A quick summary of major and noteworthy events since the start of negotiations.
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February 22-25, 2010
This week the American Airlines and Transport Workers Union Stock Clerk negotiating committees continued negotiations in Tulsa, Okla. with Mediator Jack Kane.
On Tuesday, American provided the TWU a full-text comprehensive proposal. The company’s proposal aimed to address the current state of both the airline and the industry while also addressing many of the union’s interests.
While the company modified its previous proposal in areas such as sick leave and vacation, it did so in order to provide improvements elsewhere in the proposal, like the additional lump sums and the option to convert lump sums to structural increases to maintain American’s relative standing. It is not unusual during collective bargaining, especially when using the comprehensive proposal approach, to have specific areas change from proposal to proposal. These changes were aimed at recognizing the desires of our TWU-represented employees while also allowing American to better manage its labor unit cost and be competitive.
We look forward to continuing negotiations with the TWU at a later date to be determined and scheduled by Mediator Kane.
American’s comprehensive proposal includes:
- Compensation:
- Provide lump sums each of the four years of the contract for an aggregate of 10 percent over the four years, beginning date of signing.
- A full-time Stock Clerk at max rate would get approximately $4,584 in lumps sums throughout the life of the agreement, with the option for up to 7 percent to be convertible to structural increases.
- A full-time Crew Chief Stock Clerk at max rate would get approximately $4,828 in lump sums throughout the life of the agreement, with the option for up to 7 percent to be convertible to structural increases.
- The lump sums are convertible in whole or in part to structural increases to keep American’s relative standing compared to the industry for the maximum hourly rate.
- Workrules:
- Improve American’s ability to compete by providing relief from the 1/7 rule at the overhaul bases. Currently only 1/7 of a workgroup can work a weekend coverage shift. This proposal would provide management with greater flexibility to schedule employees based on workload and customer demands.
- Base Labor Loan Workrules: Modify in order to allow management to assign employees within a business work unit to other positions in order to improve efficiency and meet workload demand.
- Holidays: Increase total number of holidays from five to eight by the second year of the contract. Increase holiday work rate of pay from one and a half times to double time on date of signing. This brings American in line with the industry average.
- Vacation: Increase the accrual rate for employees with less than five years to 80 hours of vacation a year, or two weeks. This will give all employees with less than ten years the ability to accrue up to 80 hours, or two weeks.
- Sick Leave: Modify the accrual rate to increase to eight days per year during the life of the agreement.
- Retirement Benefits: Provide a defined contribution 401(k) plan for new hires, better aligning American with what is standard in the industry. Only one AA competitor currently offers a defined benefit plan while others have terminated or frozen their plans. New hires would be automatically enrolled in the $uper $aver Plus 401(k) plan to include a 100 percent company match for employee contributions up to 5.5 percent. Existing employees would have the option of moving to the defined contribution 401(k) plan or staying in the current defined benefit pension plan.
- Retiree Medical: American’s proposal guarantees access to retiree medical coverage, regardless of employee health status – both before and after age 65 – but modifies the funding of those programs to better align American with the industry and corporate America.
- Current Retirees – Make no changes to plans for current retirees. The changes outlined below would begin for retirements on or after 1/1/2011.
- Current employees will have pre-funding balances refunded and company pre-funding contributions will stop at date of signing.
- Current Employee Pre-65 – Retirees will make monthly retiree medical payments to cover a portion of the cost. The company's proposal is that employees will pay the same portion of costs that management pays, which today is 25 percent but could change over time. Today American retirees who are making monthly payments for pre-65 coverage pay between $110 and $140 per month per person.
- Current Employee Post-65 – At age 65, retirees will receive access to a series of Medicare supplement plans offered by UnitedHealthcare. The plans will be "guaranteed issue" meaning any employee will be eligible, regardless of medical history or condition. The employee will pay 100 percent of the premiums for the Medicare supplement coverage. For 2010, the national average monthly payment for Medicare supplement coverage ranges from $81 to $183 per person depending on the plan and coverage level selected.
- Terms of Retiree Medical will be as good as or better than the retiree medical plan design, eligibility and contributions offered to management.
- New Hires – Pre-65 retirees will have access to retiree medical coverage with no company subsidy. The new hire will pay the full contribution. Post-65 retiree coverage will be replaced by a guaranteed issue, employee paid Medicare supplement plan.
- Profit Sharing: Replace the current financial component of the AIP plan with an uncapped annual profit sharing plan rewarding employees at the first dollar earned and matches what was the richest plan in the industry.
- Eagle ASM Cap: The current Eagle ASM Letter restricts American’s ability to compete with other legacy carriers and their regional partners because of the number of American Eagle/American Connection available seat miles (ASMs) American can fly relative to the American Airlines ASMs across the network.
American would like to have the flexibility to increase its number of regional ASMs to optimize our network. The company proposes modifying the cap to not exceed the industry average (based on CO, DL, UA and US with their regional partners), which currently stands at 21.3%.
To view the company's comprehensive proposal, click here.
February 5, 2010
This week the American Airlines and Transport Workers Union Fleet negotiating committees continued mediation at Flagship University (FSU), Fort Worth, TX.
During the course of the week, American offered the TWU two (2) comprehensive proposals – one was made Tuesday and one was made as a counter to the union’s proposal on Thursday.
American’s proposals aimed to address the interests of both parties and position the company and its employees for long-term success. The mediator set the next negotiating dates for March 6-8 in Washington, DC at the National Mediation Board office.
The proposal included:
- Compensation:
- Signing bonus of 4% on date of signing (DOS)
- 3% lump sum increase six (6) months after date of signing
- 1.5% structural increase 18 months after date of signing
- 3% lump sum increase thirty (30) months after date of signing, convertible in whole or in part to a structural increase to keep American’s relative standing in the industry for the Fleet Service maximum hourly rate.
- A full-time Fleet Service Clerk at max would get approximately $4,531 in lump sums throughout the life of the agreement and the max hourly chart rate would increase to $21.48.
- A part-time Fleet Service Clerk at max would get approximately $2,265 in lump sums throughout the life of the agreement and the max hourly chart rate would increase to $21.48.
- A full time Crew Chief at max would get approximately $4,971 in lump sums throughout the life of the agreement and the max hourly chart rate would increase to $23.60.
- Holidays: Increase rate of pay from 1.5x to 2x, but keep the same number of holidays in order to fund the structural increase.
- Vacation: Increase accrual rate for employees with less than 5 years of service for a total of eighty (80) hours of vacation a year or two weeks.
- Sick Leave: No change in sick leave.
- Retirement Benefits: Provide a defined contribution 401(k) plan for new hires, making American more competitive in the industry. Only one AA competitor currently offers a defined benefit plan while others have terminated or frozen their plans. New Hires would be automatically enrolled in the $uper $aver Plus 401(k) plan to include a 100 percent company match for employee contributions up to 5.5 percent. Current employees would have a one-time choice to stay in the current defined benefit plan or change to the defined contribution 401(k) plan.
- Retiree Medical: American’s proposal guarantees access to coverage, regardless of employee health status – both before and after age 65 – but modifies the funding of those programs to better align American with the industry and corporate America.
- Current Retirees
– Make no changes to plans for current retirees. The changes outlined below would begin for retirements on or after 1/1/2011.
- Current employees will have pre-funding balances refunded. The average balance is about $5,000.
- Current Employee Pre-65 – Retirees leaving after 1/1/11 will make monthly retiree medical payments to cover a portion of the cost. The company's proposal is that employees will pay the same portion of costs that management pays, which today is 25 percent but could change over time.
- Current Employee Post-65 – At age 65, retirees will receive access to a series of Medicare supplement plans offered by UnitedHealthcare. The plans will be "guaranteed issue" meaning any employee will be eligible, regardless of medical history or condition. The employee will pay 100 percent of the premiums for the Medicare supplement coverage.
- Terms of Retiree Medical will be as good or better than the retiree medical plan design, eligibility and contributions offered to management.
- New Hires – Pre-65 retirees will have access to retiree medical coverage with no company subsidy. The new hire will pay the full contribution. Post-65 retiree coverage will be replaced by a guaranteed issue, employee paid Medigap plan.
- Profit Sharing: Replace the current financial component of the AIP plan with an uncapped annual profit sharing plan rewarding employees at the first dollar earned and matches the richest plan in the industry.
- Eagle ASM Cap: The current Eagle ASM Letter restricts American’s ability to compete with other legacy carriers and their regional partners because of the number of American Eagle/American Connection available seat miles (ASMs) American can fly relative to the American Airlines ASMs across the network.
American would like to have the flexibility to increase its number of regional ASMs to optimize our network. The company proposes modifying the cap to not exceed the industry average (based on CO, DL, UA and US with their regional partners), which currently stands at 21.3%.
- Scope: American proposes outsourcing the dayline cabin cleaning function and fueling (at some locations in the future), but with furlough protection to be provided by managing surplus with attrition and/or voluntary separation programs as follows:
- For employees who retire from AA by January 1, 2011 or resign from AA under the 50/55 rule by January 1, 2011:
- Lump sums paid in 2010 will be considered pensionable earnings for purpose of calculating pension benefit.
- Retiree medical terms and conditions will remain unchanged and will retire with current retiree medical benefits.
- A special voluntary separation allowance of $20,000 will be given.
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For employees who resign from AA and forfeit any recall rights by January 1, 2011:
- A special voluntary separation allowance of $20,000 will be given.
- Duration of Agreement: American proposes a duration of agreement until DOS plus 48 months. Either party may elect to open the agreement six months prior to the amendable date.
To view the company's comprehensive proposal, click here.
