Sky Talk

American and US Airways pilots will get MOU information on Tuesday, union presidents say

Pilots of American Airlines and US Airways will receive information about the memorandum of understanding that has been approved by its unions sometime on Tuesday.

The news came in a joint message from the presidents of the Allied Pilots Association, which represents American pilots, and US Airline Pilots Association, which represents US Airways pilots.

"If the merger is eventually approved, this MOU along with the APA-American Airlines 2012 Collective Bargaining Agreement will serve as the foundation for the joint collective bargaining agreement (JCBA) for the combined pilot force. Your negotiating committees will continue working together as we develop this contract, jointly pursuing the best possible outcome for our memberships and striving to expeditiously join other pilot groups that are already enjoying substantially improved contracts," the message said.

Both unions approved the MOU, which includes seniority integration and work rules, a few weeks ago.

Keep reading for the full message.

-Andrea Ahles

Fellow pilots,

The Allied Pilots Association (APA) and US Airline Pilots Association (USAPA) share the goal of achieving the best possible contract for our memberships, and the increasing possibility of an American Airlines-US Airways merger has brought us together to work for that common cause. While this is the first joint communication you are receiving, your respective negotiating committees have been working well together since shortly after the announcement of the possible merger last April. Additionally, APA and USAPA have enjoyed a good working relationship for years though our mutual involvement with the Coalition of Airline Pilots Associations (CAPA), advancing common interests that affect our profession.

One of the results of these cooperative efforts has been the memorandum of understanding (MOU) that was approved by the APA Board of Directors on Dec. 29, 2012 and approved on Jan. 4, 2013 by the USAPA Board of Pilot Representatives for a membership vote. This MOU was the product of extensive discussions during the last month with our unions and representatives from US Airways, American Airlines and the AMR Unsecured Creditors’ Committee. Due to restrictions imposed by a confidentiality agreement, we have been unable to share any details of this MOU with you until now.

In addition to this joint update, you will be receiving information today from your respective negotiating committees outlining what the MOU means to you. If the merger is eventually approved, this MOU along with the APA-American Airlines 2012 Collective Bargaining Agreement will serve as the foundation for the joint collective bargaining agreement (JCBA) for the combined pilot force. Your negotiating committees will continue working together as we develop this contract, jointly pursuing the best possible outcome for our memberships and striving to expeditiously join other pilot groups that are already enjoying substantially improved contracts.

We recognize the prospect for substantial improvements this potential merger holds for both pilot groups. We will continue our partnership in this effort and will update you as conditions warrant. Should this merger take place, we are looking forward to utilizing the best assets from both unions to work toward a JCBA that we can all be proud of—a JCBA that propels the “New American Airlines” to the top of the industry.

Keith Wilson Gary Hummel

President, APA President, USAPA

American-US Airways merger "may be imminent," analyst says

J.P. Morgan analyst Jamie Baker - who is known in the airline community as the analyst who asked former AMR chief executive Gerard Arpey "is this really all you've got?" on earnings call - said on Tuesday that he believes a merger between US Airways and American Airlines is imminent.

Here's what Baker said in a research note sent to clients on Tuesday:

"We expect LCC-AMR to happen. The problem is so does everybody else - What might have been a proprietary thesis last March (see our note here) has crescendoed to a consensus today; LCC & AMR may potentially merge and clarity is anticipated in the near term. But the courtship (far from amorous) has hardly been secret, with even labor unions tweeting updates on its progress," Baker said.

AMR chief executive Tom Horton has said previously that a merger decision could come within weeks. Both pilots unions at the two carriers have also recently approved a memorandum of understanding that deals with integration issues if a merger were to occur.

-Andrea Ahles

Read more here: http://blogs.star-telegram.com/sky_talk/2012/03/analyst-underwhelmed-with-amrs-standalone-restructuring-plan.html#storylink=cpy

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.

US Airways pilots union unanimously recommends merger MOU for ratification

The board of the US Airline Pilots Association, which represents US Airways pilots, voted unanimously to recommend a memorandum of understanding related to the potential merger between the carrier and American Airlines.

Details of the MOU were not disclosed as the union said it is still bound by the non-disclosure agreement between the two carriers and the unions. With the vote, USAPA said it recommends that the pilots review and ratify the memorandum in a vote after a merger is announced.

"If this merger transpires, we believe this MOU is the quickest and surest path to a better lifestyle for us all," the union said in a note to members on Friday afternoon.

The Allied Pilots Association, which represents American's pilots, approved the MOU in an 11-5 vote last week.

American and US Airways issued a joint statement saying the memorandum will help the boards determine if a merger should be pursued.

"American Airlines and US Airways, with participation of committee counsel for the Unsecured Creditors Committee, are pleased that they have completed discussions with the Allied Pilots Association and US Airline Pilots Association intended to develop a framework for the terms of employment for pilots, as well as a process for pilot integration, in the event of a merger between AA and US during restructuring," the carriers said.

Keep reading for the full USAPA message.

-Andrea Ahles

Fellow Pilots,

As you know, your union has been involved in discussions, unlike any our industry has experienced, regarding the potential merger between American Airlines and US Airways. These negotiations have included USAPA, the Allied Pilots Association, American Airlines, American Airlines’ Unsecured Creditors Committee (UCC) and US Airways management. Over the holidays, much work went into achieving a newly proposed Memorandum of Understanding (MOU).

Today, your Board of Pilot Representatives voted unanimously to recommend the proposed MOU to you, the pilots of USAPA, for your review and ratification. If all parties agree to the terms of the MOU, it would serve as a framework for an agreement if American Airlines and US Airways merge. If not approved by the other parties to the MOU, or if there is no merger between the two carriers, the MOU would be rendered null and void. If the other parties approve the MOU, but the USAPA pilots do not ratify it, the MOU will apply to the other parties, but not to us.

We realize that you are understandably interested in the details and specifics of the MOU. Due to the Non-Disclosure Agreement and applicable Securities and Exchange laws, we cannot disclose the terms of the MOU at this time. We are in discussions with the other parties to the MOU and the Unsecured Creditors Committee about the timetable for their review, and when we would be permitted to disclose the MOU to you. However, we can assure you three things:

First, the MOU will not be final with regard to you until you, the pilots of USAPA, vote to approve it.

Second, you will have access to complete and detailed information on the MOU before you are asked to vote. Depending on when the other parties complete their approval processes, the NAC will visit all crew bases by the end of January, and you will be able to hear first-hand from the NAC and ask any questions you have.

Third, if this merger transpires, we believe this MOU is the quickest and surest path to a better lifestyle for us all.

This is an important moment in your union’s history. This agreement is the result of the work of your BPR, Officers, NAC and our professional negotiating team. In particular, we would like to thank our NAC, including Chairman Dean Colello and Members Rocky Calveri, Ken Holmes, and John Owens for their tireless efforts in representing you and the pilots of this airline.

Thank you for your patience and support throughout this process.

Regards,

Your Officers and Board of Pilot Representatives

Gary Hummel - President		Steve Bradford - Vice President
Rob Streble - Secretary-Treasurer		Steve Smyser - Executive Vice President
Bill McKee - CLT Chairman		Steve Crimi - CLT Vice Chairman
DeWitt Ingram - CLT Vice Chairman		Joe Stein - DCA Chairman
Pete Dugstad - DCA Vice Chairman		Steve "Spike" Szpyrka - PHL Chairman
Mike Gillies - PHL Vice Chairman		Jamie Weidner - PHL Vice Chairman
John Scherff - PHX Chairman		Dave Simmons - PHX Vice Chairman
Roger Velez - PHX Vice Chairman

AMR CEO Horton tells employees decision on merger will come "to conclusion within a matter of weeks"

In a letter sent to employees on Thursday, AMR chief executive Tom Horton said the company will reach a decision on a potential merger with US Airways "within a matter of weeks."

Horton also updated American Airlines' workers on the discussions between the pilots unions and the two carriers which are reviewing the memorandum of understanding that was approved by the Allied Pilots Association last week.

"I have been personally involved in all deliberations regarding the overall strategic review and focused intently on creating a framework with the unions and for all our employee groups that keeps American competitive and allows us to build a successful future," Horton wrote. "The proposed MOU will be reviewed alongside other factors under evaluation, as part of making an informed decision about whether a merger should be pursued."

Next week, AMR's board of directors is scheduled to meet on Wednesday to discuss a possible merger. The non-disclosure agreement that AMR currently has with US Airways is scheduled to expire on Friday.

Keep reading for the full letter from Horton.

-Andrea Ahles

Dear American Team:

As we start a new year, I'd like to thank you all for capping a year of extraordinary work by delivering for our customers during our busiest season. This dedication underscores why I have so much confidence in the future of the new American.

As you know, we continue the process we embarked upon months ago to carefully assess how we can deliver the greatest value for our stakeholders and the best outcome for our people and customers. Together with our Board, and the Creditors' Committee, we asked our unions and those of US Airways to join the discussions underway in order to better evaluate the potential benefits, costs and risks of a potential merger. All parties are operating under a confidentiality agreement, and whiel I cannot provide any details, I can assure you we are conducting a collaborative, fact-based analysis to determine the best path forward for American.

As part of these joint efforts, last week APA announced that its Board voted to approve a proposed Memorandum of Understanding (MOU), which is now subject to review and approval by American, US Airways and the US Airline Pilots Association (USAPA), the union representing US Airways' pilots. Discussions with our other unions and those of US Airways are also in progress. I have been personally involved in all deliberations regarding the overall strategic review and focused intently on creating a framework with the unions and for all our employee groups that keeps American competitive and allows us to build a successful future.

The proposed MOU will be reviewed alongside other factors under evaluation, as part of making an informed decision about whether a merger should be pursued.

I know many of you have questions about what happens next and how long this evaluation will be underway. While I cannot give you a precise date, I can tell you that we expect to bring this to conclusion within a matter of weeks. As we do, our objective is unchanged - to create the most value for our owners and the strongest possible American going forward. All of our efforts have been aimed at building on the extraordinary progress we have already made.

In just over a year, we have moved faster and performed better through our restructuring than any airline in history. Our collective efforts have created a strong foundation for the future of the new American, which is on course to become a premier global airline, equipped to compete against the best in the world. Staying laser-focused on serving our customers and running a great airline must remain our highest priority.

Thank you again for your commitment, and I look forward to sharing more information as soon as possible.

Sincerely,

Tom

Judge approves American's new contract with the pilots

At a bankruptcy hearing in New York on Wednesday, U.S. bankruptcy judge Sean Lane approved American Airlines' new contract with its pilots.

The six-year contract will provide $315 million in annual savings to the bankrupt carrier and was ratified by the Allied Pilots Association's members on December 7.

"Lane said the agreement with the Allied Pilots Association is a significant step to resolving the bankruptcy case that began more than a year ago and helps achieve “long-term viability” for the airline.

"'There is no doubt pilots represented by the APA are vitally important to the debtor’s business enterprise and thus crucial to any successful reorganization,' the judge said," according to this Bloomberg article.

At the hearing, the judge also granted American's request to extend its exclusivity period to file a restructuring plan with the court from January 28 to March 11. The request had the support of the Unsecured Creditors Committee.

-Andrea Ahles

Group of American pilots start a blog against a US Airways-American merger

A group of pilots took to the web on Monday night, launching a blog to voice their opposition to a merger between US Airways and American Airlines.

The list of almost thirty names signed on the blog include Allied Pilots Association vice president Tony Chapman and several captains based out of Dallas/Fort Worth.

"We believe that a number of people have rushed to judgment - by blinding following 'merger mania' and putting too much faith in US Airways," the blog says. "For one, airline mergers trigger dramatic unpredictability. While the leadership of the APA and other major labor groups have successfully created new agreements under difficult circumstances, seniority list negotiations, binding arbitration, and renewed contract negotiations all may jeopardize the terms that all nine union groups recently approved."

The APA has publicly supported a merger with US Airways even after the membership ratified a new contract with American that includes pay raises in exchange for more domestic code sharing and regional jets.

"There are diverse views within our membership and within our leadership about a merger and the institutional position remains very much in support of a merger between US Airways and American within bankruptcy. This is a democratic institution and discussion, debate and even agree to disagree are all part of that," said APA spokesman Gregg Overman on Tuesday morning.

-Andrea Ahles

Horton was "impartial about a merger" when he talked to pilots union, the company says

American Airlines chief executive Tom Horton did not dismiss a possible merger when he talked to the pilots union last week, according to a note sent to pilots on Monday afternoon.

Captain John Hale, the Fort Worth-based carrier's vice president of flight, said Horton reviewed the restructuring process of American to date and highlighted the opportunities for pilots at the new airline.

"Tom outlined the strong progress and improved performance we have achieved in restructuring and outlined all of the reasons -- from network and partners to fleet and products and services -- American is poised to be a successful, profitable and growing company that provides more opportunity for its people. For pilots this is growth and opportunity unseen for more than a decade. And,importantly, he was impartial about a merger, contrary to what you may have heard," Hale wrote in a memo to pilots on Monday.

Hale said that pilot pay would increase 50 percent by 2017 and the carrier planned to hire 1,650 new pilots as it brings new aircraft into its fleet.

American also released the powerpoint presentation that Horton gave to the union board on Thursday. Much of the information has been previously discussed publicly by Horton and other executives at American (the good stuff was redacted).

To download the presentation click here.

And keep reading for the full memo from Hale.

-Andrea Ahles 

 

FLIGHT DEPARTMENT HOTLINE
December 17, 2012

Good afternoon, this is CA John Hale with the Flight Department Hotline for Monday Dec. 17.

I imagine most of you have seen the reports on our chairman Tom Horton’s presentation to the APA board Thursday. There appears to have been some misunderstanding about what was presented so I wanted to be sure you had an opportunity to see the presentation first hand and form your own objective view.

Tom outlined the strong progress and improved performance we have achieved in restructuring and outlined all of the reasons -- from network and partners to fleet and products and services -- American is poised to be a successful, profitable and growing company that provides more opportunity for its people. For pilots this is growth and opportunity unseen for more than a decade. And,importantly, he was impartial about a merger, contrary to what you may have heard.

Much of the presentation is highly confidential, but it’s important for you to have an unfiltered look at the information, so we have posted to AAPilots a version that removes only the most competitive details. Also, you should know that this plan has been shown to and vetted by our Board of Directors, the UCC and countless advisors and expert professionals.

Tom shared a lot of great information on what's driving the projected pilot seniority progress and pay increases. At the heart are our roughly 550 aircraft on order -- which are very real, firm and financed – These aircraft will help fuel growth and the addition of a substantial number of new mainline routes, with international outpacing domestic growth by a significant margin. That will result in promotional opportunities and seniority advancement, not to mention about 1,650 new pilot jobs over the next five years or about 2,500 in total when you consider the new hires who will replace our colleagues who retire. On average, a pilot's income in 2017 is expected to be about 50 percent higher than his or her 2012 earnings.

Tom was clear that this vision does not preclude the idea of merging, either now or down the road, and that is being objectively assessed as we evaluate alternatives to achieve the greatest value for our financial stakeholders and the best outcome for our people and customers. And we also need to determine the impact of a merger on costs, and the process for integrating seniority, which is exactly why we wanted the APA involved in the discussions. As Tom shared in his Special Jetwire last week, we expect to have a conclusion on this work soon. I hope you will take some time to look over Tom's presentation.

That’s all for now. Thanks for all you do, take care of each other, and we’ll talk again soon.

Horton meets with pilots union, reiterates plan for standalone American

AMR chief executive Tom Horton met with pilots union leaders for almost three hours on Thursday and reiterated his support for American Airlines to emerge from bankruptcy as a standalone carrier.

Allied Pilots Association spokesman Gregg Overman said Horton believes the carrier should pursue a merger after it completes its restructuring.

"The union leadership will give Mr. Horton's presentation due consideration," Overman said. The APA ratified a new contract with American last Friday.

He added that the pilots union will invite US Airways chief executive Doug Parker to make a similar presentation to the union board. The APA has publicly supported a merger with US Airways and signed a conditional labor agreement with the Tempe-based carrier in April.

American spokesman Michael Trevino gave few details of Horton's meeting with the pilots union board.

"We met with our pilot union to thank them for their leadership in reaching a new agreement, discuss the next steps in our evaluation of strategic alternatives and exchange information and thoughts about how to continue the positive momentum we are creating for our people and our customers," Trevino said.

-Andrea Ahles

APA president thanks pilots for voting and says AMR CEO Horton will address union board on Thursday

Allied Pilots Association president Keith Wilson wrote a thank you note.

In a message sent to members on Wednesday, Wilson thanked the 96 percent of eligible pilots for casting their ballots in last week's contract ratification vote. He also updated pilots on the union's board of directors meeting that began on Wednesday.

Wilson said AMR chief executive Tom Horton is scheduled to talk to the board on Thursday morning to give an update on the restructuring process and "his view of the future."

"As the new owners of a significant percentage of the restructured airline, it’s APA’s responsibility to maximize the value of our investment by conducting thorough due diligence. I believe the APA leadership needs to hear what Mr. Horton has to say," Wilson wrote.

Wilson added that the union "must be ready to move quickly toward a potential merger."

Keep reading for the full letter from Wilson.

-Andrea Ahles

APA HOTLINE MESSAGE DECEMBER 12

I want to thank every pilot who took the time to vote in the tentative agreement ratification that concluded last Friday. With more than 96 percent of eligible pilots casting a ballot, it’s clear that APA’s membership remains highly engaged.

 

I would also like to acknowledge the level-headed resolve you have exhibited throughout the restructuring process. When a decisive majority of you voted against management’s “last, best, final offer” in August, your union leadership responded by conducting a poll to identify where we needed to focus our efforts. Our negotiators then returned to the bargaining table and ultimately secured meaningful improvements in a variety of areas. You responded by voting almost three-to-one to ratify the tentative agreement, indicating that APA had addressed some of the areas of greatest concern to you and made a difficult decision somewhat easier.

 

As we enter the next phase in American Airlines’ restructuring, your level of engagement needs to remain high. Immediately after the results of our vote became known on Friday, the news media began speculating about the prospects of a merger between American Airlines and US Airways. A number of Wall Street analysts weighed in, expressing the view that a merger of the two carriers is all but inevitable. While I will refrain from speculation, we must be ready to move quickly toward a potential merger.

 

As we announced on Monday, the Unsecured Creditors’ Committee has invited APA to join the merger-related discussions that are already underway between AMR and US Airways. By a vote of 14-2, the APA Board of Directors agreed to join the talks and to adhere to the applicable non-disclosure agreement. The US Airline Pilots Association, representing US Airways’ pilots, has also joined the same discussions. As you may recall, these talks began last summer and were put on hold when AMR and US Airways management entered into a non-disclosure agreement. With both pilot groups now participating, we are hopeful that all parties can agree to a memorandum of understanding to protect our respective interests through a transition period that would lead to a joint collective bargaining agreement.

 

The APA Board of Directors convened at union headquarters beginning today at 1 p.m. Central. AMR Chairman and CEO Tom Horton is scheduled to address the Board on Thursday morning regarding the state of the airline’s restructuring and his view of the future. As the new owners of a significant percentage of the restructured airline, it’s APA’s responsibility to maximize the value of our investment by conducting thorough due diligence. I believe the APA leadership needs to hear what Mr. Horton has to say.

 

As we continue executing our strategic plan going forward, we are committed to keeping you informed to the best of our ability. While there will be occasions when we won’t be able to provide as much detail as we would prefer because of legal requirements to keep certain information confidential, we understand how critical it is for you to receive timely updates.

 

In closing, I ask that we set aside whatever differences of opinion may have arisen during the ratification process and stay focused on our many shared interests as pilots for American Airlines. Speaking in a unified voice will maximize our ability to further those interests.

Thank you again.

 

In unity,

 

Keith Wilson

APA President