American Airlines
AA/TWU
Agreements
Fleet Service/Stores/Technical Specialist/Dispatchers/
Simulator Technicians/Instructors/Meteorologists
Joint Committee
Comprehensive Restructuring Proposal
AA Negotiating Committee
March 3, 2003
Introduction
The following proposal is intended to
restructure the AA/TWU labor agreements consistent with the Companys Business
plan.
The proposal is being provided
to the TWU under the following assumptions:
1) The TWU financial
advisors/consultants have concluded that the Company requires the $620 million
relief from the AA/TWU agreements as part of the total $1.8 billion
steady state savings in order for our Company to survive and sustain its
viability.
2) Elimination of the system
job/station protection provisions.
3) All wage and workrule
proposals will be effective DOS.
4) All wage and workrule
proposals will exclude grandfathering rights.
5) Article 11 modified to
delete QAM reference. Administration under sole jurisdiction of the Company.
6) Each proposal applies to all
the AA/TWU agreements represented by the Joint Committee, unless noted by
referencing a specific agreement.
The following savings values are not additive in every case.
Total savings require a roll-up adjustment for wage/benefit reductions. Total
savings will require adjustment to reflect double count between items.
Prelude to Joint proposals
In the interest of long term
stability within the Fleet Service Clerk and other TWU classifications
represented by the Joint Committee, the Company is proposing the following
restructuring of the applicable AA/TWU labor agreements.
The proposal is intended to be
competitive as it relates to wages and work rules not only within the airline
industry, but also with outside vendors who perform various Fleet Service and/or
Cabin Service work.
In addition, the proposal
contains necessary restructuring for the other AA/TWU agreements that will allow
American Airlines to be competitive and to survive and sustain its viability for
the long term.
Many of the wage and work rule
proposals are intended to accomplish the above, however, the Company recognizes
that there are alternatives contained within the proposal for many of the
various wage and work rules with the overall objective of reaching the $620
million target for all TWU represented employees.
Article 1 - Recognition and Scope
Propose restructuring of the
agreement as follows:
For the Fleet Service agreement:
Outsource all cabin
cleaning $
48.7 MM
Outsource the AA/AE transfer
driver function $ 6.1 MM
Outsource non-hub cargo
operations $ 5.6 MM
Outsource aircraft
fueling
$ 3.8 MM
Outsource container/tub movers
and interline transfers $ 1.8 MM
Outsource bus driving at LAX and
ORD $ 1.0 MM
Article 1 Recognition and Scope
Propose restructuring of the
agreement as follows:
For the Fleet Service agreement:
Increase station outsourcing up
to 40 daily departures $ 110.5 MM
or
Increase station outsourcing up
to 30 daily departures $ 88.5 MM
or
Increase station outsourcing up
to 25 daily departures $ 68.6 MM
or
Increase station outsourcing up
to 15 daily departures $ 26.8 MM
Article 4 Compensation
Propose the following
competitive pay rates & premiums:
For all TWU agreements represented
by the Joint Committee:
Reduce the chart rates for all
TWU classifications by 1%* $10.0 MM**
Eliminate payment of longevity
pay $7.4 MM
Eliminate C/C premium when not
working in C/C capacity $0.5 MM
* Includes variable benefits for 2003 plan
** Each 1% reduction is equivalent to $10.0
MM
Article 4 - Compensation
Propose the following
competitive pay rates and premiums:
For the Stores agreement:
Eliminate D1 Driver
pay
$0.3 MM
Eliminate weekend premium at the
Maintenance bases $0.3 MM
Article 5 - Shift Differential
Propose restructuring of the
agreement as follows:
For all TWU agreements represented
by the Joint Committee:
Eliminate all shift differential
pay $16.5 MM
or
Pay only for hours actually
worked within the shift differential
window. Ex: Emp. A: 0430-1300
shift; pay 1.5 hrs. for period
from
0430-0559.
$TBD
and/or
Pay shift differential only for
hours actually worked. Ex: shift
differential not paid for VC/SK/HO
or other paid time
not
worked.
$1.9 MM
and/or
Modify Shift 4 to 1700 -
0459 $2.5 MM
Article 6 Overtime
Propose restructuring of the
agreement as follows:
For all TWU agreements represented
by the Joint Committee:
Elimination of the overtime meal
allowance $1.2
MM
Modify penalty hour to pay for
actual time worked at 1.5X $2.4 MM
Employees must physically work
40 hours in a week
before being eligible for 1.5X
premium $TBD
Eliminate 2.0X overtime rate;
all OT paid @ 1.5X rate $1.9 MM
Article 7 - Holidays
Propose restructuring of the
agreement as follows:
For all TWU agreements represented
by the Joint Committee:
Reduce number of paid
holidays $4.4 MM
and/or
(per holiday)
Reduce the premium paid for
working on a holiday from
2.5X to
2.0X
$15.8 MM
and/or
Modify Article 7 to eliminate
the rolling of the observed holiday,
pay HO for holiday that falls on day
off or during vacation $3.9 MM
Article 8 - Vacations
Propose restructuring of the
agreement as follows:
For all TWU agreements represented
by the Joint Committee:
Reduce vacation accrual to a
maximum of 5 weeks $5.1 MM
Article 17 - Leaves of Absence
Propose restructuring of the
agreement as follows:
For all TWU agreements represented
by the Joint Committee:
Eliminate UBP - All Union
business coded to UB or UBC $1.4 MM
Discontinue Company subsidized
medical benefits for $0.8 MM
SKLOA after 12 months on leave
Article 19 - Termination of Employment
Propose restructuring of the
agreement as follows:
For all TWU agreements represented
by the Joint Committee:
Elimination of the continuation
of benefits for furloughed
employees
(prospective)
$207/emp./month
Article 25 - Recall and Call In Work
Propose restructuring of the
agreement as follows:
For all TWU agreements represented
by the Joint Committee:
Eliminate 2 hour guarantee for
call in and pay for actual time
worked at appropriate overtime
rates $1.2 MM
Article 27 General
Propose restructuring of the
agreement as follows:
For all TWU agreements represented
by the Joint Committee:
Eliminate Company paid cleaning
of uniforms $0.2 MM
Reduce provisioning of uniforms
to 6 sets (non-contractual) $0.2 MM
Article 34 - Sick Leave
Propose restructuring of the
agreement as follows:
For all TWU agreements represented
by the Joint Committee:
Eliminate 80-day salary
continuance for IOD occurrences $14.3 MM
Provide alternatives to SK
accrual and % of sick benefit pay:
Ex:
5 days accrual/yr pay @ 100%
$7.2 MM
maintain current maximum
or
12 days accrual/yr pay @
70% $14.1 MM
maintain current maximum
or
12 days accrual/yr pay @ 50%
$19.4 MM
maintain current maximum
Article 36 - Meal Periods
Propose restructuring of the
agreement as follows:
For all TWU agreements represented
by the Joint Committee:
Eliminate the penalty lunch
provision $5.4 MM
Article 37 - Severance Allowance
Propose restructuring of the
agreement as follows:
For all TWU agreements represented
by the Joint Committee:
Modify severance allowance
Article 40 - Retirement Benefits
Standardize Retirement Plans
across all employee
groups
$9.0 MM*
Propose restructuring of the
agreement as follows:
For all TWU agreements represented
by the Joint Committee:
Freeze the existing defined
benefit plan for both pay and service
Employee would have an option on
a one time basis of either:
Prospectively replace the
defined benefit plan with a 5.25% cash balance plan
Accounts will receive a fixed
rate return equal to the 30 year treasury rate
or
Prospectively replace the
defined benefit plan with a 401(k) match at 5.5%
* Value for all TWU represented employees
Article 41 - Medical Benefits
Standardize all Medical Plans
across all employee groups
Active Medical
Replace current plans with the following employee choices:
POS-like plan (high cost, high
coverage plan)
PPO-like plan (medium cost,
medium coverage plan)
Catastrophic plan (low cost, low
coverage plan)
HMO plan, where feasible
Medical maximum benefit for
active employees $1MM
Modify active medical company
contributions to national average (presently 80%)
Company subsidy based on PPO
plan value
*
employee contribution to make up
difference
Change contribution structure to
4 tiers (from current 3 tiers)
Employee plus 2; Employee plus 3 or more
Article 41 - Retiree Medical
Standardize all Medical Plans
across all employee groups
Employee portion of Pre-funding
plan accounts refunded
Retiree Medical Under 65
For prospective Retirees only -
Company will determine changes for prior retirees
Plan design same as Active
employees
Modify retiree medical
contributions by the company to national average (presently 60%)
Company subsidy based on PPO
plan value
*
employee contribution to make up
difference
Retiree Medical Over 65
Modify medical plan design to
provide only prescription drug coverage
Modify contributions by the
Company to national average (presently 25%)
Article 41- Dental Benefits
Standardize all Medical/Dental
Plans across all employee groups
Active Dental
Eliminate 2002 Dental Plan
enhancements
100% Preventative coverage (to
80%)
Adult Orthodontia coverage
(eliminate)
Individual plan maximum reduced
from $1500 to $1000
Child orthodontia reduced from
$1500 to $1000 lifetime maximum
Remove cash back options
Reduce Company subsidy for
Active Dental coverage from 87% to national average of 75% for employee and
dependents
Change to 4 tier contributions
(from current 3 tier)
(same as medical plan above)
Article 42 - Job Security
Propose restructuring of the
agreement as follows:
For all TWU agreements represented
by the Joint Committee:
Elimination of the system
job/station protection provisions
Article 43 - Part Time Employees
Propose restructuring of the
agreement as follows:
For the Fleet Service Agreement
Eliminate provision to offer OT
to FT prior to PT $3.0 MM
Eliminate PT cap restriction
(Aggregate and Stand alone) $6.4 MM
Article 44 - Moving Expenses/Optional Severance
For Protected Employees
Propose restructuring of the
agreement as follows:
For all TWU agreements represented
by the Joint Committee:
Eliminate Article 44 consistent
with the change in Article 42
Article 46 - Duration of Agreement
Propose restructuring of the
agreement as follows:
For all TWU agreements represented
by the Joint Committee:
Modify the duration clause to
reflect an amendable date of 3/1/08
Miscellaneous
Propose restructuring of the
agreement as follows:
For all TWU agreements represented
by the Joint Committee:
Selection of the most qualified
Crew Chief by interview panel (Article 11,12)
Eliminate premium pay for travel
time to training (Article 23)
Technical Specialists - Pay for
before and after shift training at straight time (Article 23(b))
Eliminate pay increases when
downgrading positions (Article 27)
Fully cross-utilize, as the
operation requires, between all classifications and Title groups (Article 11)
with the TWUs cooperation
AMTs for aircraft parking
Miscellaneous
Eliminate short turn penalty
driven by shift bid or rotation (Art 21)
Remove time limitations on
Temporary Employees (Article 35(a))
Number of RIFd employees will
be equal to the sum of the
vacancies plus the employees
targeted for displacement
and
The juniority list will be
resized on a one for one basis when an
employee fails to receive a
displacement option for any reason (Art 15)
Dispatch, Instructors, and Tech Specialists
Propose restructuring of the
agreement as follows:
For the Dispatch/Metro agreement:
Eliminate Dispatcher debrief
pay $0.6 MM
Change work work rig to 5:2
$0.2 MM
For the Instructor agreement:
W days may be moved at the
discretion of the Company $0.5 MM
For the Tech Specialist
agreement:
Eliminate Tech Specialist
debrief pay $0.2 MM
Change Tech Specialist work rig
to 5:2 $0.1 MM
Reclassify MOC Tech Specialist
to a Title I Tech Crew Chief
classification and reduce rate of
pay $0.4 MM*
* Included in Mechanic and related pg. 16
Dispatch, Instructors, and Tech Specialists
Propose restructuring of the
agreement as follows:
Reduce all license premium,
skill premium and occupational
premium by
10%
$0.3 MM
Technical Specialists
Simulator Technicians
Ground School Instructors
Flight Engineer Instructors
Pilot Simulator Instructors
Dispatchers
Ops Coordinators
Meteorologists
