09.30.05

This is Tommie Hutto-Blake, APFA President, with the hotline for Friday, September 30, 2005.

The U.S. Senate on Wednesday introduced its version of pension reform legislation entitled the Pension Security and Transparency Act of 2005. This is a bipartisan bill sponsored by Senate Finance Committee Chair Sen. Charles Grassley (R-Iowa) and Ranking Member Sen. Max Baucus (D-Mont.), Senate Health, Education, Labor and Pensions Chair Sen. Michael Enzi (R-Wyo.) and Sen. Edward Kennedy (D-Mass.), the HELP Committee ranking member.

As the Senate moves ahead with this comprehensive reform, the three unions at AA have jointly urged Congress to ensure that companies that continue to fulfill their pension funding requirements, such as AA, are not disadvantaged by the final legislation. Congress has been considering a special airline-specific provision that would allow carriers that have frozen their defined-benefit plans to extend the amortization period for full funding to 14 years, and the ability to use a “reasonable” interest rate while doing so. We would like the same benefits to be extended to AA – without the requirement of freezing our Defined Benefit Plans. American’s plans are the best funded in the airline industry. They have been managed prudently over the years and have earned an average interest rate of well over 10 percent. Again, we need legislation that does not force AA to freeze our plans.

Just this afternoon we delivered letters to Senators Kay Bailey Hutchison and John Cornyn of Texas appealing to them to make “every effort to help American save our pension plans,” and reminding them that, “American employees – management, union, and non-contract – made difficult and responsible choices in 2003 to keep American out of bankruptcy. The employees gave up wages and work rules rather than cut their pension benefits. It would be grossly unfair to reward air carriers that chose to freeze or plan to freeze their pension plans rather than honor their promises.”

This Bill may reach the Senate floor as early as next Wednesday, October 5, with a vote possible on October 6. Your senators need to hear from you asap! Log onto the APFA website at www.www.apfa.org and follow the Action Alert instructions to send a prepared letter using our CapWiz feature.

Also this past week, Oklahoma Senators James J. Inhofe and Tom A.Coburn co-authored a letter to their Senate colleagues showing support for the joint labor/management efforts on pension reform here at American. The letter asks the sponsors of the bill to “recognize the unprecedented efforts of American Airlines and their employees by including them in the airline provision of your legislation.” The entire text of this letter can be found on our website.

On Thursday the U.S. House Subcommittee on Aviation held hearings in Washington, D.C. Several airline industry financial specialists testified before the committee, some predicting that further consolidation, deeper cuts in operating expenses and increasing moves toward a low-cost carrier model may be the solutions to the ongoing crisis in the industry. One analyst stated that the combined losses will probably reach $40 billion by the end of 2005.

All agreed that the recent bankruptcy filings by Northwest and Delta are proof that the industry’s tough times have only gotten worse this year. However, he also predicted that the only remaining legacy carriers not already in bankruptcy, American and Continental, could avoid the process. He agreed that both could be put under greater financial pressure if Northwest and Delta dump their pension plans as US Airways and United Airlines have already done.

Specialists also acknowledged that if legacy airlines can cut costs sufficiently, “They have several strategic advantages that will help them compete with the LCCs [low-cost carriers],” including national networks connecting to more cities and higher frequencies than are possible with point-to-point service.”

Next week the APFA Constitutionally mandated annual training will take place in PHX. This year the APFA Officers have assisted in designing training focused on building the strongest leadership foundation possible. Currently our organization has a diverse pool of both elected and appointed leaders who carry the responsibility of representing the best interests of the AA Flight Attendants. Each of your leaders has stepped forward with the intent and purpose of protecting and preserving the Flight Attendant career.

During this three-day training we will meet internally with several outside labor experts who will assist and guide us in meeting this daunting responsibility. We will also be joined by leaders from both the APA and TWU, and some of the outside consultants working on the joint labor/management efforts. Two senior officers of AA will also be present on this day focused on our joint efforts.

We must continue to strengthen our position in the industry – to protect both our Union and our negotiated contract while we try to help restore our Company to its pre-2001 financial strength. And, we must continue to walk two paths – sometimes alone and, on certain occasions, in lock step with our employer – such as in our fight to preserve our retirement benefits.

It is time to focus on preparation and strategy for the months ahead. We do not want to make the same mistakes that we have recently observed on other airline properties. We must learn from these examples not repeat them.

Thus, this next week, your leadership base, the APFA Board of Directors, Executive Committee and National Coordinators will be working together to set our course. We have chosen an off-site facility to hunker down and focus on the very serious work ahead. We will continue to communicate our strategies to you, our members, in the months ahead.

And now please stay on the line for the rest of the hotline.

This is Lori Bassani, Public Affairs, sitting in for Leslie Mayo who is on vacation, with the remainder of the hotline for Friday, September 30.

Please continue to keep the 12 APFA Flight Attendants who are serving full time in the military and our 4,126 furloughed co-workers in your thoughts.

APFA Legislative Rep Rick Musica and DFW InfoRep Denise Pointer will be in ORD operations on Tuesday, October 11, and STL operations on Wednesday, October 12, to provide information on and promote legislative issues, and to recruit new participants in the Union’s InfoRep program. The pair will also travel to LAX on Tuesday, October 18, and to SFO on Wednesday, October 19.

AA announced this week that we will no longer fly the ORD – Nagoya route effective November 1, 2005. The Company cited several reasons for the decision including lower than expected revenue on the route combined with increasing fuel costs and the very aggressive long-haul expansion planned for New Delhi, Osaka and Shanghai.

Feedback from Flight Attendants on the Purser Flex Test has been very positive and we are pleased to announce that APFA and the Company have agreed to extend the Test beginning October 1, 2005, continuing through March 31, 2006. After that, the Test will automatically renew itself each month unless and until either the Company or the Union serves a 30-day notice of intent to cancel it. Additionally, APFA President Tommie Hutto-Blake and AA Vice President Lauri Curtis have agreed that the parties should continue to meet to identify and attempt to agree on additional procedures that would enhance any of the already implemented portions of the Test. The text of the letter on the Purser Flex Test can be viewed in its entirety on the APFA website.

An extremely successful three day seminar facilitated by APFA Health Coordinator Patty French was held this week in Dallas. The program included extensive training for APFA Professional Standards Reps on the Company’s Employee Assistance Program and focused specifically on addictions and enabling behavior. Approximately 55 people attended the three-day program and came away with the clear understanding that helping someone kick an addiction problem often means more than saving a job – it means saving a life.

APFA Scheduling Coordinator Jaimie McNeice reports this week that there will be a test conducted on the Reserve preference awarding process. Article 10, J., spells out the process for awarding reserve preferences. APFA and our members have had ongoing concerns with the Company’s failure to honor preferences. AA Crew Resources has agreed to test the Time Accrued Reserve Assignment system in the manner most consistent with honoring preferences. Beginning October 1, SLT and BOS Domestic will be the test bases. What this means for Flight Attendants in these bases is that all Flight Attendants serving reserve should enter preferences. Please refer to HIDIR or www.apfa.org for detailed instructions. Remember, less is more. Do not enter a preference such as, 1. JFK/LGA/EWR, 2. am2. You just told the computer you would fly out of all three New York airports between 9 am and noon. APFA and AA will be monitoring the results of this test to see if it increases the number of preferences awarded for those Flight Attendants within the utilization ranges.

In industry news this week , US Airways finally left bankruptcy protection and the merger with America West became official Thursday. The carriers will operate separately for two years.

As low-fare carrier Independence Air announced lay-offs of about 600 employees in the coming weeks, it also announced new nonstop service from Dulles to San Juan starting this December. The new route is part of a network restructuring that will see the cancellation of 120 routes in addition to the layoffs, which are primarily at Washington Dulles Airport. The airline plans to reduce its flights from 350 to 230, as part of a network restructuring that will cancel all routes west of the Mississippi except Las Vegas by Nov. 29.

ATA Airlines’ pilots ratified a three-year contract that will save the bankrupt carrier $84.5 million. The company’s Chief Executive Officer said the airline will now focus on the final stages of restructuring. Pilots will receive stock options in ATA when it emerges from bankruptcy protection in exchange for pay and benefit cuts under the contract

Northwest Airlines is now asking employee groups represented by three unions for larger pay and benefit concessions. Northwest’s flight attendant union says the company has asked for $195 million in annual savings, up from the $143 million requested before it filed for bankruptcy earlier this month.

That’s it for this week. Thanks for calling the APFA hotline.