Amfa Vs. Twu Debate

[TWU informer]

Well Calvin,

When you have ZERO observers in TWU "active engagement" negotiations, and then you have the infamous "without further ratification" sign-off on a contract. Combined with deletion on the TWU websites of all written communication regarding the re-vote, the number of members unable to obtain pin numbers, and all other references to the debacle.

Who in the TWU should be to blame in your mind?

Jesus Christ man, even the IAM guy from TWA, that just joined the TWU should be able to see that something ain't right about this situation. If nothing else, just the deletion of all references on the websites to the voting problems/failures should strike some questions in one's mind.

 

[mojo13]

I am starting an investigation of your accusations.

ZERO observers in TWU "active engagement" negotiations???
what is this in reference to?
Were observers ever allowed in???

deletion on the TWU websites of all written communication regarding the re-vote???

deletion of all references on the websites to the voting problems/failures

I'll agree with the PIN number fiasco...

 

[TWU informer]

Yawn.....

"Active Engagement" was the name given to the pre-amendable contract negotiations that led to the industry leading concessions.

To my knowledge the only "observers" were Congressmen that needed to repair the damage of the "SERP" revelation of the SEC filing. In fact, the final outcome even deprived your own negotiating committee from the room and involvement.


Go ahead and investigate, there were many Local Newsletters, and many ATD updates deleted from the websites that made references to the RE-VOTE announced by Jim Little, and the 3200 Pin Number not obtained, and the lack of good faith bargaining because of the disclosure. Surely you have personal access to copies of these communications. Go match up your "ATD DIRECTOR UPDATES" with the ones currently posted on the ATD website. Pay close attention to those dated between April 5th and 15th of 2003.

When the Local 562 Lawsuit was filed, all of this material mysteriously dissappeared from the websites. Even the Local 514 TWU informer has been removed that same time frame, because the content directly relates to this debacle.

Oh joy, another TWU investigation. Just what we need to clear things up and fix our problem.

Not: TRY SIGN YOUR CARD AND VOTE AMFA

 

[mojo13]

Although the "Timeline" ATD update that make reference to the revote is still on the Local 530 website it has indeed been removed from ATD's site.

 

[mojo13]

But; info on the revote is still there.

American
IMMEDIATE ATTENTION 04-17-03
IMMEDIATE ATTENTION 04-17-03


April 17, 2003

TO: All TWU/AA Members

Dear Sisters & Brothers:

Yesterday, as contract ratification for all three union groups was being completed, the Company made a filing with the Securities and Exchange Commission, indicating it had established a special pension fund for its executives. The existence of this fund was never revealed to our consultants while they examined AA's books, nor were we informed of it in the bargaining which led to the concessions we agreed to in order to avoid a bankruptcy. We regard the failure to timely disclose the existence of this fund in bargaining by American as a material breach of its obligations to provide relevant information.

The concessions our members barely ratified the other day were based on the premise of shared sacrifice. This fund is the opposite of shared sacrifice and calls into question the basis of each of our contracts. We have signed no new agreement, and in light of the disclosure in AA's SEC filing, we must reconsider whether we will sign off, even if the consequence is a bankruptcy. Unless the Company reforms itself on the issue of executive compensation, there is no basis to cooperate in its effort to survive.

Sincerely & fraternally,

James C. Little
Director Air Transport Division
Intl. Administrative Vice President


American
MEMBERSHIP RE-VOTE 04-21-03
MEMBERSHIP RE-VOTE 04-21-03


April 21, 2003

To: All TWU AA Members

Dear Sisters & Brothers,

Last week I sent a message to all members stating that, by failing to disclose to us that it had intended to provide special retention bonuses and fund its supplemental pension plan in bargaining, American was guilty of a material breach of its obligation to provide relevant information.

The basic premise to the modifications we made to our agreements was clear and was recited in each agreement - " the modifications to the TWU agreements described have been negotiated in good faith by the company and the TWU on the basis of the best information currently known to the Company with the intent of avoid reorganization under Chapter 11 of the Bankruptcy Code..." The Company's conduct has called this basic understanding into question and, in my view, tainted the ratification process that led to these agreements. Because of this, and after consultation with President Sonny Hall and the TWU International Administrative Committee, TWU has decided to resubmit the proposed agreements to membership vote. In that the ratification procedures used to reach agreement by April 15th were authorized by unanimous vote of the President's Council only on a one-time basis, we will utilize the normal mail ballot procedures in the President's Council By Laws for the re-vote, or by other means the Council believes can expedite the process.

We continue to have the gravest concern about the possibility of a bankruptcy filing and its impact on our members. In every instance I know of consensual agreements reached out of bankruptcy are substantially fairer to employees than those reached in the bankruptcy process under the threat of possible contract rejection. Nevertheless, in order for these agreements to accomplish their purpose they must be credible. The only way to assure credibility is to allow a full re-vote with the full membership knowledge of all relevant company actions.

Sincerely and Fraternally,

James C. Little,
Director Air Transport Division
International Administrative Vice President

 

[mojo13]

AmericanAirlines®





Mr. James C. Little

Director Air Transport Division

International Administrative Vice President

Transport Workers Union of America, AFL-CIO

1791 Hurstview Drive

Hurst, TX 76054





Dear Jim,



Whereas, American Airlines, Inc. (“American†or “Companyâ€) and the Transport Workers Union of America, AFL-CIO (“TWUâ€) have agreed to resolve all disputes which exist or could exist between them related to the negotiation, ratification, and their final effectiveness acceptance of the Restructuring Agreement, dated April 15, 2003 ("Restructuring Agreement"), and



Whereas, American and the TWU (the "Parties") have each agreed that it is in their mutual interest to permit the Restructuring Agreement to become binding and effective.



Now therefore, it is this 24th day of April 2003, hereby agreed that the following shall supplement, and, to the extent inconsistent, modify the Restructuring AgreementAnnual Incentive Program.



The Company will establish an Annual Incentive Program (“Programâ€) that shall substitute for and replace the Variable Incentive Program included as part of the Agreement.





e. Incentive payments will be distributed on April 1 of each calendar year during the term of the program, based on the application of the incentive criteria during the preceding calendar year. All outstanding payments will be made no later than 60 days following termination of the program, payment for the portion of the calendar year in which termination occurs will be on a pro rata basis



The program will remain in effect through the term of the Agreement

and will terminate upon the ratification of the next basic agreement between American and APFA.



A. Duration of the Agreement. Contingent on approval of this Letter of Agreement by the AMR Board of Directors and the TWU and without further ratification, the April 30, 2Restructuring Agreement will be effective beginning April 15, 2003, and shall remain in effect for a period of five (5) years and become amendable April 30, 2008.



B. Early Reopener. Either the American or the TWUAssociation may elect to reopen the Restructuring Agreement by the services of notices pursuant to 45 USC Sec. 156, on or after April 30, 20060.



C. Special Reopener Procedure for Change.



1. The parties agree that fFor a period not to exceed thirty (30) days beginning on written notice by the TWU no later than May 15, 2003, they Parties will meet and discuss the deletion or modification of a single item in the Restructuring Agreements, that is(the "Original Provision"), such as, the change to Article 34(d) of the Mechanic and related agreement regarding payment of Sick Leave for the first 16 hours at 50% and the substitution of one or more alternative items (the "Offset Modification(s)") such that the net economic result of the deletion or modification and substitution provides cost savings to the Company equal to the cost savings originally projected by the Company for the Original Provision (i.e. $7.0 million per year).

The purpose of the discussion will be to reach an agreement on a modification of the ½ pay for sick provision along with a corresponding modification of the Agreement (“original offset modificationâ€) which have the net effect of not increasing the costs of the Agreement to American.



2. If the parties cannot reach agreement during the thirty (30) day period on the an oOffset mModification(s) having the appropriate aggregate value described in C.1., above,- they will select a neutral arbitrator in accordance with the System Board procedure in the Restructuring Agreement. Said arbitrator must be available to hear the matter with seven (7) days of selection and shall issue a decision within 21 days of selection.



3. The There willarbitrator shall conduct a hearing of no more than one day in duration. American and the TWU will each have a maximum of one-half day for its presentation, with appropriate procedural rules to be set by the arbitrator.



4. At the hearing, the TWUAssociation will identify one or more additionaloOffset mModification(s), the aggregate value of which must achieve the result described in C.1., above. will equal the difference between the cost of the ½ pay for sick provision modification and the Company’s valuation of the original offset modification proposed by the Association. For example, if the proposed modification to the Original Provision has a cost of $7 million and the Company arbitrator values the original oOffset mModification(s) at $6 million, the UnionAssociationwill must identify some additional oOffeset mModification(s) with a value of $1 million.



5. The Parties’ original valuation of the Restructuring Agreement will determine the value of the Original Provision. The arbitrator will determine the value of the originalall changes to less than all of the Original Provision, as well as the value of all oOffset mModification(s). If the arbitrator determines that the value of the Offset Modification(s) it is less in aggregate value to the Company than the cost of the modifications or deletions to the Original Provision, unless the TWU selects some additional Offset Modification(s) which achieves the result described in C.1., above, the arbitrator will ofurther modify the Original Provision so that the changes to the Original Provision compared to the aggregate value of the Offset Modifications(s) achieves the result described in C.1., above.



6. The decision of the arbitrator will be final and binding on the TWU and the Company.



D. Annual Incentive Program.



The Company will establish an Annual Incentive Program

(“Programâ€), as set forth in Attachment A, that shall substitute for and

replace the Variable Wage Adjustment Program included in the Restructuring

Agreement.





E. Authority and Effective Date.



Execution of this Letter of Agreement shall constitute a representation by each party that the terms of this Letter of Agreement and of the Restructuring Agreement have been approved. This Letter of Agreement will become final upon execution on this 24th day of April 2003.





For the Transport Workers Union of America, AFL-CIO:





____________________________

James C. Little

Director Air Transport Division

International Administrative Vice President



For American Airlines, Inc.:


____________________________

James B. Weel

Director

Employee Relations

 

[Rusty]

A. Duration of the Agreement. Contingent on approval of this Letter of Agreement by the AMR Board of Directors and the TWU and without further ratification, the April 30, 2Restructuring Agreement will be effective beginning April 15, 2003, and shall remain in effect for a period of five (5) years and become amendable April 30, 2008.

A. Duration of the Agreement. Contingent on approval of this Letter of Agreement by the AMR Board of Directors and the TWU and without further ratification, the April 30, 2Restructuring Agreement will be effective beginning April 15, 2003, and shall remain in effect for a period of five (5) years and become amendable April 30, 2008.

 

[mojo13]

Yep, there it is, without further ratification

But I think there has been a revision since that letter.

 

[Rusty]

mojo13, why do we even vote if the TWU can vote for us?

 

[mojo13]

TRANSPORT WORKERS UNION TO AMERICAN AIRLINES:

"COUGH UP DETAILS ON EXECUTIVE COMPENSATION"

FORT WORTH, TX --- Angry American Airlines mechanics and fleet clerks confronted company officials at the AMR Annual Meeting and demanded a full report to shareholders and the public on executive compensation, claiming the company’s compensation committee has provided "far less than full disclosure" in its most recent proxy statement and Securities and Exchange Commission (SEC) filings.

The workers, members of the Transport Workers Union of America, AFL-CIO (TWU), recently joined other unionized employees in agreeing to $1.6 billion in concessions to save AMR subsidiary American Airlines from bankruptcy, but were outraged at learning about a secret pension and bonus plan for company executives. The exposure of this package resulted in the resignation of AA CEO Donald Carty.

"This is absurd," observed TWU International Representative Robert Gless. "Our compensation and sacrifices are plastered across every newspaper in America, but you’d need a pack of bloodhounds to track down what these executives are making. And what are they giving back?"

TWU members also voiced opposition to movement of aircraft maintenance work overseas and called upon new AMR CEO Gerald Arpey to support legislation sponsored by the AFL-CIO to restrict such outsourcing.

The TWU members were joined at the meeting by representatives of the national AFL-CIO, which has long been conducting a campaign against excessive executive company compensation. The giant labor federation maintains an "Executive Paywatch" website that expose management pay scales and regularly sponsors resolutions at annual meetings to force corporations into more transparency.

Gless said that in the company’s most recent proxy statement, the compensation committee failed to disclose the amount of the company’s contribution to its supplemental executive retirement plan (SERP), nor the amount paid to top executives as "retention" bonuses.

"These contributions amounted to $421 million and up to twice the value of some executive’s base salaries," Gless said. "These amounts are substantial and clearly belong in the Compensation Committee’s report."

 

[mojo13]

Directors Update 10-24-2003
Posted on Friday 24 October @ 08:02:05
TO: All AA members Local 501-590.


RECAP: AA reorganization Time Line.





Dear Sisters and Brothers:

I know we have all been through some extremely difficult times since 911 in our Airline Industry, and we do not know what the future will bring. I do however; believe we made the right decision on the restructuring at American. As you know things were changing fast during the spring, AA avoidance of bankruptcy, IRAQ war, SARS and the ailing economy. My biggest regret is that not all of you were kept as current on the status of American as the situation unfolded therefore, I thought a recap of events that led up to the reorganization agreement would give you a better insight of what your leadership was faced with.

1. In the fall of 2002, we began to receive regular briefings from Company officials warning that American's finances were deteriorating and that the Company was sustaining daily losses averaging five to seven million dollars. The Presidents of the Allied Pilots Association (APA) and Association of Professional Flight Attendants (APFA) received similar warnings. Then, on December 6, 2002, I received a letter from AMR CEO Don Carty requesting that the TWU (along with the APFA) defer a pending increase due on March 1, 2003. We did not agree to do so, but stated we would need to do an analysis of AA finances, and if conditions warranted we would ask our members to consider a pay deferral. We hired economic consultants to review the Company's books to determine whether the request was justified. Our consultants were the "ECLAT" Group (DCA) led by former Air Line Pilots Association President-CEO Randy Babbitt. ECLAT informed us that it would take about 30 days to complete an analysis. However, while attending Senator John McCain subcommittee hearing on binding arbitration in Washington DC we contacted ECLAT for a status report. That evening ECLAT gave us preliminary findings that indicated forgoing pay was not the issue of concern and based on their analysis AA could be in bankruptcy by late May. Our first reaction was of disbelief however Mr. Babbitt assured us they would review the analysis again.

2. About a week later the APA contacted us to review their financial finding, and according to their analysis AA would be in bankruptcy by late spring. APA, APFA, and TWU contacted CEO Don Carty and requested a meeting with senior management. During the meeting we asked if AA would be in bankruptcy by late spring. He stated that the company is experiencing deep financial losses, and bankruptcy may be imminent. We notified Mr. Carty we would no longer consider the pat deferral, and would focus our resources on the bankruptcy process.

3. While ECLAT was still conducting its analysis of AA's books, CEO Carty requested that the TWU participate in a process of "active engagement" to "save and restructure American Airlines." Exhibit 2. Carty's letter identified the following problems:

· Our bankrupt mainline competitors are using the bankruptcy process to create huge cost advantages through creditor-imposed labor and other cost cuts.

· The competitive threat from low-cost carriers in over 75 percent of our markets, coupled with the growing practice of internet fare shopping, has impacted our pricing structure;

· Government-imposed security and insurance costs are crippling; and

· Fuel prices continue to rise and the threat of war looms.

The letter went on to warn that "... the restructuring of our labor agreements is inevitable and fundamental to our survival, and must be part of any long term solution." The Presidents of the pilots and flight attendants unions received identical letters.


4. ECLAT completed its review in late January 2003. ECLAT President Randy Babbitt and the economist Thomas Stalnaker confirmed that the Company was indeed sustaining operating losses of five million dollars a day and, combined with debt payments, the losses approached ten million dollars a day in the third quarter of 2002. ECLAT stated that these sorts of losses were not sustainable and, at that rate of "cash burn," the Company would have to file for bankruptcy as early as May 2003. ECLAT noted that American was unlikely to allow its unrestricted cash position to fall below $1.2 billion because it would be unable to finance a reorganization in bankruptcy. ECLAT's conclusion was not unique; the consultants for the other unions, as well as several published analyses from various investment firms, came to essentially the same conclusion. .

5. On February 4, 2003, CEO Carty sent another letter to all unions on AA property warning that "We continue to lose millions of dollars every day forcing us to borrow vast sums of money just to make payroll and stay in business. Now our number one priority must be to deliver the additional two billion we estimate we need to survive." Given that priority, the Company demanded aggregate labor cost savings of $1.8 billion per year. AA allocated the sacrifices expected of each work group as follows:

Based on this review, the TWU Represented employee’s portion is $620 million. We want to work with you to determine together how best to achieve these savings, and expect it would be through a combination of changes in wages, benefits, and work rules.

The other work groups' portions are as follows (in millions):

Pilots $660
Flight Attendants $340
Agents and representatives $80
Management and support staff $100

Be assured that management will continue to do its part. Today's $100 million allocated to management and support staff is in addition to the over $200 million in savings already achieved through a 22 percent reduction in these provisions and foregoing across-the-board management pay increases (2001-2002) for a second straight year.

Upon examination, it turned out that the allocation of concessions to each union was based on the percentage of payroll paid to each membership in 2002.


6. In late February and early March, International Representatives Gary Yingst, Robert Gless, John Conley and I worked with ECLAT as well as our staff economist, John Donnelly, to examine the Company's request and to cost out the various provisions of our contract in order to facilitate dealing with AA’s proposals for relief. Late in February, we also brought investment bankers from the Milestone Group (who was also working on the World Com reorganization) into the process in order to get data on AA's standing in the financial markets and to help us structure a stock option plan if that became an alternative our Bargaining Committees wished to pursue. We also met with consultants for the pilots and flight attendants. All consultants were unanimous in advising that AA could not sustain the losses it was absorbing and that unless its labor contracts were modified and the Company provided cost savings of the magnitude demanded, the Company would not survive.

7. We did not conduct any negotiations with the Company until all TWU Local Presidents at American were brought into Dallas. Then, on March 12, 2003, at the request of the Company, a meeting was convened with CEO Carty and his top labor relations and operational managers. At that meeting, Carty stated that the Company's finances were still deteriorating and that it could not survive unless its labor costs were restructured in the amounts requested in his February 4, 2003 letter, and that, without consensual modifications to its agreements to provide this relief, the Company would have no choice but to declare bankruptcy. Carty stated that the Company had major cash payments due on April 15, 2003, and April 16, 2003 which it did not wish to make if it was compelled to seek Chapter 11 protection. Accordingly, Carty stated that he needed tentative agreements modifying AA’s labor contracts by the end of March, and ratified modifications supplying the necessary relief by April 15, 2003. And Carty stated, in the most express terms, that unless all three unions could alter their normal timetables for ratification to provide for the chance of producing modified agreements by that date, he intended to file for Chapter 11 protection before the end of March.


8. The following day, the AA Local Presidents Council voted unanimously to request that the International Administrative Committee allow them to revise their normal procedures for ratification in order to adopt an automatic balloting procedure for the ratification of any modifications of our collective bargaining agreements that would allow the ratification process to be conducted between April 1 and April 14, 2003. The APA and APFA made such revisions in their procedures and adopted automatic electronic balloting procedures and the same timetable as the TWU. All Unions designated the American Arbitration Association as the agency to conduct and count ballots.

9. The following week, I convened Bargaining Committees for all work groups including mechanic and related. I suggested that we divide responsibility for producing the required $620 million in annual relief among TWU work groups using the same methodology that AA used to allocate concessions among its various unions. I then suggested that the representatives of each work group devise their own proposals for reaching the targets demanded by the Company. Within a few days, the Mechanic and Related Committee formulated a proposal in which it sought to meet the Company's financial demands of its craft solely through layoff of 2,700 employees. The Company, however, definitively rejected this proposal; because its accountants advised that it did not produce anywhere close to the necessary labor cost relief. Moreover, because the proposed layoff would leave AA without enough workers to perform necessary maintenance, the Company maintained that the above approach would require it to outsource a substantial amount of work. AA, therefore, responded with a proposal which allowed the mechanics to make some of the required savings by closing two heavy maintenance bases and outsourcing the work overseas, closing a number of small line stations, and ridding itself of all automotive and facilities mechanics. The Mechanic and Related Committee rejected this proposal and passed a resolution stating its intent not to reach its cost savings targets through further outsourcing or overseas maintenance. Only the two representatives from Local 561 and the President of Local 562 dissented.

10. By Saturday, March 29, 2003, none of the Unions had yet reached agreement with American. American Airlines President and Chief Operating Officer Gerard Arpey, along with Chief Financial Officer Jeff Campbell, asked to speak to a joint session of all TWU Bargaining Committees. At that meeting, he thanked us for our efforts, but also emphasized that "American Airlines is out of gas" and stated that it could not survive with its labor agreements in their present form, and that the agreements would either be modified consensually or in bankruptcy. Arpey further stressed that, if the Company was forced to take the latter course, it would need at least half a billion a year more in concessions in order to finance a bankruptcy and secure debtor in possession financing. Arpey stated that the deadline for reaching consensual agreements was 11:00 a.m. Central Standard Time, so as to allow the Company's lawyers in New York enough time to file a Chapter 11 petition in the Southern District of New York. The Chairman of the National Mediation Board was in Dallas at the time, and also spoke to our Bargaining Committees. He, too, emphasized the risks associated with a bankruptcy. After the meeting, our advisors from ECLAT and Milestone were informed by CFO Campbell that AA's operating cash was deteriorating rapidly because vendors, particularly suppliers of fuel, were no longer allowing 30 days to pay, but demanding payment within 15 days.


11. Shortly after these presentations, the Company provided all unions with the proposals it intended to make pursuant to 11 U.S.C. § 1113 should it file for bankruptcy without consensual concessions. AA’s plan was to shrink operations by at least 25 percent in bankruptcy, its § 1113 proposal to TWU represented mechanics eliminated all protections against layoff, all restrictions on outsourcing, and called for elimination of over 10,000 mechanic and related workers, a concession which would have wiped out all automotive and facilities mechanics, and the bulk of our members in heavy maintenance bases. Similar reductions would occur within our other title groups. The proposal also called for over a threefold increase in the cost of health care coverage for active employees, more than a fourfold increase for retirees, and conversion of the defined benefit pension program to a cash balance plan. Even with all the above concessions, the Company would still be demanding a 13 percent reduction in pay and premiums with no stock, profit sharing, or wage snap backs for the remaining employees. As an example the aggregate yearly sacrifice in the Company's post bankruptcy proposal for mechanic and related was $385 million as compared to the $315 million the Company was demanding in pre-bankruptcy bargaining. Comparable proposals were presented to the representatives of the various work groups in joint bargaining.


12. At approximately 11:00 a.m. on March 31, 2003, the Mechanic and Related Committee approved the Company's final proposal for consensual contractual relief by a margin of 14 to 8. The proposal contained deep concessions, including a 17.5 percent cut in base wages (i.e., wages not including license or skill premiums), elimination of five holidays, one week of vacation, a portion of sick time, as well as a number of work rule concessions. At the same time, the proposal preserved all aspects of the defined benefit pension plan, the retiree medical program, allowed for no changes in medical coverage or cost beyond that already provided for in the contract, and retained all restrictions on outsourcing. A maximum of 1,481 mechanics were to be laid off based on efficiencies realized from the work rule changes adopted, but after conclusion of that layoff a job protection provision covering all mechanic and related hired before September 28, 1998 was to be instituted. In addition, the consensual proposal provided for wage snap backs of 1.5 percent per year, beginning April 2004, stock options at prices established the day after ratification, and profit sharing. Finally, the consensual proposal limited the Company's ability to secure more concessions if, notwithstanding the agreements, it filed for Chapter 11 bankruptcy. The Joint Committee reached agreement at approximately the same time and also provided the Company with the cost savings it had demanded, but also negotiated job protections and opportunity for stock and profit sharing comparable to the mechanics.

13. Beginning March 31, 2003, the TWU took the following steps regarding ratification: On that day, the Union posted, on its Air Transport Division website, term sheets which outlined the various concessions which the Bargaining Committees had tentatively agreed to, along with the value given each concession. The next day, the Union provided the American Arbitration Association the TWU/American Airlines membership list so that the AAA could conduct the ratification vote, prepare, and assign the pin number election ballots for the members. I confirmed that AAA had accomplished this and assigned pins on a random basis. On April 4, the TWU sent to its American Airlines members an overview of the March 31 modifications and an explanation of why the consensual modifications were preferable to the modifications that were likely through the bankruptcy procedures, as well as an explanation on how the AAA’s electronic balloting procedures work. On April 10, the first day it was available due to various drafting disputes, the TWU posted on its ATD website the full final text of the March 31 modifications.


14. In tandem with the foregoing, on April 4, the AAA mailed out to the TWU’s members the ratification election ballot, together with balloting instructions. The balloting period, which was originally set as April 9 to April 14, was reset to run from the evening of April 10 to the morning of April 15 to take account of the protracted period for drafting the final contractual language, as well as a clerical error, which we became aware of shortly after ballots had been sent out. This error was the omission of 467 mechanic crew chiefs from the eligibility list sent to AAA, a mistake that was made because this group of members is kept on a separate seniority roster. We were alerted to this problem through complaints made to the Union, as well as to AAA. We remedied the mistake by transmitting the names of the 467 crew chiefs inadvertently omitted from the eligibility list to AAA on April 10, and confirmed receipt by AAA the morning of April 11. AAA arranged to allow this group of members to request pin numbers via E-Mail through the weekend up until Tuesday morning, and we posted instructions for doing so on the ATD website. Members of my staff were made available during this time frame to assist members in securing pin numbers. After conclusion of the election, AAA informed me that 200 out of the 467 eligible mechanic crew chiefs had voted.


15. At 9:00 a.m. Central Standard time on April 15, 2003, voting ended. In the mechanic and related vote, out of 15,825 eligible voters, 13, 339 participated. 7,021 mechanic and related members voted yes and 6,318 voted no. In the Joint Negotiation vote, out of 19,160 eligible members, 6,222 voted in favor and 5,272 opposed. Subsequent to the election, AAA informed me that the election process had worked properly, that AAA had received only 699 requests for, or complaints about, pin numbers from all TWU members involved in both ratifications (including the crew chiefs referred to above) and that AAA was generally able to rectify the problems as they arose. The pilot’s ratification process ended at the same time as ours, and they also ratified the proposed concessions. The APFA extended its ratification process another day, but, in the end, also ratified.

16. On April 17, 2003, the Wall Street Journal published an article stating that American had made a filing with the Securities and Exchange Commission to the effect that it intended to provide special "retention bonuses" to various officials, and that it had partially funded the Special Executive Retirement Plan (SERP). As AA CEO Carty later admitted, none of the unions were informed of either action and, in my view, both actions were completely inconsistent with assurances we had received throughout the negotiation process that there would be full disclosure of all aspects of the Company's finances and that management would fully share in the sacrifices necessary to save the Company. The same day, I advised the TWU members that, without reform on executive compensation, I could not go forward with the signing of the modified collective bargaining agreements.


17. On Friday, April 18, 2003, the President of the APFA announced his intent to conduct a ratification revote. I considered the matter over the weekend and, after consulting with TWU President Sonny Hall, ATD staff, and various TWU Local Union officers and members, on Monday, April 21, I announced that, because of the Company's misrepresentations and omissions during the bargaining process concerning executive compensation, TWU would likewise conduct a revote. Within a day, I received communications from the AA Vice President for Labor Relations stating that it was the Company’s position that, as of April 15, the modified collective bargaining agreements were binding contracts. He further warned that the AA Board of Directors would be meeting on April 24, 2002 in Chicago and that the officers of the Company intended to request approval for a bankruptcy filing in the event that TWU, APFA, or the APA sought to unsettle matters by conducting a ratification revote.
18. On April 22, I was contacted by Congressman Martin Frost, who expressed deep concern over the impact of an American bankruptcy on his district and on the Dallas economy in general. He asked if I would be amenable to meeting with him, as well as other members of the Dallas/Fort Worth congressional delegation, along with the Company, to see if he could prevent the restructuring agreements from unraveling, thereby creating a bankruptcy. Similar requests were made of the APFA and APA.


19. On April 24, 2003, Congressman Frost, along with Congressmen Pete Sessions and Michael Burgess, did convene a meeting at the Dallas/Fort Worth Airport of the TWU, APFA, APA and the Company. All three Unions denounced the Company’s actions on executive pay and explained how that action had put a cloud over the negotiation and ratification of the March 31 modifications. The Company’s chief spokesperson was CEO Carty. He stated that the AA Board of Directors had authorized the Company to file for bankruptcy in the event any of the Unions sought to revote their ratification of the March 31 modifications. During the course of the discussions, though, Carty noted that the Company had taken steps to undo the problems created by the hidden compensation arrangements. This included not only elimination of the retention bonuses, but also a commitment to never fund the SERP at a level higher than the pension plans for the hourly work force. Carty further responded to concerns, voiced throughout the ratification process, that the concession agreements were too long, by offering a reduction in the term of the agreement by nine months, as well as provisions for an opportunity to fully reopen the contract after only three years. (The full reopener was offered in lieu of a very limited opportunity to engage in binding arbitration over wages after three years in the original agreement -- an arbitration in which we could not be granted increases which would place us above industry average). In response to concerns initially voiced by the APFA, Carty also offered a process affording the unions an opportunity to “swap†one concession in the agreement for a concession which the union determined was less harmful, provided it was of equal value. It was made clear in this discussion that any swap proposal and any modification that came out of an early opener were subject to ratification. Finally, in response to concerns that, if the Company's performance improved, management, but not labor, would receive bonuses, Carty agreed to a process providing the unions’ members whatever performance incentive bonuses the Board of Directors’ Compensation Committee provides to Company managers, in addition to the new modified stock options and profit sharing already in the agreements. Carty stressed to all three Unions that he had to have an answer, before close of business that day, from all three Unions, as to whether the union would (a) accept the additional modifications he had proposed on a final and binding basis and (B) would honor the entire modified collective bargaining agreement a binding contract. He reemphasized that, if any Union sent the March 31 modifications out for revote, the Company would file for bankruptcy. At the conclusion of our discussion, Mr. Carty also advised me that he would not stay if his presence would be an impediment to avoiding bankruptcy, and that there would be a decision of the Board of Directors on that issue the following day.


20. After the meeting with the Congressmen and the Company, I held a conference call with President Hall, ATD-staff, our bankruptcy attorneys, Investment bankers (milestone) and our economic team from ECLAT to discuss our options. It was made clear that based on the current state of American especially, as a result of the Carty fiasco AA may end up in Chapter 7 (liquidation). I held a second telephone conference with the Presidents of the TWU Locals at American. I note that, at the time of this call, it was still not clear whether the flight attendants intended to honor their agreement.(as the executive Board was in session on deliberation) Therefore, there was still substantial risk that there would be a bankruptcy, and that we could enter into such procedures without protection. I advised the Council that after discussion with our experts and the APA leadership. I intended to accept the modifications to the collective bargaining agreements that the American CEO had proposed on a final and binding basis and that I did not intend to conduct ratification revote on the March 31 modifications. After considerable discussion, the Presidents were asked if there was a better alternative course of action. No one suggested, much less made a motion directing, that I take a different course.

As to the April 24 modifications, it was my view that the modifications were not of the type that required a ratification vote, and given their favorable nature, did not warrant ratification. As to the March 31 modifications, it was my view that, since American had rescinded the secret bonus arrangement and had neutralized the most objectionable aspects of the hidden pension arrangements, the fairness considerations that had pushed toward a revote no longer obtained, and that the overwhelming likelihood that going forward on a ratification revote would cause American to file bankruptcy not only pushed against such a decision, but made it clear that the decision would be destructive of the welfare of the membership.

I know that the restructuring agreement has had a great deal of impact on our membership at
American. However, I truly believe that any other decision would have been devastating to our members and our families.

In Solidarity and sincerely and fraternally,



James C. Little
Director Air Transport Division
Intl. Administrative Vice President

JCL:cjw opeiu-153 afl-cio

 

[TWU informer]

 

[TWU informer]

 

[TWU informer]

 

[TWU informer]