American Airlines
AA/TWU Mechanic and related Agreement
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) Return to Table II OSM
guidelines in the 1996 29D.
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 M&R proposals
In the interest of long term
stability within the aircraft maintenance mechanic and related classifications,
the Company is proposing the following restructuring of the AA/TWU Mechanic and
related labor agreement. 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 aircraft overhaul and repair work. The Company
believes the following proposals are required to fundamentally change the way
M&E conducts its business going forward, with the intent to preserve as much
employment within M&E as necessary and to maintain the viability of overhaul
maintenance and American Airlines.
In addition, the proposal
contains necessary restructuring for all other areas within M&E that will allow
American Airlines to be competitive and to survive and sustain its viability for
the long term.
Many of the 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 Mechanic and related
agreement:
Modify Article 1 to allow the
outsourcing of any work function
within Title I/II or to accommodate
the sale of any portion of the
operation
Title I: $223.4 MM
Title II: $ 64.8 MM
Article 4 Compensation
Propose the following to achieve
competitive pay rates & premiums:
For the Mechanic and related
agreement:
Reduce the chart rates for all
TWU classifications by 1%* $10.8 MM**
Eliminate payment of longevity
pay $5.7 MM
Eliminate C/C premium when not
working in C/C capacity $0.1 MM
Eliminate Midnight Retention
Premium $3.0 MM
* Includes variable benefits for
2003 plan
** Each 1% reduction is equivalent to $10.8
MM
Article 4 - Compensation
Propose the following
competitive pay rates and premiums:
For the Mechanic and related
agreement:
Eliminate weekend premium at the
Maintenance bases $1.7 MM*
or
Pay only for hours actually
worked within the
weekend premium window; article
3(i) $1.6 MM**
and/or
Pay weekend premium only for
hours actually worked $0.3 MM
Ex.: Not paid for VC/SK/HO, etc. or
other paid time not worked
To be competitive with FBOs
modify article 4(g) to pay for
licenses only where required by the
Company such as: $23.7 MM
Line Maintenance and A/O docks (A & P
license)
Engine Assembly (P license)
* Based on 2002 Actuals
** Based on 2/03 headcount working
2230/Sun
Article 4 - Compensation
Propose the following
competitive pay rates and premiums:
For the Mechanic and related
agreement:
Eliminate skill premium (Title I
and Title II) $15.0 MM
Modify License premium rates as
follows:
Article 5 - Shift Differential
Propose restructuring of the
agreement as follows:
For the Mechanic and related
agreement:
Eliminate all shift differential
pay $13.1 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.
$1.2 MM
and/or
Modify Shift 4 to 1700 -
0459
$0.4 MM
Article 6 Overtime
Propose restructuring of the
agreement as follows:
For the Mechanic and related
agreement:
Elimination of the overtime meal
allowance $0.1
MM
Modify penalty hour to pay for
actual time worked at 1.5X $0.4 MM
Employees must physically work
40 hours in a week
before being eligible for 1.5X
premium $0.3 MM
Eliminate 2.0X overtime rate;
all OT paid @ 1.5X rate $0.8
MM
Article 7 - Holidays
Propose restructuring of the
agreement as follows:
For the Mechanic and related
agreement:
Reduce number of paid
holidays $2.2 MM
and/or
(per holiday)
Reduce the premium paid for
working on a holiday from
2.5X to
2.0X
$7.6 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 $2.2 MM
Article 8 - Vacations
Propose restructuring of the
agreement as follows:
For the Mechanic and related
agreement:
Reduce vacation accrual to a
maximum of 5 weeks $6.8 MM
Article 11 - Classification and Qualifications
Propose restructuring of the
agreement as follows:
For the Mechanic and related
agreement:
Modify all C/C ratios
$11.5 MM*
AMT ratio 1 : 15
Eliminate all other C/C ratios
Allow Crew direction to encompass
any classification
* Valued at 1 :11.5 ratio with objective
to phase to 1 : 15 ratio
Article 11 - Classification and Qualifications
Propose restructuring of the
agreement as follows:
For the Mechanic and related
agreement:
Combine structures and systems
job functions into a general
mechanic classification for Base
maintenance airframe
overhaul
$6.8 MM
Convert OSM work, currently
performed by MCIE AMTs to be
performed by OSMs at OSM rates of
pay $1.7 MM
Article 11 - Classification and Qualifications
Propose restructuring of the
agreement as follows:
For the Mechanic and related
agreement:
Reclassify MOC Tech Specialist
to a Title I Tech Crew Chief
classification and reduce rate of
pay $0.4 MM
Combine carpenter, millwright,
welder and painter skills into one
general mechanic classification for
Base maintenance $1.9 MM
Outsource building cleaner
work $1.1 MM
Article 12 - Promotions and jobs to be posted
Propose restructuring of the
agreement as follows:
For the Mechanic and related
agreement:
Adjust manning requirements on
temporary or permanent basis
within a Business Unit (overhaul
base) at company discretion
(Attachment 12.1)
and
Permanent vacancies resulting in
an addition to a Business Unit
(overhaul base) will be filled in
accordance with Article 12
(Attachment 12.1)
and
Redefine movement hierarchy,
with Attachment 12.1 following
a surplus 1 deep, then 12(l), 12(m)
$4.1 MM
Article 17 - Leaves of Absence
Propose restructuring of the
agreement as follows:
For the Mechanic and related
agreement:
Eliminate UBP - All Union
business coded to UB or UBC $1.7 MM
Discontinue Company subsidized
medical benefits for $0.3 MM
SKLOA after 12 months on leave
Article 19 - Termination of Employment
Propose restructuring of the
agreement as follows:
For the Mechanic and related
agreement:
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 the Mechanic and related
agreement:
Eliminate 2 hour guarantee for
call in and pay for actual time
worked at appropriate overtime
rates $0.1 MM
Article 27 General
Propose restructuring of the
agreement as follows:
For the Mechanic and related
agreement:
Eliminate Company paid cleaning
of uniforms $0.5 MM
Reduce provisioning of uniforms
to 6 sets (non-contractual) $0.4 MM
Article 34 - Sick Leave
Propose restructuring of the
agreement as follows:
For the Mechanic and related
agreement:
Eliminate 80-day salary
continuance for IOD occurrences $5.3 MM
Provide alternatives to SK
accrual and % of sick benefit pay:
Ex:
5 days accrual/yr pay @ 100%
$5.5 MM
maintain current maximum
or
12 days accrual/yr pay @
70% $13.9 MM
maintain current maximum
or
12 days accrual/yr pay @ 50%
$19.6 MM
maintain current maximum
Article 36 - Meal Periods
Propose restructuring of the
agreement as follows:
For the Mechanic and related
agreement:
Eliminate the penalty lunch
provision $0.5 MM
Article 37 - Severance Allowance
Propose restructuring of the
agreement as follows:
For the Mechanic and related
agreement:
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 the Mechanic and related
agreement:
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 the Mechanic and related
agreement:
Elimination of the system
job/station protection provisions
Article 44 - Moving Expenses/Optional Severance For Protected Employees
Propose restructuring of the
agreement as follows:
For the Mechanic and related
agreement:
Eliminate Article 44 consistent
with the change in Article 42
Article 46 - Duration of Agreement
Propose restructuring of the
agreement as follows:
For the Mechanic and related
agreement:
Modify the duration clause to
reflect an amendable date of 3/1/08
Miscellaneous
Mechanic and related
Additional cost saving items
(proposals reflected in
slides 33 -
35)
$7.9 MM
Miscellaneous
Mechanic and related
Selection of the most qualified
Crew Chief/Tech Crew Chief by interview panel (Article 11,12)
Pay for before and after shift
training at straight time (Article 23(b))
Eliminate premium pay for travel
time to training (Article 23)
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
Movement of parts (Stock
clerk/AMT)
Inspectors perform AMT functions
Miscellaneous
Mechanic and related
Standardize Line station shift
bid at 6 months (Article 21)
Implement 4/10 schedules without
union concurrence (Art 3)
Modify Article 25(b)(5) : Early
calls in excess of 4 hours will be paid with the scheduled shift.
Eliminate short turn penalty
driven by shift bid or rotation (Art 6)
Eliminate seniority
consideration for training (Art 23)
Eliminate Article 25(c): 1 hour
call on day off
Miscellaneous
Mechanic and related
Limit QA TWU auditing function
to bill of work audits (overhaul bases)
Limit TWU TCC function to
Production/MOC
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)
