APA Update (The Re-birrh of American Airlines): April 20, 2012

USA320Pilot

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APA Update (The Rebirth of American Airlines): April 20, 2012

Fellow pilots,
It was announced this morning that the three unions at American Airlines—Allied Pilots Association, Transport Workers Union and Association of Professional Flight Attendants, representing a total of 55,000 front-line employees—have agreed to support US Airways’ bid for a merger between American Airlines and US Airways. This endeavor has been underway for many months and your APA leadership has been in direct discussions with the senior leadership at US Airways since early March. In this letter, I want to explain why APA decided to support a merger, how the process came about, what the new American Airlines would look like, and provide a brief overview of what APA has already negotiated as the framework of a new collective bargaining agreement.

AMR’s Business Plan

The APA leadership does not believe that AMR’s business plan will produce an airline that is viable long term. I’ll just summarize with this: while AMR’s network and route structure have withered during the past decade, those at United and Delta have grown larger and stronger, resulting in the steady defection of American Airlines’ corporate accounts and vital high-value customers. A big component of AMR’s plan for restructuring is to force massive concessions on unionized employees to reduce them to below-market compensation. Another primary element is to rework the “Cornerstone” plan to try to bring in additional revenue by down-gauging AMR’s fleet and through dramatically expanded domestic code sharing. Combined with the substantially increased productivity management seeks and the large-scale outsourcing of pilot jobs that management envisions, the result would be a major loss of pilot jobs at American Airlines. The effects would be catastrophic, including further stagnation for a pilot group that has already suffered from the industry’s longest time to upgrade to captain.

Our Futures

Management has told us that we should be excited because AMR has ordered new aircraft and has options to purchase more. New aircraft orders — which primarily will go toward replacing our fuel-guzzling S80 fleet — do not constitute job security for our pilots. Most of the Wall Street analysts view American Airlines management’s efforts to achieve network parity with Delta and United as “too little, too late.” The same analysts also believe any such effort would probably destabilize an industry that has finally gained some meaningful degree of pricing power. We also need to be mindful of the fact that management intends to impose regional airline pay rates on large numbers of new Airbus aircraft—not an especially appealing prospect. So exactly how do pilots benefit from being displaced into much lower-paying equipment?

Management’s Vision for a New Pilot Contract

Based on management’s actions to date, their vision—quite simply—consists of rejecting our contract entirely. They are on the Harvey Miller high-speed train to terminate our contract in bankruptcy court (Miller was Frank Lorenzo’s lawyer at Continental and Eastern. He is now AMR’s lead restructuring attorney). Management has made no moves at the table that suggest any interest in trying to arrive at a consensual agreement. While APA has taken the high road and made every effort to negotiate in good faith, management has shown beyond a shadow of a doubt they’re not interested in reciprocating.

The New American Airlines

First and foremost, the combined carrier will be branded American Airlines, based in Fort Worth Texas and headquartered at CentrePort. It will be comparable in size and scope to Delta and United, with a robust domestic network capable of supporting significant international expansion. American Airlines’ relationship with oneworld will be maintained and strengthened. All of American Airlines’ aircraft orders with Boeing and Airbus will proceed. The former US Airways route system will be realigned with the American Airlines system to add more cities, more markets and better frequencies. The new American Airlines, under a lean, energetic and highly capable management team, will be able to compete on an equal footing to win back high-value customers. On the East Coast, which is the largest and most lucrative airline market in the world, American Airlines will go from No. 5 to a strong No. 1. In the Midwest, we will go from No. 4 to No. 1. In Miami, our dominance to South America will be enhanced by stronger East Coast traffic flows. For the first time in years, American Airlines will be in a position of strength in Chicago.

How Did We Get Here?

As your APA leadership has been emphasizing for some time, we are committed to evaluating all available alternatives to AMR management’s restructuring plan in an effort to provide a better outcome for our pilots. US Airways’ senior management has made no secret of their desire to further the process of industry consolidation by joining with American Airlines. For many months, a team from US Airways has been making presentations to various Wall Street analysts and investors, including one of APA’s advisers. After being briefed on the substance of the US Airways presentation, I initiated a dialogue with that airline’s leadership, which resulted in a series of meetings beginning last month. Their vision was compelling. Shortly thereafter, the APA Board of Directors was briefed and they gave a “thumbs up” to continue exploring a potential merger.

The Negotiations

When it started becoming clear that a merger with US Airways was a superior alternative to AMR’s stand-alone plan—and with the support from the APA Board of Directors—we assembled a team to begin substantive discussions with the senior leadership at US Airways. Accompanying me to Phoenix for those discussions were members of the APA Negotiating, Scope, Industry Analysis, Technical Analysis and Contingency Committees, as well APA’s General Counsel, bankruptcy counsel and a delegation from investment adviser Lazard. At this point, US Airways began discussions with the leadership at APFA and TWU, which had begun to evaluate this alternative course of action.

Working with US Airways, APA was able to achieve in just over a week far more than we had been able to achieve in more than five years of trying to bargain with AMR management. Our interaction with US Airways was in stark contrast to what we have been experiencing with AMR. We dealt directly with the people whose jobs are to run an airline. Many of the talks consisted of president-to-president interaction. In accordance with the APA Constitution and Bylaws, there were always two members of the APA Negotiating Committee present during these negotiations. Completely absent from the discussion were the posturing and game-playing that characterizes the approach AMR management takes when dealing with us.

Returning from Phoenix, we had accomplished a great deal toward constructing a framework for an agreement, but we still had several important unresolved issues to address. We convened a special APA Board of Directors meeting and the Board remained in session as the unresolved issues were negotiated. The APA Board of Directors then spent several days carefully studying and evaluating the plan of reorganization agreement. Upon the closeout of the last remaining issues, the APA Board of Directors voted unanimously to support the framework for a new CBA.

A New Collective Bargaining Agreement for the Pilots of American Airlines

APA has agreed with US Airways on a framework for a new collective bargaining agreement. Our agreement will be distilled into final contract language during the next 60 days and will be sent out for a membership ratification vote as specified in APA’s Constitution and Bylaws. Details on the specifics of the new CBA will be provided in a separate, upcoming communication from the APA Negotiating Committee. Please click here to access our special AA-US Airways merger page on the members’ side of alliedpilots.org. This page will be updated regularly as additional information becomes available.

A Good Day for APA

I would like to extend my personal thanks to the many APA officials and committee members who worked tirelessly to conclude this agreement. This includes my fellow National Officers, the APA Negotiating Committee, Scope Committee, Industry Analysis Committee, Pension Committee, APA Contingency Committee, Technical Analysis Committee, and last but certainly not least, the entire APA Board of Directors. All of these individuals have put in countless hours on behalf of their fellow pilots.

Still a Long Road Ahead

This merger, along with a new CBA and a much brighter future for American Airlines, is still far from certain. Chapter 11 restructuring is a difficult, complex process for all concerned.
I urge all pilots to stay informed and involved. We will keep you updated as events warrant.

In unity,
Captain Dave Bates
APA President
 
just a few comments....
.
Bates got it right that analysts are convinced that the AA standalone plan is the best because it is based on adding alot of capacity that could destabilize the industry and put AA in the crosshairs of other airlines that are successfully keeping capacity under control in order to generate profits.
.
He also got it right that AA is losing corporate contracts - but it is because AA has been shrinking in NYC, the largest corporate travel market, while DL and UA have been growing their presence in NYC. UA acquired CO and linked UA's LGA and JFK presence w/ CO which obviously had a strong EWR operation. DL is using the fact that LGA and JFK as the larger of the 3 airports for NYC local passengers will translate into a revenue premium for DL - which will grow to a similar size as UA after the slots size is in place. Either way, DL and UA are taking key revenue from AA - as well as what is left of US - and AA/US doesn't provide a significant presence in NYC which is what AA needs in order to regain that top revenue.
Only B6 with its much larger presence at JFK - even with some slot divestitures - can help AA return to its former size in NYC but only if AA has costs comparable to or lower than DL or UA - and AA's standalone plan is based on cost parity with DL - and lower than UA.
.
AA/US will not be #1 in the midwest - unless you use the same aggressive growth plan that AA is proposing its own plan and then combine it with US.
.
US and AA cannot combine their existing DCA operations because of antitrust issues - which means that DCA is divided up between competitors either in advance or by the government as part of the approval process - eliminating a lot of the advantage that is supposed to come from the merger.
.
An assumption that AA/US would be number one in the NE doesn't factor in DL's published growth in NYC or UA's continued merger benefits that are happening in NYC and WAS - and it also doesn't factor in that US has given away more slots in NYC than it gained in DCA.
.
It is doubtful that US could add much to what AA already carries through MIA where it has a fully developed hub.
.
AA's presence in ORD is shrinking faster than UA's as a result of the growth of B6 and VX as well as AA's pulldown of TATL flying. It also doesn't change that AA's major gateway to China operates at a revenue deficit compared to UA at ORD and DL at DTW. With a cost advantage, AA has a chance of undercutting UA and building its own network. Otherwise, AA's ability to grow its Pacific network is highly limited.
.
The process is indeed long ahead of AA - but hopefully AA employees will understand the reality of what will happen in an AA/US scenario - what will really be fixed and what won't.
 
just a few comments....
.
Bates got it right that analysts are convinced that the AA standalone plan is the best because it is based on adding alot of capacity that could destabilize the industry and put AA in the crosshairs of other airlines that are successfully keeping capacity under control in order to generate profits.
.
He also got it right that AA is losing corporate contracts - but it is because AA has been shrinking in NYC, the largest corporate travel market, while DL and UA have been growing their presence in NYC. UA acquired CO and linked UA's LGA and JFK presence w/ CO which obviously had a strong EWR operation. DL is using the fact that LGA and JFK as the larger of the 3 airports for NYC local passengers will translate into a revenue premium for DL - which will grow to a similar size as UA after the slots size is in place. Either way, DL and UA are taking key revenue from AA - as well as what is left of US - and AA/US doesn't provide a significant presence in NYC which is what AA needs in order to regain that top revenue.
Only B6 with its much larger presence at JFK - even with some slot divestitures - can help AA return to its former size in NYC but only if AA has costs comparable to or lower than DL or UA - and AA's standalone plan is based on cost parity with DL - and lower than UA.
.
AA/US will not be #1 in the midwest - unless you use the same aggressive growth plan that AA is proposing its own plan and then combine it with US.
.
US and AA cannot combine their existing DCA operations because of antitrust issues - which means that DCA is divided up between competitors either in advance or by the government as part of the approval process - eliminating a lot of the advantage that is supposed to come from the merger.
.
An assumption that AA/US would be number one in the NE doesn't factor in DL's published growth in NYC or UA's continued merger benefits that are happening in NYC and WAS - and it also doesn't factor in that US has given away more slots in NYC than it gained in DCA.
.
It is doubtful that US could add much to what AA already carries through MIA where it has a fully developed hub.
.
AA's presence in ORD is shrinking faster than UA's as a result of the growth of B6 and VX as well as AA's pulldown of TATL flying. It also doesn't change that AA's major gateway to China operates at a revenue deficit compared to UA at ORD and DL at DTW. With a cost advantage, AA has a chance of undercutting UA and building its own network. Otherwise, AA's ability to grow its Pacific network is highly limited.
.
The process is indeed long ahead of AA - but hopefully AA employees will understand the reality of what will happen in an AA/US scenario - what will really be fixed and what won't.

You are one of the few on here who gets it.

Cheers,
777 / 767 / 757
 
All I have to say is WHERE were all the AA pilots today while all the other employee groups picketed??? Not one AA pilot should up. Disgusting!!
 
Not intending to be smart, but possibly they are looking forward to the US deal and are focused more on that..
 
It's a sad day if you are agree with this Delta Cheerleader..
I see that you are new to the boards....
Dual user, or a relative?
Perhaps, Delta hired some more propaganda helpers....


Yes, I am a Delta spy, sent here to change the course of history.......I agree with someone who you don't agree with, I must be a spy, a no good management boy sent to brain wash you all......I have multiple screen names that I carefully use to beat down poor unsuspecting labor from big bad management.

Wow, Parker must be laughing at how easy this is for him......

Cheers,
777 / 767 / 757
 
All I have to say is WHERE were all the AA pilots today while all the other employee groups picketed??? Not one AA pilot should up. Disgusting!!


No offense, but if you can't deal with your fellow employees with a little more respect, how on earth do you expect management to treat you with any? Perhaps, they realize, that if 400k people showed up, it would not make a difference. It is a court appearance, not a court of public opinion appearance. Nothing anyone says outside of the court room has any bearing on the judge's decision.

Cheers,
777 / 767 / 757
 
It's a sad day if you are agree with this Delta Cheerleader..
I see that you are new to the boards....
Dual user, or a relative?
Perhaps, Delta hired some more propaganda helpers....
and we all have to ask what your whole stake in this thing is? What motivates you to be major spokesman for US at this hour?
.
Doesn't matter how many people post here, the truth will come out... and US' promises and AA labor's belief that this whole US -AA labor agreement will change the 1113 process is what is disconnected from truth.
AA has exclusivity to present a POR.
Until the rest of the creditors - not just labor - believe it is in their best interest to terminate AMR's exclusivity, the 1113 process will move forward and there is no provision in that process for a merger proposal.
.
I want the best thing for AA employees, too. But the problem is that the damage to the company was done and AA employees enjoyed better benefts packages than other airline employees for a number of years. Unfortunately, the price now has to be paid.
 
No offense, but if you can't deal with your fellow employees with a little more respect, how on earth do you expect management to treat you with any? Perhaps, they realize, that if 400k people showed up, it would not make a difference. It is a court appearance, not a court of public opinion appearance. Nothing anyone says outside of the court room has any bearing on the judge's decision.

Cheers,
777 / 767 / 757
You are ignorant if you don't believe the judges decision will not be influenced by political voices and big $$.. Unfortunately, it will not be from labors voice. "Us" AA employees are in this together and many of us rallied today system wide to show or Unity against what AA is proposing to its work force. The pilots are a big piece of the pie. they should have been there to show there Unity. Plane and simple...
 
Not intending to be smart, but possibly they are looking forward to the US deal and are focused more on that..
Exactly. If I had to guess, I'd say they were flying, were at a layover or were enjoying their hard-earned day off. Picketing at a federal courthouse or at airports nationwide won't affect the outcome of a bankruptcy proceeding. The judge will rule on the basis of the testimony and section 1113. If it isn't going to change things, then might as well do something else.
 
Not intending to be smart, but possibly they are looking forward to the US deal and are focused more on that..
[/quoT
Because if they stay at home and "focus" on the deal, its really going to help? Sorry, but all of us frontline employee groups are l In this together. Today was a day to show our unity and rally against the #### sheet AA is trying to shove down our throats!
 
Exactly. If I had to guess, I'd say they were flying, were at a layover or were enjoying their hard-earned day off. Picketing at a federal courthouse or at airports nationwide won't affect the outcome of a bankruptcy proceeding. The judge will rule on the basis of the testimony and section 1113. If it isn't going to change things, then might as well do something else.
Ok, you really are above us other groups... Sorry to bother you on your day off or layover.... There were FA's picketing on their layovers, flew in on their days off and many others there on their days off.... what " else" are you doing to change things?
 
What REALLY says it all is there were more US Airways employees there picketing with us today and showing their support for the merger than AA pilots. I am not trying to stir the pot, but COME ON AA PILOTS.. WHY WEREN'T YOU THERE TODAY?
 

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