had ceased in August.

In December, the UCC and the companies asked APA and USAPA to enter into discussions with the companies for the purpose of negotiating an MOU governing the transition into a merged entity in the event of a merger. This allowed the unions to have input regarding the labor consequences from a pilot perspective of a merger. However, the unions’ participation was contingent on their agreement to be bound by a non-disclosure agreement like the other parties to the merger negotiations. USAPA and APA each individually engaged in a series of exchanges over the terms of the agreement and both unions signed the non-disclosure agreement (NDA). The NDA covers a range of confidential business information and, not surprisingly, implicates disclosure obligations under federal securities laws.

Pursuant to the NDA, USAPA and APA have engaged in negotiations over the terms of transition in case of a possible merger, and these terms are contained in the MOU that the APA Board of Directors approved on Dec. 29, 2012 and the USAPA Board of Pilot Representatives (USAPA BPR) approved on Jan. 4, 2013. APA and USAPA have requested that US Airways, American and the UCC agree to permit APA and USAPA to disclose the terms of this MOU notwithstanding the NDA.

Q: When will a complete copy of the MOU be made available to the pilots?

A: We are not certain on timing at this point, but rest assured you will have plenty of time to review the complete MOU well in advance of any merger between US Airways and American. We are working with the companies and the UCC on exact timing and will continue to push for release from the NDA at the earliest opportunity so we can provide you with the MOU.

Q: Why are USAPA-represented pilots being given a copy of the MOU and a vote to ratify?

A: To be clear, the USAPA BPR has reviewed the MOU, but the USAPA pilots, like the APA pilots, have not and cannot review the MOU until USAPA and APA are granted relief from certain provisions of the NDA. The MOU will act as a brand-new collective bargaining agreement (CBA) for the USAPA pilots, which is why they will have an opportunity to vote on it. However, for APA-represented pilots, the MOU only amends the new CBA, as opposed to creating a whole new agreement.

Q: When does the MOU become effective for APA and USAPA?

A: The MOU does not become effective for APA unless and until a merger is approved as a part of a plan of reorganization (POR). Assuming the USAPA pilots ratify the MOU, it will similarly become effective for them when a merger is approved as a part of a plan of reorganization. However, if the USAPA pilots reject the MOU, it will not apply to USAPA-represented pilots.

Q: If a merger were to occur, when would the reorganized New American Airlines exit bankruptcy?

A: We have no clear answer, as a merger would be subject to, among other things, antitrust review by the Department of Justice. But it is reasonable to expect an exit sometime later in 2013.

Q: Will APA or USAPA represent the combined pilot group?

A: Assuming that a POR with a merger is agreed upon and approved by Bankruptcy Judge Sean Lane, we anticipate that, within four months of the effective date, APA will file a single carrier petition with the National Mediation Board (NMB) to obtain a determination that the post-bankruptcy “New American Airlines” (New American), and US Airways are a single employer for labor relations purposes. We estimate the NMB may take up to six months from the date of filing to make that determination. Once it finds that a single transportation system exists, APA and USAPA have 14 days to produce a showing of interest by 50+ percent of the combined pilot group to trigger a representation election. The combined pilot workforce would be about 12,400 pilots, based on 8,201 pilots represented by APA and 4,197 pilots represented by USAPA. Consequently, the unions would have to produce a showing of interest of approximately 6,200 pilots. Given the numbers, APA will be the likely collective bargaining agent for the combined pilot group.

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Comments

Richard

I recently saw a website for a group of APA pilots who are in rebellion against their union over this merger. I can't say I'm surprised, since the APA seems to conduct their negotiations in secret, not telling their members very much.

casual observer

Will this "allowed" review be subject to changes or approval by the rest of the pilots?

Also, you have to admire the APA's hubris about being the representing union in the event of a merger. It very well could be that plenty of AA pilots are fed up with their union's tactics and are ready to throw support elsewhere.

Raf

Richard, you are talking about 50 pro management pilots who are against the idea of a merger with US Airways. There were 8000 pilots who casted a no confidence vote against the management's plan for a standalone exit out of bankruptcy.Those 50 anti-merger pilots represent a little more than .5% of those who voted. The group is so small that they hardly merit being mentioned.

Get Real

Raf, don't mix your numbers up. You don't have to be a "pro-management" pilot to be opposed to the union. It can be two bad choices, not one good and one bad.

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