April 24, 2003
To: All Local Presidents and Members
Dear Sisters & Brothers,
Last week, the press revealed that the Company had failed to inform the three Unions which had ratified concession agreements in order to avoid a bankruptcy about the payment of special retention bonuses and the funding of a supplemental retirement plan for certain executives. As the New York Times observed yesterday, None of these perks were revealed in negotiations. Moreover, it appeared that American had delayed the 10K filing by two weeks to keep the plan secret.
Because of what we regarded as a serious breach of the Company''s duty to disclose relevant information, on April 21, 2003, I announced my intent to revote all ratified agreements. I stated that
intent with grave misgivings because of my concern that such a revote could lead to a bankruptcy and a bankruptcy will inevitably and without question result in far greater job loss among our membership as well as reduced wages, benefits and pensions, assuming the Company survived at all. However, all of us were of the view that the Company''s reprehensible conduct required a significant response. Based on similar considerations, the APA and APFA either scheduled re-votes or declined to sign the agreement.
On April 23, 2003, Congressmen Martin Frost, Joe Barton, Mike Burgess, and Pete Sessions convened a meeting with the Company and the leaders of all three Unions. The purpose of the meetings was to examine whether the agreements could be salvaged so as to avoid a bankruptcy if at all possible. The result of the intervention of these public officials were three significant improvements in the ratified agreements which were offered in acknowledgement of the Company''s errors and omissions. They are as follows:
1. The duration of the agreement has been reduced to five years and is amendable April 30, 2008. In addition, either party has the option of opening the agreement for full Railway Labor Act negotiations on or after April 30, 2006. In other words, we can begin negotiations for a new contract in three years.
2. Beginning May 15, 2003 and for 30 days thereafter, each work group has the option of modifying their agreement by substituting one item for an item of equal value. For example, vacation or sick days can be added provided it is exchanged for an item of equal value. If there is a dispute as to whether the item which we seek to exchange is of equal value to the item we seek to secure, we have the right to arbitrate the issue.
3. An Annual Performance Incentive Program has been put in place for all employees through which we can annually increase wages by up to ten percent based on reasonably achievable performance goals in the Company''s operations. The Performance goal thresholds under the plan shall apply uniformly to labor and management. This plan is in addition to the profit sharing and stock option plans in the ratified agreements.
In addition, not only has the Company agreed to these enhancements to the ratified agreements, but it has also committed not only to the TWU, but also to Congressmen Frost, Barton, Sessions and Burgess that it has cancelled the executive retention bonus plan and that there is nothing else that has been hidden from disclosure to the Unions during the negotiations. In other words, there will be no more surprises.
These improvements are contingent on honoring the results of last week''s votes. We and the pilots are prepared to go forward on this basis. However, in the event any Union puts their agreement out for revote, the Board of Directors has voted to declare bankruptcy.
In our view, there is only one rational decision which can be reached. Re-voting the ratified agreements will mean a bankruptcy, with far more layoffs, worse pay and working conditions. Pensions and health care will be in immediate jeopardy. We will not be taking our chances in bankruptcy -- we will be guaranteeing a worse future for our members. Honoring last week''s votes will allow for a shorter agreement and maximize our chances for undoing concessions no one wants. Moreover, if there is a bankruptcy, we will have provisions in place protecting us from attempts to secure further concessions.
Based on these considerations and on the commitments made yesterday, our Union will honor last week''s vote in order to protect our members. We must do everything in our power to limit exposure of our contracts and our members in bankruptcy proceedings. Those who would do otherwise are clearly motivated by reasons other than the welfare of the members.
Sincerely and Fraternally,
James C. Little,
Director Air Transport Division
International Administrative Vice President
Gary Yingst
AA System Coordinator
International Vice President
--------------------------------------------------------------------------------