2.28.03

This is APFA President John Ward with a hotline message; today is Friday, February, 28.

As talk of an AMR bankruptcy increases I know, so too, do our stress levels. Tonight, I want to update you on what APFA is doing both to avoid bankruptcy and to prepare for that worst case scenario should that occur.

To review: you will recall that in early December, American requested that APFA forgo our 3% pay increase that went into effect January 1. At that time, the Company made clear that it was just the beginning, and that what it wanted was a Apermanent restructuring of the labor agreements on the property. At that time, APFA immediately retained the services of an airline economist the same one we utilized during our recent contract negotiations– to conduct a thorough and necessary review of the Company’s finances in order to determine the legitimacy of the Company’s request. Earlier this month, the Company demanded from its employees additional concessions totaling $1.8 billion in permanent annual savings, including $340 million from APFA. And I want you to understand just how much money that is. $340 million, if taken entirely in the form of a pay cut, amounts to an approximately 33 % pay cut to a flight attendant!

I want to emphasize that the APFA has approached this difficult situation reasonably and responsibly. The two extremes in this situation would be to either do nothing at all or to hand Management a blank check and tell them to just fill in the numbers themselves. Obviously, neither of these choices makes much sense and neither would be responsible. The APFA Board of Directors instead met within one week of the Company’s request for concessions and at that meeting unanimously adopted a comprehensive, multi-faceted plan of action. The Board, in developing this plan, expressed its commitment to the survival of the Company and recognized the importance to the membership of taking appropriate steps to ensure that the Company is a viable and successful entity which, at the same time respects the needs and legitimate rights and expectations of the flight attendants.

During the course of the past few weeks, as things have really heated up, there has been an increase in the need for information. I understand that. Unfortunately, we’ve been restricted in our ability to provide many of the details as to the Company’s financial situation as the information has been obtained under confidentiality agreements due to its proprietary nature. But I’ll try my best to explain to everyone exactly where we are:

 

• Is there a financial crisis that needs to be addressed at American Airlines? Yes. Clearly, you don’t have to be an airline analyst to know that almost all airlines, including American, are struggling financially at this time. However, the exercise we’ve asked our economist to undertake involves much more than just verifying the books. We’ve engaged in detailed costing analyses to attempt to determine the exact extent of the problem and, as importantly, to predict, as accurately as possible, how long the problem may continue to exist. Only then could we possibly determine the appropriate amount of relief that may be necessary.

• Will the Company really declare bankruptcy soon, if Management doesn’t obtain the $1.8 billion in concessions it has demanded from its employees? It might, and it is intent on exerting maximum pressure to exact every penny it seeks by threatening bankruptcy if it doesn’t. Rest assured, the pressure will be constant and will only ratchet-up in the days ahead. Keep in mind, a Company doesn’t have to be completely broke to declare bankruptcy. United Airlines declared with approximately $800 million in cash on hand; all we know is that Management has stated that it believes United waited too long to file and that AMR would not let cash get nearly as low before it would file for bankruptcy. The situation in the Middle East further increases the difficulties of predicting future events at American.

• Is APFA willing to talk to the company about providing some concessions to avoid bankruptcy? Yes. As distasteful a proposition as concessions is, the threat of bankruptcy is even worse. Management has a gun to our heads, they know it, and we’ve got to try everything possible, within reason (and I stress within reason) to avoid it. We don’t want our futures determined by a bankruptcy judge, whose primary concern would be to protect the creditors’ interests, not ours. At the same time, it would be irresponsible to simply rollover and let management permanently gut our hard-earned contract as they appear to be intent on doing.

• Will the APFA membership have any say in this process? Most definitely yes. Should the APFA determine to send out a concession package, the membership will have the final say.

 

So what’s next? Next week, the APFA Negotiating Committee will continue its thorough review of the contract. Following that, we expect to be entering into intense discussions with the Company in an effort to see if we can reach an agreement with Management that would provide some level of relief to the Company while making every effort to preserve to the maximum extent possible existing terms and conditions of our contract. Additionally, the APFA Board of Directors will convene for its Annual Board of Directors Convention beginning next Friday, March 7 for five full days of discussions.

Please know that Your APFA leadership is working extremely hard during this difficult period to protect your interests. Don’t let the rumors get the best of us. We will be updating this hotline with increasing frequency, so please check back often. Please stay on the line for the remainder of this week’s message. I sincerely thank you for your continued support.

This APFA National Communications Coordinator George Price
with the APFA Hotline for Friday, February 28, 2003.

The Quarterly Executive Committee meeting originally scheduled for Tuesday, February 25th, was cancelled due to the weather in the DFW area. The meeting will be re-scheduled. Once plans are final, they will be posted on the APFA Web site and included on this HotLine.

The Annual APFA Board of Directors Convention will be held at the Hilton Lakes Hotel in Grapevine, Texas North of the DFW Airport March 7-11th. All members in good standing are welcomed to attend all open portions of the meeting. A hotel courtesy van is available from the DFW Airport.

APFA President John Ward, APA President John Darrah, TWU International Vice President Jim Little, American President Gerard Arpey, and AMR CEO Don Carty met with influential members of the North Texas Congressional delegation late Friday, February 21. This gave leaders at American Airlines the unique opportunity to discuss the airline industry’s current financial crisis with Senator Kaye Bailey Hutchison, Representative Martin Frost, Representative Sam Johnson, Representative Michael Burgess, and Representative Kay Granger. During the meeting, it was stressed that the U.S. Government must provide airlines with relief from taxes, fees, and the cost of new security enhancements. The group also highlighted the importance the continued viability of American Airlines has on both the Texas and U.S. economies.

The CRAF page of the APFA Web site has been updated with more information on CRAF flying including a Q and A. If you are interested in becoming part of the CRAF Reserve Pool, please thoroughly review the information on the CRAF page and Part II of Appendix E, beginning on page 393 of the contract.

The IOR Chair and Vice Chair ballot due date has been extended one week until 0900 March 18, 2003, due to a United States postal delivery delay. The deadline for the BOSI, LAX, IDF Chair and Vice Chair and IMA Vice Chair ballots will remain the same due date, which is 0900 March 11, and will be counted at the DFW Hilton Lakes hotel in Grapevine, Texas. If you are based in any of the bases where an election is being held and have not received your ballot, please call the National Ballot Committee at 1-800-395-2732, Extension 8311, immediately for a duplicate.

Various news outlets widely reported this week that APA predicted that American would file bankruptcy without immediate concessions from employees. This report was based on an internal e-mail from an APA Representative. APA was quick to put out a press release in which it said, “This prediction in no way constitutes an official APA position. It is not based on any information from the extensive series of internal meetings that have taken place between APA and American Airlines management during the past several weeks.” American also was quick to dismiss the information contained in the internal APA communications.

The APFA has reached agreement with the company on the issue of missed trips that occurred as a result of the severe weather and subsequent transportation emergency that was declared in the Northeast last week. Please contact your Base Chair for details if you were impacted by this event. The company and APFA are in continued discussions regarding missed trips that occurred as a result of the ice storm in DFW.

The proffer for Overage Leaves and Partnership Flying will close at 0800 Central Time on March 3, 2003.

These leaves are available for the following periods:

12-months beginning April 2003-March 2004
3-months beginning April 2003-June 2003
9-months beginning July 2003-March 2004

Partnership Flying will run from April through June 2004. The APFA Partner Finder is up and running on the APFA Web site “Reduction In Force” page to assist Flight Attendants interested in Partnership Flying in locating a partner.

APFA has filed a Presidential Grievance regarding the company’s restriction of awarding Overage Leaves and Partnership Flying to the STL base only.

The Missouri Division of Workforce Development has planned a series of Rapid Response meetings for American Airlines employees based in STL that have been or may be affected by reduction in force. The meetings will be March 11th, 19th, and 27th at 1000 and 1400 at the TWA-LLC Training Center.

The company has modified its policy and will now allow Flight Attendants to complete EPT’s prior to the actual clearance of background and fingerprinting checks. Under no circumstances will Flight Attendants be allowed to fly prior to clearance of background and fingerprint checks.

The APFA Safety Department would like to remind all Flight Attendants that a new RF file has been created in DECS in order to provide timely security information to all working crewmembers. The new RF file, which is RF7700U SEC, provides an overview of information contained on the SSI Web site accessible only through the Flight Service Web site. The Safety Department encourages all Flight Attendants to access this information prior to each trip.

The deadline for completion of the TWA MD80 Differences Training packet and input of SPC code 51 is March 10, 2003. To enter the code, go into your personal mode and type in HI22/51. Primary vacation will close for all Flight Attendants on March 7, 2003 at 0001 Central Time. Primary awards should be posted by 0001 Central Time on March 15, 2003. Secondary vacation bidding will open at 0001 Central Time on March 16, 2003 and will close at 0001 Central Time on March 23, 2003. Secondary awards should be posted by 0001 Central Time on March 31, 2003.

Due to the weather in the DFW area, the February Skyword will be delayed. The Communications Department hopes to have the magazine in the mail early next week. As soon as it is printed, it will be made available on the APFA Web site.

In conjunction with the APFA Annual Convention, the Tenth Annual APFA Awards and Recognition Dinner is on Friday, March 7th, at The Austin Ranch in Grapevine, Texas. As no Union funds are used for this event, the cost is $40.00 per person in advance or $50.00 per person at the door. This includes all you can eat and drink as well as a live Country/Western band, and our guest speaker for the evening will be Holly Hegeman from www.planebusiness.com.

In Industry News:

Northwest Airlines has approached its Pilots for concessions. The airline has asked Pilots to roll back wages, benefits, and work rules to pre-1996 levels.

Thai Air has agreed to purchase seven 747-400s from United for a fraction of the original price of each plane. The deal has been valued at $702.3 million. United currently has 44 747-400s in its fleet.

Delta CEO Leo Mullins told analyst this week that survival of the industry will depend on the following:

Airlines must continue internal cost reductions
Government should assume aviation security cost and lower taxes and fees
Government should allow airline mergers, alliances, and asset sales.

In a recent New York Times article, Mr. Rolfe Shellenburger, former 31-year veteran of American Airlines and current independent travel consultant, said, “In my opinion, half of the traffic JetBlue is carrying is not stolen from some other airline. It’s new business.”

Instead of working now to build new markets and compete against other forms of discretionary spending, the major airlines are foolishly trying to “knock each other off” by undercutting fares “at ridiculous prices” in the current fire-sale atmosphere, he said. At the same time they are stubbornly defending fare structures that continue to be anchored in a strategy of gouging the business traveler, he said.”

Midwest Express announced this week it would layoff 13 percent of its workforce and reduce pay and benefits of those who remain. The furloughs will affect 430 employees. This includes 128 Flight Attendants.

Please visit the Aviation Industry News page of the APFA Web site for more information on the airline industry and American specifically.

That is it for this edition of the APFA Hotline. For the latest information, please visit the APFA Web site.

Please remember there are 2,396 American Airlines Flight Attendants currently on furlough.