We have a letter that an American Airlines pilot shared with me. This pilot has credibility with me, so I’m putting it out here.

The letter writer appears to have inside knowledge of the American-Allied Pilots Association negotiations. His indication is that the two sides are very, very close to an agreement, but that the APA board of directors is nervous.

“As you will soon learn, significant progress has been made between the parties. The fear of sending another agreement your way in the wake of the rejection of the LBFO is very real. After more than six years of negotiations, AMR and the APA are finally at the end game. Political courage to lead during times like these is difficult but necessary,” the author wrote.

“While the APA and American Airlines management are down to a few remaining items, APA leadership appears to have provided no means for these few items to be concluded.

“Instead of providing their negotiating committee with direction and feedback on what it will take to conclude an agreement, the APA Board left last week with no clear guidance and clarity on what they expect their negotiating committee to negotiate,” it said.

Let’s go through some issues that helped kill a previous tentative agreement, the “last, best, final offer” (LBFO), in August:

– Scope remains as the biggest unresolved issue as the two sides fight over the size of jets that regional partners could fly. The difference is three seats and 7,000 pounds– APA wants a ceiling of 76 seats and 86,000 pounds and American wants to go to 79 seats and 93,000 pounds.
One would suspect that American has a certain airplane in mind. But if so, we don’t know what it is.

– Pay buckets. The Airbus A319 (and similarly sized Boeing 737-700) in the original deal was put in a lower-paying pay level than larger single-aisle airplanes like the McDonnell Douglas MD-80 and Boeing 737-800. It was a big issue when the original deal was rejected.
The new talks have moved the small narrow-body airplanes up into the MD-80 and 737-800 bucket.

– The six-year duration of the contract remains, but the mid-term pay adjustment have improved the situation in favor of the AA pilots.
American had offered to adjust pay to the average of other major U.S. carriers after three years, but with a weighting that took the average down.

The new method puts more weight on the pay rates of Delta Air Lines and United Airlines and less on the lower rates paid to US Airways and former America West pilots.

– The management proposal sitting on the table would provide a 4 percent pay increase when the contract is signed; 2 percent raises in each of the next two years; the mid-term adjustment discussed above, which the author says could mean a 16 percent raise; and 2 percent raises the last two years of the contract.

– As in the previous deal, pilots would get 13.5 percent of stock in AMR when it emerges from bankruptcy and AMR would give the APA $5 million to pay for the union’s bankruptcy expenses.

– Unlike the previous deal, the union would not give up its right to protest management compensation.

Keep reading for the entire open letter.

IT’S TIME…
As most other APA pilots did, the authors of this open letter viewed the recently defeated LBFO as an unnecessary and ill-advised attempt by management to permanently suppress the compensation and working conditions of American Airlines pilots.

Your collective rejection of the LBFO and insistence on maintaining your professional stature is solely responsible for the positive results that have occurred since. It appears management may now “get it” when it comes to dealing with their most important employee group.

It’s time…

…for you to pay VERY close attention to what is occurring at APA. Hold every member of your APA leadership fully accountable for both what is and what is not happening as negotiations reach the end game over the course of the next several days. Insist your leadership provide you with a detailed explanation of where negotiations are and if you believe appropriate, allow you to be the final decision maker of whether or not the final agreement is appropriately “Industry Standard.”

As you will soon learn, significant progress has been made between the parties. The fear of sending another agreement your way in the wake of the rejection of the LBFO is very real. After more than six years of negotiations, AMR and the APA are finally at the end game. Political courage to lead during times like these is difficult but necessary.

While the APA and American Airlines management are down to a few remaining items, APA leadership appears to have provided no means for these few items to be concluded. Instead of providing their negotiating committee with direction and feedback on what it will take to conclude an agreement, the APA Board left last week with no clear guidance and clarity on what they expect their negotiating committee to negotiate.

The major sticking points are the restrictions on small jets. AMR wants to have the ability to fly 79-seat regional jets weighing up to 93,000 lbs while APA wants the restrictions to be the same as Delta at 76 seats and 86,000 lbs. There is also a small difference in table positions on the limitations on the number of small jets AMR can operate. Currently the parties are separated by a difference of 2%.

Other remaining items are APA’s requirement for full furlough protection for every pilot currently flying at American Airlines and the maximum Captain pay rates that would result for widebody Captains after the new proposed mid-term adjustment.

Management’s newly proposed mid-term adjustment could result in American’s widebody Captain’s being the highest paid pilots in the industry at the mid-term because of the design of using the 737-800 as the comparator. Management is willing to offer an enhanced mid-term adjustment that, based on current pay rates at DAL, UAL, US and AW, would result in an additional 16% pay raise at the mid-term as compared to the LBFO. However, management wants to limit the widebody Captain pay rates so that they are not the absolute highest in the industry if as a result of the mid-term adjustment the widebody Captain pay rates are greater than DAL or UAL.

Other proposed items include:

Pay

- Pay raises of 4% (DOS), 2%, 2%, mid-contract adjustment (minimum 16% pay raise), 2% and 2%
- A319 and 737-700 included in Group 3 (mid-term rate, minimum $207, maximum $220)
- International Override paid only for actual flying (same as DAL and UAL)
- No Night Pay (same as DAL and UAL)
- Current Book per diem rates. DOS+3 = $2.00 domestic and $2.20 Int’l
- Mid-contract adjustment changed to weighted average of ASM’s of DAL, UAL and US, instead of using DAL, UAL, US and AW equally (25%).

Fatigue
- Fatigue calls paid
– Paid events subject to review team with APA input
– Industry-leading Fatigue MOU

Sick
- Split sick bank starting in Jan 2014 (60 hours short-term per year, rest in long-term bank)
- Substantiation not required for short-term bank
- Substantiation required to access long-term bank for absences over 14 calendar days or if short-term bank depleted
- Annual sick sell-back program of half of unused accrual, starting with 2013 accrual
- Rapid re-accrual limited to time used (Same as all other carriers with rapid re-accrual)
- Sick Bank replenished after an Injury on Duty

Benefits
- Disability improved from LBFO
– 60% of income up to $8000
– Offsets for SSDI, Workers Comp and State Disability
– No offsets for Earned (W2) income for first 48 months (was 24 months in the LBFO)
– Retirees 60-64 can cash out sick time at retirement into a Health Retirement Account ($25/hour) which can be used for medical premiums up to $25,000


Pension
14% contribution to 401k plan
Frozen A-fund
B-fund proceeds rolled to SuperSaver or pilot’s IRA
- DAL terminated A-fund and 15% DC
- UAL terminated A-fund and 16% DC

Scheduling
84 hour Max Average Line Value with 82 hour Rolling Average over the year (similar to DAL)
Green Book duty rigs
90 hour Individual Monthly Max (averages a pilot out to 90 hours over the course of a year)
Current flight-time duty time limits until new FARs applied in Jan 2014
- All sequences subject to review of Fatigue Risk Management System with APA input
CPA Bank eliminated, all fly-through time paid for the actual time flown in each bid month
Reassignments past the original sequence footprint pay 150%
Sequence protection notification and obligation windows patterned after Delta contract.
- Pilot may opt out of sequence protection pay and obligation

Vacation
- Green Book values and accruals with the elimination of the 42 day accrual step at 30 years of service
- Pilots can float all but one week of vacation
- Pilots can drop trips and charge to current floated vacation bank

Pilot Bases
- STL pilot base will remain open until an arbitration process has been concluded
- No other pilot bases will be closed until at least fourth-quarter 2013
- Home base concept which can allow some sequences to be built from cities that have large commuter populations.

Reserve
18 days of availability for 73 hours
Trips assigned on scoring system (Reserve Priority Value) patterned after Delta system
Reserve pilots can pick up trips on days off for pay above guarantee at company option
- Military pilot may move duty-free periods to cover military duty

Miscellaneous
- APA can protest management compensation
- 13.5% equity stake in the new company (Projected $100,000+ per pilot on average)
- APA reimbursed $5 million for bankruptcy expenses

Scope remains as the biggest unresolved issue as the two sides fight over the size of jets that regional partners could fly. The difference is three seats and 7,000 pounds– APA wants a ceiling of 76 seats and 86,000 pounds and American wants to go to 79 seats and 93,000 pounds.
One would suspect that American has a certain airplane in mind. But if so, we don’t know what it is.