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APA President Tells Members Why He'll Vote Yes for New Contract
Posted On: Nov 16, 2012

By Terry Maxon--

Allied Pilots Association president Keith Wilson told members Friday that he voted no on the first tentative agreement last summer, but that he’ll be voting yes on the second one that’s been handed to member now.

Here’s his message:

I voted “no” last time

Fellow pilots,

With the APA Board of Directors’ vote to approve the agreement-in-principle between APA and AMR as a tentative agreement, you will shortly be deciding how to cast your ballot. As you prepare to do so, I believe it’s important for you to understand the events that led to this latest tentative agreement. I also believe it’s important for you to know my personal view of the choice that we will all be making.

When our members rejected the first tentative agreement back in August, the APA Negotiating Committee resumed negotiations with management based on explicit guidance from the APA Board of Directors. We made slow but steady progress until reaching a stalemate in the areas of scope and pay. After considerable discussion and debate, the APA Board of Directors opted to present a comprehensive counter-proposal to management.

It’s worth noting that representatives of the Unsecured Creditors’ Committee (UCC) were instrumental in helping to convince management to accept our counter-proposal. Also, the UCC has continued to express conditional support for our 13.5 percent equity stake based on APA and management “promptly” reaching a consensual agreement. Absent a consensual agreement, our advisers characterize our prospects of securing a claim through litigation as extremely remote.

In addition to securing our claim, our advisers believe a consensual agreement will enhance prospects for further industry consolidation involving American Airlines. In a report published this week, J.P. Morgan airline analyst Jaime Baker addressed the impact of a consensual agreement on a potential American Airlines-US Airways merger: “Investors have inquired whether the tentative agreement between AMR and its pilots represents ‘labor détente,’ thereby diminishing the prospects for consolidation. We believe the opposite is true. A stand-alone plan inclusive of a pilot contract is a must-have for AMR’s unsecured creditors committee, in our view, so that it may be compared to the merits of a merger. Quite frankly, two plans are expected to come under consideration, and the lack of a completed stand-alone plan threatened to weigh down the process. With that impediment seemingly cleared (though still subject to ratification), creditors are more likely to receive competing plans by year-end or early next.”

It’s also worth noting that bankruptcy restructuring isn’t designed to satisfy labor’s wants and needs. Instead, it gives the debtor sweeping powers to cut costs, often at labor’s expense. Trust me, I’d like nothing better than to deliver an immediate industry-leading contract, but other key players in this process—including management, the bankruptcy judge and UCC—are in a position to limit what we can achieve during Chapter 11.

Some of our members continue to advocate waiting until after AMR emerges from bankruptcy and resuming negotiations at that time. That’s one option. We should be mindful, though, that it’s an option with considerable risk and uncertainty. It would be extremely difficult to recapture what we would be leaving on the table—including the 13.5 percent equity stake—much less surpass the total value. Critical items such as scope could well be irretrievable in a lengthy, post-bankruptcy negotiation. Without a contract with APA, management would be able to operate completely unfettered, imposing new terms on our pilots at will. We should also be concerned about the long-term prospects of a stand-alone American Airlines in that scenario, particularly with the poisonous labor-management relations that would likely ensue.

Since UCC attorney Jack Butler and Pension Benefit Guaranty Corporation (PBGC) Director Josh Gotbaum addressed our Board last week, I have seen some references to supposed “pressure tactics” by the UCC and PBGC to persuade our Board to conclude negotiations. That’s not an accurate characterization. The discussions with Messrs. Butler and Gotbaum reinforced your APA leadership’s view that proceeding with our comprehensive counter-proposal was the correct course of action. We made a thoughtful and deliberate assessment of our situation based on all available information.

For the record, I voted “no” on the original tentative agreement based on my belief that we could do better. This time I intend to vote “yes” and ask that you give serious consideration to doing the same. I am convinced that we have attained everything possible in our current circumstances, and that pressing for more amounts to overplaying the hand we’ve been dealt.

By ratifying the tentative agreement, we will lock in our 13.5 percent equity stake, preserve the prospects for a merger between American Airlines and US Airways, and retain vital influence over the balance of AMR’s restructuring.

In the coming days, we will provide further details of the equity stake and what it would mean to individual pilots monetarily and to APA institutionally. Please carefully review all of the information we provide before casting your ballot. After you’ve finished your thorough due diligence, base your decision on a rational, objective assessment of our situation. Above all, be sure to exercise your right to vote to determine your future as an American Airlines pilot.

Thank you.

In unity,

Keith Wilson

       APA President


     
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