1.06.06 – (LAA) – AA Announces Executive Bonuses

This is Tommie Hutto-Blake, APFA President, with the APFA Hotline for Friday, January 06, 2006.

Today it was announced that many of AA’s management – about 1,000 employees from mid-level all the way to top-management – would be receiving bonuses. In light of this development, APFA has decided to defer our participation in the Base Briefings with AA set to begin next week. We will let you know if and when APFA decides to participate in these Base Briefings.

Yesterday, APFA received a draft letter announcing the fact that there would be bonuses awarded to management in April. Today we received more information that included details on the total compensation at today’s stock price, which would equal a $20M payout. A copy of the plan is available as of today on Jetnet .

The irony of this is that even though AMR has lost $8B over the past four years, recently our stock has most outperformed the airline industry. It must be noted that we have ALL played a key role in driving stock prices up at AMR, resulting in healthy bonuses for both mid-level and top management employees.

APFA has expressed its serious concerns with management that at a time when we are attempting to work together with AA to bring this company back to profitability, the very poor timing of management bonuses is clearly not in the best interests of this Company and its employees who have worked so hard to turn this airline around. To say the least, we are disappointed at this information considering the Company’s substantial debt.

All top-level management on AA Payroll at the time these bonuses were conceived accepted the incentive but for one – CEO Gerard Arpey. These bonuses, which will be in the form of “units,” will be vested on April 18, 2006. The recipients of the plan will receive the equivalent in cash at the stock price on that day.

Each recipient is set to receive a specific number of units. For example, Dan Garton, the Senior VP of Marketing is at the top of the list with 44,000 units. If AMR’s stock price goes unchanged, Dan Garton is set to receive $1.7M in April. The lowest amount to be paid out at today’s stock price would be $2,000 for 50 units, which goes to the lowest level manager invited to participate in the plan. The units will be multiplied by 175% of the stock price on April 18, 2006, due to the fact that AMR’s stock price was the industry’s best performing stock. Since 2003, the stock price has increased 169%.

APFA would like to commend Gerard Arpey for having the resolve to lead by example and turn down a very large amount of money when this plan was offered to him more than two years ago.

Now please stay on the line for the rest of the APFA Hotline. Leslie…

Thanks, Tommie.

This is Leslie Mayo, National Communications Coordinator, with the rest of the APFA Hotline for January 6, 2006. As we begin the New Year, please don’t forget our 4,084 furloughed flight attendants and 10 Flight Attendants serving full time in the military. The difference in numbers is following an end-of-the-year payroll status update from AA.

APFA News : APFA and AA met this week to discuss the Speaker Test results and the data obtained by APFA and the Company. The parties have decided that beginning with the March bid month, the Speaker Test will no longer be in effect. APFA and AA will be looking for solutions within the confines of the contract and explore viable options that benefit our members and the Company as it relates to Foreign Language Qualified Speakers. For the bid month of February, which begins January 31, 2006, bidding will remain as outlined in the Test, as it has been for the past seven months. APFA wishes to thank all Flight Attendants who responded to the survey in Skyword, as well as those who sent emails and voice messages relating to the Speaker Test.

From the Contract Department: The Company expects to have preliminary 2005 SK and VC accrual information available on January 10. The final posting of sick hours should occur on January 17th.

If you are currently on an unpaid sick absence and are on active payroll, your local base payroll coordinator will automatically recode trips originating in January as paid sick. This will ensure you are paid with your newly accrued SK hours once they are posted. If you are currently on an unpaid sick absence and are not on active payroll, in other words you are showing inactive, you must contact the local payroll coordinator to arrange for payout of your newly posted sick hours. This request for payout must be made no later than April 30.

In response to concerns from some of our furloughed members regarding the upcoming deadline for payment of retiree medical pre-funding premiums, APFA confirmed that the Company deposited checks from nearly 500 persons on January 5. If you are interested in confirming receipt of your payment, you can either verify the check clearance through your bank or contact Employee Services at 800-447-2000.

The response to changes in AIFS trigger training has been overwhelming. As of January 5, over 744 Flight Attendants have requested the training and 314 Flight Attendants have received the qualification. The ability for Flight Attendants to obtain this highly sought after qualification was brought about due to the recent Settlement Agreement on 737 staffing, which also resulted in improvements to minimum layover rest and crew meals.

And from the APFA Retirement Department: There will be a retirement seminar in RDU Thursday, January 12 from 4 – 5:30 PM in the Kitty Hawk meeting room at the airport. AA retirement counselor Karyn Mally and APFA retirement specialist Jill Frank Smoak will present information about retiree health, pension and travel benefits. Please use JETNET to print a personal pension estimate and bring it with you to the seminar.

Flight attendants from all bases are invited. Please leave a message for APFA chair Peggy Turley at 817-540-0108, Ext. 8446 if you plan to attend.

Bankruptcy Watch : PFAA, the Union representing the flight attendants at Northwest Airlines says they may strike if a bankruptcy judge voids their contract at the request of NW management. If no contract is reached by January 17, NW will ask the Bankruptcy Court to abrogate the contract.

Independence Air stopped operating last night. Independence filed for bankruptcy in November but couldn’t find a buyer or investor to keep it afloat,

Fuel Watch : As of January 5, crude oil was $62.79 per barrel, up nearly $2.50 per barrel from last week. The crack-spread price was $13.97, down about $1.25 from last week’s price. Therefore, the price of one barrel of jet fuel costs $76.76, up about $1.25 from last week’s price.

That’s it for this week. Thanks for calling the Hotline.