10.14.05

This is Leslie Mayo, National Communications Coordinator, with the APFA Hotline for Friday. October 14, 2005.

We have 4,106 F/As on furlough, and 12 F/As serving in the armed forces full time. Please keep them in your thoughts.

FUEL WATCH: Last week the APFA Leadership, and subsequently the AA Flight Attendants via the Hotline became all too familiar with the term “crack spread.” The crack spread is derived from the refining process known as cracking, where larger oil molecules are cracked down into smaller molecules to create gasoline and heating oil.

This week, the crack spread is in the low $50’s down about 10% from last week. This brings our total price per barrel of fuel to $116 as of October 12th taking into account the price of a barrel of crude PLUS the price paid for the crack spread.

The Wall Street Journal published the following quote on August 9, 2005, in an article entitled, Jet-Fuel Prices Outpace Crude: “The widening gaps between the price of crude oil and various types of fuel…are dealing a one-two punch to an industry that can ill afford it…. To a reeling airline industry, the widening crack spread couldn’t come at a worse time.”

On the other hand, 2Q earnings for the oil companies were through the roof this year. Shell reported a 34% rise in net income from the same quarter in ’04 to $5.24B for the three-month period ending June 30, 2005. Exxon/Mobil reported a 32% rise in net income to $7.64B for the same period, and Unocal’s net income was up 39% for a total of $475M compared with the same quarter last year ending June 30, 2005.

Airlines have not been successful in raising fares to match the increase in fuel. Currently, the cost of driving from New York to LA – strictly from a fuel standpoint – is more expensive than buying an airline ticket.

The Air Transport Association, which represents 23 airlines in the U.S., Canada, Mexico and the Caribbean, has been lobbying for relief on the fuel tax, however, even if they were successful, this would equate to the airlines paying about .02 cents per gallon less than the going rate.

AA releases its 3Q “earnings” next week. While we made a small profit last quarter, this quarter is projected to be very different with another loss due to fuel prices. Very shortly, we will be adding a FUEL WATCH section to our website so stay tuned.

BANKRUPTCY WATCH : Northwest Airlines has asked the bankruptcy judge to void its contracts with its unions if they don’t agree to $1.4B in concessions. It also plans to pare down its fall schedule and extract $1.1B from management and non-labor groups bringing its total cut in costs annually to $2.5B. The total amount is about the price of the increase in AA’s fuel bill for the year.

Mesaba Aviation, one of Northwest Airlines regional partners, filed for bankruptcy yesterday citing cash shortages and the reduction in Northwest’s fleet.

Fifty of United Airlines’ creditors do NOT like UAL’s proposed exit plan from bankruptcy – primarily the issue of how the creditors will fare once United is out of bankruptcy. They are asking United to change their plans before it is proposed to the court. The PBGC happens to be one of the primary objectors and is citing its objection to United’s proposal that restricts exactly when the PBGC is allowed to sell the stock United gave them in exchange for taking over its pensions.

Comair (Delta’s regional airline) yesterday announced it would cut 650 more jobs bringing the total jobs lost to 1,000. That number equals nearly 15% of its entire workforce. Comair also plans to reduce expenses by $70M a year, cut its fleet by 20% and seek wage and benefit reductions for pilots, flight attendants, mechanics and management.

Delta previously announced its intentions to reduce expenses by $3B and its workforce by 9,000, which equals 17% of its workforce. So, with Comair’s cuts, it only has 8,000 more jobs to eliminate and $2.93B more per year in cost cutting!

CALLING ALL FLIGHT ATTENDANTS : One glaring issue that sets our Company apart from any other network carrier is that in our 71 years as an airline, we have never filed for bankruptcy. Clearly, we are doing something differently, and in order to retain control of our futures, we must do our part to continue to protect our careers. Please read your latest Skyword available for download online at www.apfa.org if you haven’t already received your copy, sign up to be an InfoRep ([email protected]), and participate in any events organized by APFA to promote our careers. Your leadership cannot do this alone – we need every members’ help. If you have questions or hear a rumor you need cleared up, email me at [email protected].

Next week, Denise Pointer and Rick Musica, APFA’s InfoRep and Legislative Representatives will continue their education/recruiting efforts in Los Angeles and San Francisco. Please stop by and meet these two Flight Attendants and consider becoming an APFA InfoRep if you are not already part of this program. They will be in LAX Ops on Tuesday, October 18th and SFO Ops on Wednesday, October 19th.

IN APFA NEWS : From the Safety Department: Some of you have reported that the shoulder harness and lap belt on the mid-cabin 767 jumpseats aren’t long enough. The Company has ordered extended-length belts, which will add 6” across the shoulders and 14” to the lap belt. These changes should be completed in a few weeks. The Flight Academy’s 767 trainer will also be updated to reflect the new size.

The APFA Health Department would like to remind everyone that open enrollment for next year’s health benefits is available via JETNET through Oct. 31, 2005. Be sure to sign-up before the deadline. Also consider putting money into your flexible spending account, as this will save you money in tax dollars.

The APFA Contract Department received several questions this week regarding the cost of benefits while on a Leave of Absence. To clarify, F/A’s will be responsible for the full cost of their Health Benefits if they take a leave of absence for 17 days or more in a single month.

IN RUMOR CONTROL : The question of the week seemed to be: “Is APFA negotiating away our vacations?” Answer: ABSOLUTELY NOT. Furthermore, APFA is not in negotiations with AA.

IN JOINT NEWS:

JOINT FINANCE MEETING : All three unions will be meeting with AA CFO James Beer next Thursday following the announcement of 3Q earnings, to continue monthly briefings on the financial state of AA and the industry.

PENSION REFORM : Thank you to every F/A that contacted your Senators regarding the Airline Provision of the Joint Pension Reform Bill. Next week, the Senate returns from recess and unfortunately, it’s uncertain when they will schedule a vote on all the changes to the Bill. Please contact your Senators and let them know how important it is that they not penalize AA for paying its bills and treating AA the same way they are treating other airlines in bankruptcy. Go to the APFA website and click on the link entitled: “IMPORTANT: Contact Your Senators Regarding Airline Pension Reform THIS WEEK .” If we are successful with urging the Senate to include our provisions in the Pension Reform Bill, we will be asking you to contact your Representative in the House. Stay tuned!

WRIGHT AMENDMENT WATCH: American ordered a study on the effects of repealing the Wright Amendment, which would allow Southwest to overturn a 26-year law that restricts passenger flights to points between Love Field and cities in Texas, Mississippi, Kansas and Alabama. Eclat Consulting provided results of the study on Monday, which showed that if the Wright Amendment was repealed, DFW would lose 218 daily departures and Love Field would gain 125 flights. The report found that AA would shift about 45 flights to Love Field in order to compete with Southwest Airlines and that 33 daily departures from other airlines would also shift to Love. This would create a 20 percent reduction in DFW’s total service, including potential losses to nonstop service from DFW to London, Paris, and Buenos Aires due to a loss of feeder routes.

Continue to contact Congress to let them know you don’t want any changes to the Wright Amendment by clicking on “ Facts About the Wright Amendment” at www.apfa.org.

ON THE FLY : Last week, we introduced the joint newsletter compiled by APFA, APA, TWU and AA. You can download a copy of On The Fly from all three unions’ websites as well as JETNET.

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