APA Negotiations

aPA's proposed cost structure

•     The union’s current compensation proposal calls for a 53 percent pay increase plus annual increases of 6 percent plus inflation. These changes would drive AA's rates to levels that are 20 percent higher than those agreed to at United in 2000 and Delta in 2001, contracts that contributed to the bankruptcy filings at both carriers and, subsequently, a dramatic decrease in pilot compensation and retirement benefits.

     

•     APA’s proposed pay increase would cost the company more than $700 million in 2009 and approximately $100 million would be added annually.

•     As a whole, APA's proposals put the company at a dangerous competitive disadvantage. If accepted, the union’s proposals would increase AA’s current pilot costs by 165 percent, approximately 257 percent higher than the 2007 industry average of $255.

•     Annual pilot costs would increase by almost $3 billion in recurring expenses, excluding the APA’s proposed signing bonus, one-time pension contribution and other one-time expenses. This translates to more than a $350,000 increase per active pilot.

•     The company cannot, in good conscience, entertain a proposal that would create such an enormous disparity between AA and the rest of the industry and threaten the long term viability of the company.

Source: Form 41
Notes: Block hours calculated using crew factor estimates by entity. Excludes Instructor costs; AA APA Proposed estimates are based on 2009 costs and are subject to change; Revised March 3, 2009; Price outs do not include all aspects of APA proposals; Pay and Pension proposals are compounded in Workrules and Other proposals; Does not account for compounding of all proposals.