3.22.12 – (LAA) – AA Announces Intent to File Section 1113 Motion

AA announces intent to file Section 1113 motion

During a Bankruptcy Court hearing this afternoon, AMR’s attorneys announced that the Company will file a Section 1113 motion next week unless substantial progress is made in negotiations over the next few days. Considering that the Company has been unwilling to reduce its demand of $230 million in annual Flight Attendant concessions, we expect a Section 1113 motion covering the Flight Attendants will be filed the week of March 26.

Section 1113 of the Bankruptcy Code allows the debtor (AMR) to petition the court to scrap the existing collective bargaining agreements with its workforce. Once the debtor files the Section 1113 motion with the court, a hearing will be scheduled to begin on an expedited basis, as early as within 14 days of the filing date unless the parties mutually agree to a later date or the judge determines an extension is necessary based on the case’s particulars. Following the hearing, the bankruptcy judge will make a determination within 30 days. Discussions between the Company and the Unions may continue in an effort to reach an agreement prior to the judge’s ruling. No schedule has yet been set by the Court for its consideration of the anticipated motions.

The APFA is disappointed that the Company believes negotiations are stalled to the point that this drastic action is necessary. Our negotiating team has been working with the Company steadily since we received management’s term sheet on February 1. Our team has offered significant efficiencies to the Company in the hope that a truly equitable path forward could be found. For example, we have presented an aggressive early-out proposal that our financial experts estimate could save the Company over $100 million.

Most importantly, the Company’s demand of $230 million is totally divorced from the market rates or contract costs of Flight Attendants at other airlines. Over the past decade, the Company has constructed and implemented a business plan that has produced a much-publicized $10 billion hole, and now management expects labor to fill it.

Time and time again we have proven to the Company that the cost of our CBA has converged with those of our peers. In fact, after years of improving the Flight Attendants terms of employment, the average of our competitors’ CBAs will soon be far more expensive than American’s contract. Nonetheless, in an extraordinary effort to reach a consensual agreement, APFA proposed substantial savings to specific areas where American is not in line with its competitors. Management’s response was to repeat its mantra: “If it’s not $230 million in annual savings, we’re not interested.”

In addition, APFA, APA and TWU have been working to resolve our disputes fairly and equitably. Each union offered binding arbitration as the least disruptive path to an agreement, but that idea was summarily dismissed by Jeff Brundage. Apparently, American has no interest in achieving a constructive relationship with labor, based on trust and respect. Instead, it is perpetuating its long-standing practice of preferring contention over consensus. That is truly regrettable.

The Company appears intent on converting the Section 1113 process from one that focuses exclusively on negotiations to one that seeks rejection of our entire CBA. Now, as management tries to map its way out of bankruptcy, they are resorting to the take it or leave it tactics which never result in real success but only resentment and turmoil. Apparently, in preparing its business plan, American has left out one of the elements most critical to a successful reorganization ñ treating its employees with decency and respect. New aircraft, lie-flat seating, and elegant first class meals do not an airline make. It takes 80,000 workers. Should American continue to forget that fundamental principle it will be left with only the shell of a company.

In Unity,
Laura Glading