03.18.05

This is Tommie Hutto-Blake with the APFA Hotline for Friday, March 18, 2005.

I have two very important items to address today at the close of our APFA Board of Director’s meeting in Chicago. The first relates to Crew Rest, and the second is the Joint Pension Statement issued this week with our fellow Unions and AMR.

Legal rest between duty periods is a very real problem and APFA hears you loud and clear. We have expressed concerns to the Company about the lack of rest for our Flight Attendants on the line and see the need to make your concerns heard even louder. Please visit www.apfa.org and read theDeclaration of UnRest. There is an area for you to sign up for a lobby day on Capitol Hill on May 11th. You can download a bagtag that reads “ We’re Restless ” and equally important is to share your lack of rest stories with APFA. We want to hear from you about your personal struggles to remain alert and vigilant on the aircraft. Please take the time to put your experiences down on email and send it to your Union.

On a more positive note, this past Wednesday, APFA, APA, TWU and American Airlines issued a press release after reaching agreement on a unique joint position on governmental pension reform. APFA was instrumental in securing this joint position and I’m pleased to share a brief explanation of what we were able to accomplish together. For all of the details, please visit www.apfa.org.

While we believe pension reform is critical due to the current financial crisis and defaults of some of the weaker airlines in the nation of late, the three unions on this property along with American Airlines believe there’s a better way to fix the pension problem in this country. In short, the risk of our pensions being negatively affected by the Bush Administration’s 33-page proposal on pension reform is very real. Basically, it focuses on three areas:

1. Reforming the funding rules to ensure that employers fully fund their retirement commitments,

2. Increase and restructure the premiums paid by private sector employers to the PBGC,

3. Increase disclosure to workers, investors and regulators to ensure greater transparency and accountability.

Again, while we agree that these issues and others should be addressed, some of the administration’s proposals would actually hurt us. The Unions and management at American recognize that we are unique in a number of ways.

1. We are in the enviable position of having a pension fund that is better funded than any other Airline.

2. Gerard Arpey has repeatedly stated he believes that companies have a MORAL obligation to try to protect the retirement benefits that have been promised to their people.

3. The three Unions and management are working together to resolve issues, such as this one, that affect each of us.

4. Most importantly, through large sacrifices in wages, benefits and work rules the employees have entered into a partnership with this employer to return to profitability and retain our defined benefit plans. Management has responded by making all of the required contributions to our pensions. Last year AA made payments of $461 million to our pension funds during very difficult times.

In January, the three unions met to determine if we could find mutually agreeable ideas that would protect all of our benefits. Although each group has unique areas of concern we were able to find mutually satisfactory concepts that protected the foundation of all of the plans on the property.

So, what are we saying?

We are saying that we support pension reform. Unfortunately, the Bush Administration’s proposal would consider a company’s credit rating to evaluate the security of the plan. There’s no need for that. Airline bond ratings are notoriously cyclical and low and this would unfairly impact airlines over other industries. The real issue here is how much money is in the plan, not whether it’s a good year for the company sponsor.

We are saying that we want to continue with our defined benefit plan. Some of the proposals on Capitol Hill have addressed freezing all defined benefit plans. Everyone at American agrees that we do not want our pension plan frozen as a mandatory part of reform.

We are saying that we support reasonably extending the number of years companies would have to make up the under funded portions. Currently, Congress has put into place a temporary extension on funding. However, we support permanent rules for extensions.

We are saying that we support a reasonable interest rate to determine plan liabilities. Right now there are different rates used by each Company, the PBGC, the IRS and the auditors to evaluate a Plan’s soundness. Therefore, each review shows a different level of funding. There needs to be consensus on one rate.

We are saying that Pension Plan data needs to be user friendly. Currently, the data is reported in the annual IRS filing and is due in September of the following year. So, right now we are working with information reported at the end of 2003. In this electronic day and age, the deadlines for reporting should be much more efficient.

We are saying that we support flexibility to fund more in a good year without penalties for doing so. Under the current rules, a corporation cannot make “extra” contributions to the pension funds in a good year without tax penalties.

A point on Supplemental Executive Retirement Plans: The parties are in agreement that the minimum annual contributions to all corporate defined benefit plans must be made prior to any funding of executive supplemental plans.

And finally, we are saying that we support legislation that would also provide pension relief to companies that freeze their Plan through the collective bargaining process rather than terminate them in bankruptcy. Make no mistake; we are not discussing terminating or freezing our Plans. Some companies are faced with no other options in bankruptcy but to terminate their plans. We think there should be another alternative to termination, and a freeze is usually better for the employees. In addition to saying that we DO NOT support legislation that makes it mandatory to freeze all plans, we also want to ensure that when a corporation does approach this path that they do so through collective bargaining NOT through bankruptcy!

We are very proud of this collaborative position, the document, and perhaps more importantly, that the Unions and American are approaching very real concerns jointly with substantive solutions.

We will be visiting Washington DC on May 11th to discuss this and other issues with Congress, It has never been more important for each of you to join us and make your voices heard.

Now, please stay on the line for the remainder of the APFA Hotline. Leslie…

Thanks, Tommie. This is Leslie Mayo, APFA National Communications Coordinator with the rest of the APFA Hotline for Friday, March 18, 2005.

Please keep each of the 12 APFA members still serving in the military full time and our 4,240 furloughed flight attendants in your thoughts.

On Friday, March 11, AA flight #908 from Buenos Aires to Miami, a Boeing 777 aircraft, experienced a contained engine failure and fire on take-off. The flight aborted the take-off roll at 110 knots. The ATC tower in B.A. advised the cockpit of a visible fire in the right hand engine. The cockpit initiated an evacuation and instructed the IMA-based Flight Attendants not to use doors 2R and 3R due to the close proximity of the engine fire. The fire department responded quickly and sprayed foam on the right engine. The full 777 aircraft was evacuated in less than 65 seconds.

The crew did a great job. According to reports, their calm, authoritative demeanor during the evacuation helped to minimize passenger injuries. There were only a few minor injuries, none requiring hospitalization.

Congratulations to the crew for job well done!

Fuel prices continue to break records closing Thursday at $56.40 a barrel. With fuel prices 70% higher than last year, and American hedged for fuel at only 15% for the first quarter and no hedging for the remainder of the year, while others are hedged at up to 85%, AMR will be hard-pressed to realize a profit anytime soon. Please join us on Capitol Hill May 11th as we bring to the attention of Congress the affects these fuel prices are having on our Company, our Flight Attendants, and perhaps more relevant to them: their voters! One financial analyst reported this week that AMR could return to its employees asking for concessions as early as year’s end. AMR has not approached APFA or any other Union for more concessions.

As Tommie mentioned, the APFA Annual Convention took place this week in Chicago. BOS-I Flight Attendant Lenny Aurigemma and IDF Flight Attendant Steve Watson were elected to the two open Ad Hoc positions on the APFA Executive Committee. At the Awards Banquet, APFA honored former Union Vice President Sherri Cappello and former Health Coordinator Emily Carter with the Distinguished Service Award; and founder and President of Airline Ambassadors Nancy Rivard with the first ever APFA Award of Merit. Many members took advantage of seminars presented on retirement, scheduling and legislative issues and visited with APFA National Coordinators and representatives.

According to the Dallas Morning News this week, American plans to add two first-class seats on the Super 80. The Company stated that demand for first-class seats has increased as ticket prices have fallen. The additional seats will be added by removing a storage closet.

The latest issue of Skyword was mailed this week. On page 24, the contract article contained an error. The second bolded “R2” should actually read “R3.” Please note that when you are bidding for a vacation relief, the R3 designator is the code that should be entered if you DO NOT WISH an individual selection in your ballot to be awarded as a relief.

The APFA Hotel Department is very pleased to report that AA has renewed our contract with our current layover hotel in FRA. This hotel is one of the most popular hotels in our system. Thank you to all the Flight Attendants who took the time to communicate with APFA and AA on this hotel.

We are also pleased to inform you that we have a new long layover hotel for Los Angeles. The longest of the layovers will be staying at the new Manhattan Beach property. All other long layovers will remain at our current long layover hotel. Go to the website at www.apfa.org and click on Departments, then Hotel for details on this hotel.

As a reminder, please take note of two rapidly approaching deadlines. Secondary vacation bids are due by 0800 CST on March 23. In addition, the Company’s deadline for receipt of dependent verification documents is April 8.

In Industry News this week, Continental Airlines reported in an SEC filing that its workers must agree to concessions before the end of the month or it will cut jobs and wages and downsize its fleet. The airline, which wants to reduce costs by $500 million, has reached tentative agreements with its unions, but the new contracts have not yet been ratified by the respective memberships.

Each of the four agreements requires that, even if ratified, they will not go into effect unless all of the other agreements are ratified. Continental warned that if all agreements are not ratified, it will be “forced” to increase the annual pay and benefit reduction objectives by 60 percent, from $500 million to $800 million, sublease or sell 24 737’s, cancel new aircraft orders and layoff a “significant number” of employees.

The PBGC has petitioned a bankruptcy court for control of the pension fund covering 36,000 United Airlines mechanics and baggage handlers. The unions oppose the petition, and United said it is “evaluating options” in response to the government’s move. United has missed mandatory contributions to the plan, and the government said the pension plan faces a $3 billion shortfall.

United CEO Glenn Tilton was paid a bonus of about $366,000 under a companywide incentive program last year and made about $1.1 million according to an annual report filed Wednesday. The bonus pay came at a time when the bankrupt carrier was moving to cut employees’ pay and benefits and eliminate defined-benefit pension plans. A United spokeswoman said the incentive pay reflects the airline having met operating targets last year and has nothing to do with the labor cutbacks. Tilton also has a retirement benefit with special protection from creditors in the bankruptcy. A $4.5 million trust was set up for him when he was hired in 2002. Boy does that sound familiar.

Tilton’s bonus pay wasn’t the largest at the airline last year, the filing showed. The executive vice president of marketing, sales and revenue, earned $445,000 in bonus pay on top of his $541,000 salary. Three other senior executives made about $501,000 combined in bonus pay in 2004.

Also this week, United filed an objection with the DOT to American’s plans to start flying from Chicago to Shanghai. United said instead it should be allowed to serve Guangzhou from San Francisco. Guangzhou, United said, makes more economic sense because it is a growing economic center.

Two regional airlines – Air Wisconsin and Republic – have pledged to invest in US Airways and help it recover from bankruptcy. Both smaller airlines will probably end up with a stake in US Airways.

Hawaiian Airlines said Monday that Flight Attendants have ratified a new three-year contract. Hawaiian’s 794 Flight Attendants are represented by AFA. Five of Hawaiian’s six labor unions now have ratified agreements with the airline covering 89 percent of its unionized employees. ALPA is expected to conduct its ratification process next week on a tentative agreement with the carrier’s 298 pilots. If the TA is not ratified, the company’s trustee can ask a bankruptcy judge to cancel the contract so the airline can impose new terms.

That’s it for this week. Thank you for calling the APFA Hotline.