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January 15, 2013

Details of the MOU for the pilots unions at American and US Airways are released

The Allied Pilots Association released key details of the memorandum of understanding that it approved in late December.

Among the highlights includes an additional $522 million in contractual improvements over the six-year term of the pilots' contract. The money will likely come in the form of pension, pay or per diem rates and translates to about $87 million per year of the contract. The half a billion dollars is in exchange for no profit sharing.

The MOU also decreases the amount of domestic code-sharing. In the APA contract approved in December, the pilots agreed to allow American to have up to 50 percent of its domestic flying in code-share agreements. The MOU caps domestic code sharing at 15 percent. American had asked pilots for expanded codesharing so it could increase its agreements with other carriers like JetBlue, to help it gain market share on the East Coast. Since US Airways already has a strong presence on the East Coast, it is likely that a merged carrier would not need expanded code sharing agreements.

Keep reading for the full letter from the APA Negotiating Committee.

-Andrea Ahles


Negotiating Committee Overview of the MOU

In December, APA participated in negotiations to develop a memorandum of understanding (MOU) addressing issues related to a potential merger inside bankruptcy. The talks were facilitated by the Unsecured Creditors’ Committee and included senior management from US Airways and AMR, as well as negotiators from the US Airlines Pilots Association (USAPA). We worked very closely with the USAPA Negotiating Committee throughout this process. The APA Board of Directors voted on Dec. 29 to approve the MOU by a vote of 11-5. The USAPA Board of Pilot Representatives approved the MOU on Jan. 4 by a vote of 11-0.
To view the MOU, click here.
To view questions and answers regarding the MOU process, click here.
Key Components of the MOU
  • The document replaces the conditional labor agreement (CLA) negotiated with US Airways management in April 2012 and serves as a Merger Transition Agreement.
  • The MOU starts with the APA 2012 Collective Bargaining Agreement (CBA) as the baseline contract for all pilots, and allows APA to make $522 million in contractual improvements ($87 million per year over six years).
  • USAPA pilots will be covered under the modified APA 2012 CBA on the Effective Date, which will be the date the Plan of Reorganization is approved by the bankruptcy court.
  • A timeline is established for negotiating a Joint Collective Bargaining Agreement (JCBA) with USAPA participation until such time as one union is certified by the National Mediation Board (NMB) to be the collective bargaining representative of the combined pilot craft or class, at which time the duly-certified representative shall have the exclusive authority to negotiate the JCBA on behalf of the pilots.
  • For USAPA, the JBCA will be a new contract. For APA, the JCBA will be an amendment to our current contract.
To view the timeline established by the MOU, click here.
  • APA must file a single-carrier petition with the NMB within four months of the Effective Date of the MOU.
  • Provisions and procedures are established for a Seniority List Integration process in accordance with McCaskill-Bond.
  • The MOU provides initial flying protections until fence provisions are established as part of the Seniority List Integration process.
All existing AA aircraft, including orders and options, will be flown by current APA pilots.
All existing US aircraft, including orders and options, will be flown by current USAPA pilots.
US Airways pilots will fly the first thirty E190 aircraft and starting with the 31st E190, APA will receive two E190 aircraft for every additional E190 above thirty flown by US Airways pilots.
Shuttle operations (BOS-LGA-DCA) will be flown by current USAPA pilots, along with existing PHX-Hawaii flying.
All transpacific (Asia) flying will be performed by current APA pilots.
  • Minimum block hour floors are established at US and AA to prevent the new company from drawing down either operation at the expense of the other. Pay protection is provided for pilots subject to displacements (subject to contract modification and valuation phase).
  • If either US Airways or American Airlines is hiring, furloughed pilots on either side may volunteer to fly for the other operation. Furlough protection will be provided to all pilots at both operations, who are senior to the most junior active pilot on the Effective Date.
  • Carried over from the Conditional Labor Agreement are provisions that transition our vacation accruals and daily values to the America West structure (daily value of 3:40), as well as the provision that flights over 16:00 hours will be manned by two captains and two first officers. Similar to the CLA, the MOU has no provision for profit-sharing.
  • The APA 2012 CBA Section 1 will preserve the limit for regional feed aircraft of 76 seats and 86,000 lbs and will grandfather seventy-six aircraft which are below 86,000 lbs but currently flying with more than 76 seats. Total regional operations will be limited to 75% of the mainline narrow-body fleet count and large regional aircraft (66-76 seats plus grandfathered) will be limited to 40% of the mainline narrow-body fleet count in 2016 and thereafter. Domestic code-sharing will be limited to 15% (down from 50% in our current contract). The international baseline will be updated to include international hours flown by US Airways.
  • The MOU also requires the new company to uphold the arbitration decision outlined in LOA 12-05 that will address the elimination of Supplement CC and the drawdown of the STL pilot base.
Contract Modifications
As mentioned previously, the MOU gives APA $522 million to spend on contractual improvements, subject to a valuation phase and arbitration (if required). On Thursday, Jan. 3, 2013, the APA Board directed the Negotiating Committee to make specific contractual modifications to our 2012 CBA during the valuation phase outlined in the MOU. Since these modifications have not been mutually agreed to, we will communicate them in a separate message in the near future.
This MOU negotiation is just one milestone in this process and will require approval of the two corporate boards of directors as well as the approval of the bankruptcy court. It is our goal to provide additional educational materials in the near future in order to answer the many questions you may have associated with the MOU and the potential merger process ahead.
You APA Negotiating Committee


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