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  • TWU Members Won't Get Hit Before Other American Airlines Employees

    May 18, 2012

    NEW YORK - The five bargaining units of the Transport Workers Union that approved concessionary contracts won't feel that pain before other American Airlines employees, AA executive Jeff Brundage said Friday

    Speaking in U.S. Bankruptcy Court here, Brundage said American had committed to TWU leadership that the carrier won't implement the cost-cutting, including job cuts, until it has agreements with other unions or gets court permission to reject the other labor contracts.

    American is in court to seek rejection of its contracts with the Allied Pilots Association, Association of Professional Flight Attendants and the TWU. The votes by five TWU units means they have new six-year contracts and American won't try to get those new contracts rejected.

    However, the other two TWU units - mechanics and related employees and maintenance stores clerks - turned down American's deal, and American is proceeding with its efforts to have those contracts thrown out.

    Bankruptcy Judge Sean Lane questioned American's counsel, Todd Duffield, about how the issue of "me-too" treatment was relevant to the decision he has to make, which is whether American should be allowed to reject the contracts.

    Duffield said it was to make the point that American's actions were "fair and equitable," a requirement under the bankruptcy code's Section 1113 for a contract rejection.

    The Association of Professional Flight Attendants wrapped up its testimony in opposition to American's rejection motion at mid-day Friday. Brundage, who previously testified during April hearings, was called back to the stand to lead off the TWU's case.

    The flight attendants' union put expert witness Leon Szlezinger, a managing director at Jefferies & Co., to testify that about Jeffries' review of American's business plan.

    He said the business plan is now on version three, which showed better financial results over the next six years than versions one and two. American chose to use the projected extra cash to reduce debt and financing requirements rather than reduce the amount it was seeking from employees, he said.

    American has proposed reducing its employee costs by $1.25 billion a year, including $990 million from employees represented by union, over the next six years.

    Szlezinger also questioned a number of American's assumptions in its business plan, such as on fuel costs and on code-sharing with other carriers. He criticized American for not "stress-testing" the plan, saying interested parties need to know the downside potential of its proposals.

    During his testimony, Brundage addressed accusations from unions that American had adopted a "take it or leave it" stance in negotiations since it laid out its targets for cost-cutting.

    "We never used the term take it or leave it," Brundage said. However, "we were very stratightforward that the 1113 standard was dramatically different from the typical type of bargaining we have always done."

    In traditional bargaining, the company would present positions to achieve its goals, and the union would do the same. But in bankruptcy, the approach must change, he said. The airline must ask for what is necessary for a successful reorganization, Brundage said.

    The company was open to different ways to get to the targeted savings, but had to get to those numbers, he said.


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