July 8 Start Date for Joint Collective Bargaining Agreement Negotiations

APA and management have agreed to begin joint collective bargaining agreement negotiations on Tuesday, July 8. Until the National Mediation Board issues a single-carrier finding, the time we spend bargaining will not count against the 30-day timetable specified by the four-party memorandum of understanding signed by APA, USAPA, American Airlines and US Airways.

As previously reported, the NMB has already issued a single-carrier determination for the passenger-service employees at American Airlines and US Airways. APA continues to await a response from the NMB to our application for single carrier. Once the NMB issues a single-carrier determination, the 30-day clock will start. At the end of the 30 days, the MOU stipulates that the "New American Airlines will offer final and binding interest arbitration."

APA has accelerated the pace of preparations for JCBA negotiations in recent weeks, with the board of directors approving two related motions during its special meeting last week.

One motion directs the APA president to "use all available Association resources to determine any and all differences in total pilot costs, whether contractual or not, between the pilots employed by Delta Air Lines and those pilots employed by the newly combined American Airlines. These findings will be reported to the APA Board of Directors not later than the July 2014 special board of directors meeting. This aggregate cost comparison shall attempt to include and identify any recent amendments to each pilot group's working agreements made in response to FAR 117 changes. The President may include similar comparisons to other carriers as he deems appropriate."

The other motion stipulates that "the APA Board of Directors directs the APA Negotiating Committee to provide the APA Board of Directors with a confidential weekly written JCBA synopsis which shall include specific CBA sections discussed, progress report and timeline, immediate feedback from associated Committee Chairmen, and last positions of APA and management. This synopsis will commence immediately concerning all JCBA communications and negotiations."

During the Section 1113 negotiations in bankruptcy, APA and management identified numerous low-cost and cost-neutral items that we set aside to deal with more pressing business. We plan to address that unfinished business during the JCBA process, along with tackling more challenging issues.

The JCBA negotiations will differ from traditional Section 6 bargaining in one key respect: the "final and binding" arbitration clause that management can invoke if we're unable to reach a negotiated settlement within a specified timeline. If we don't reach a mutual agreement, the MOU sets limits on the arbitrator's award: "The arbitrator's award specifically shall adhere to the economic terms of the MTA and shall not change the MTA's Scope terms."

That noted, our airline has already established itself as a formidable competitor, recently setting new record highs in quarterly profits, yield and passenger unit revenue. According to a recent company presentation, "American's pretax margin is already in line with peers," with "anticipated upside synergy just beginning." Various airline analysts include AAL among their "best/top picks" in airline stocks, reflecting widespread confidence in the airline's future prospects. In other words, things change.

Given American Airlines' competitive position, it is our firm view that meaningful improvements to our current collective bargaining agreement — an agreement reached under duress during Chapter 11 bankruptcy — must be on the negotiating table. We look forward to a healthy bargaining dialogue with the new management team that reflects the dramatically improved state of American Airlines and the industry itself.