December 3, 2001
Via Facsimile & First-Class Mail
Mr. Robert W. Baker
Vice Chairman
American Airlines, Inc.
P. O. Box 619616
Dallas/Ft. Worth, TX 75261-9616
Dear Mr. Baker:
As time grows shorter toward an operational merger, we are disappointed to report that there has been no progress toward obtaining a fair and equitable integration process for TWA employees. In order for American Airlines to fully appreciate the IAM's position, I must briefly review the IAM's involvement with TWA concerning a restructuring program.
In May of 2000, I met with then TWA President and Chief Executive Officer William Compton in St. Louis, Missouri, to address the concerns and potential solutions to the problems that confronted all TWA employees. On October 13, 2000, I wrote a letter to Mr. Compton and confirmed our discussion in writing. A copy of this letter is attached.
The IAM consulted with airline analysts and determined that TWA could survive with a total restructuring of its operations and finances. We advised TWA management that the IAM was prepared to work with TWA management to protect our members and ensure the long-term viability of the carrier. To that regard, we entered into discussions with aircraft lessors, members of the TWA Board of the Directors, and the restructuring firm of Jay Alix & Associates.
The IAM, ALPA, and TWA met in St. Louis during the Christmas 2000 holidays and came to an agreement on a term sheet to restructure TWA. Boeing Aerospace and Jay Alix & Associates participated in these meetings. Boeing had agreed to provide reduced lease payments and a cash infusion. In addition, Boeing indicated they would talk to other lessors to participate in the restructuring. Jay Alix & Associates agreed to lead the restructuring program. We negotiated with TWA representatives and legal counsel and were prepared to sign an agreement that would have provided for substantial cost savings from all the employee groups. In exchange, TWA would hire the restructuring firm and seek cost reductions from all of its lessors and creditors. President Compton then left the negotiations and did not authorize anyone with authority to sign the agreement. However, Mr. Compton's representative, Kate Soled, then TWA's Chief Counsel, assured us that the agreement would be signed in the morning. Neither Bill Compton nor any of his representatives ever signed the agreement that would have given TWA an opportunity for survival.
On January 3, 2001, I wrote a letter to President Compton and advised him of the urgency of the matter, and requested that he sign the negotiated document. Bill Compton never responded to that letter.
During this time, it was rumored that TWA was in discussions with other carriers to either liquidate or sell the carrier. Bill Compton denied any discussions with other carriers to purchase TWA. Subsequently, there was an announcement that American Airlines would buy the assets of TWA, place the company in bankruptcy and guarantee employment for the 16,000 unionized employees. American Airlines further stated before Congress and the Bankruptcy Court that a fair and equitable integration process would be negotiated with the respective labor organizations.
As you know, the APFA has refused to discuss this matter with IAM representatives. The TWU, for various reasons, has been unable, until very recently, to enter into any meaningful discussions with IAM representatives to discuss seniority integration. The IAM submitted a proposal to the TWU on November 20, 2001, which was to be reviewed by the TWU President's Council and then American Airlines. During the November 20th discussions, we were advised that American Airlines had verbally vetoed the proposal. Further, we were informed that American Airlines had veto power over all proposals. American Airlines imposed seniority integration on the Passenger Service Agents. It is our view that this integration process was neither fair nor equitable. American Airlines management and its employees must remember that TWA employees came with planes, routes, and a workforce that kept an otherwise dying airline intact for well over 15 years. Many of those employees, some with 35-40 years seniority, have made significant sacrifices over the years, which must not be ignored.
Our members feel betrayed by this course of conduct. The IAM has been deluged with telephone calls, e-mails and letters protesting their unfair integration or lack of integration into the American Airlines system. They know full well that, based on the proposed integration system, disproportionate numbers of TWA employees will be furloughed and the very few that remain will only have an opportunity for part-time employment. It is this realization that gave rise to the lawsuit the IAM filed on behalf of the Passenger Service Agents. We have been further advised that numerous TWA employees have independently voiced an intention to sue American Airlines for age, sex and racial discrimination and to seek class action status. It can also be anticipated that labor organizations that do not take into consideration their duty of fair representation for all of their members will be the subject of lawsuits as well.
The IAM has been advised by legal counsel that American Airlines cannot relinquish its responsibility for fair and equitable integration by merely delegating it to the labor organizations.
In view of the current situation in the transportation industry as a result of the September 11, 2001 terrorist incidents and Flight 587, transportation labor and management cannot afford to divert their attention from rebuilding passenger confidence and airline profitability. If the seniority integration problem is not resolved, American Airlines will be confronted with lengthy legal battles, a demoralized workforce, and representation elections.
In my September 12, 2001, letter to you (copy attached), I stated the following:
Our best efforts require that we come together in times of crisis. Our industry has been dealt a serious blow. Despite differences that define our professional relationship, please know that I stand as a solid ally in the effort to overcome the negative effects of yesterday's tragedy.
With the unfortunate incident of American Airlines Flight 587, it is evermore important that our efforts foster good working relationships and make airline employees safe and secure. It is now time that we take action. The devastating blows to our industry, to the victims and their families, and to all airline employees, clearly sends a message that business-as-usual is not acceptable.
We are requesting that American Airlines institute binding arbitration whereby all parties can present their case to a third party for quick and fair integration.
We urge American Airlines to resolve this matter so as to fulfill its commitment to our members at TWA.
Sincerely,
Robert Roach, Jr.
GENERAL VICE PRESIDENT
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