7.27.06 – (LAA) – AMR Profit Report, Executive Bonuses, Inoperative 777 Crew Bunks, FA Fatigue Study, Pension Bill, Foreign Control of US Carriers, Wright Amendment Agreement

This is Leslie Mayo, National Communications Coordinator, with the APFA Hotline for Thursday, July 27, 2006.

It was a busy week at American Airlines and here are some of the highlights:

• On Wednesday July 19th, American Airlines’ parent company AMR recorded only its second profitable quarter – excluding those quarters helped by one-time items – in the past five years. AMR said it earned $291 million or $1.14 per share in the three months ending June 30th.
• On Friday July 21st, management notified the Allied Pilots Association (APA) that it intended to enter into Section VI bargaining under the Railway Labor Act.
• Then on July 24th, still intoxicated with the fact that AA had its second profitable quarter in five years, the AMR Board of Directors felt the need to give management even bigger bonus opportunities for the future by granting CEO Gerard Arpey a 23 percent raise and other long-term pay incentives. Arpey’s annual base salary will increase to $650,000, up from $526,620. This does not include stock and incentive plans. The AMR BOD also approved additional bonus/incentive plans for other management employees.

All of this uninhibited spending would lead one to ask why AA has had only two profitable quarters in five years with all of this high-paid talent.

Printed in a well-known Dallas newspaper this morning, when asked about the CEO’s raise, APFA President Hutto-Blake’s tone was harsh: “The increase flies in the face of any real effort to change the corporate culture of our company.”

APFA is disappointed to say the least by these irresponsible acts of management in the current industry environment. They seem to have forgotten the “Turn around Plan,” shared sacrifice, and all the other AA-coined phrases. Management cannot talk out of both sides of their mouth and expect to pull together/win together. American Airlines employees are watching closely, and unfortunately, AA management is NOT leading by example.

On another note, APFA President Hutto Blake sent a letter to Congress today urging them to include the Senate provision of the pension reform bill which includes airline-specific language that will be beneficial to all AA Flight Attendants.

This week, an AA 777 flight from LAX to LHR experienced engine failure and an emergency was declared. The flight landed safely at JFK. No injuries were reported and an evacuation was not necessary. Bravo to the LAX-I crew of flight 134 for doing what each of us is trained to do as safety professionals in the event of an emergency.

APFA News: Please continue to make APFA aware of any flight you work with an inoperative 777 crew bunk. Email the flight number, date, and aircraft number to [email protected]. Remember to include whether alternate seats were provided per the Significant Malfunction Procedures letter on p.557 of the Contract. You can also provide this information by calling the Contract Department at 817-540-0108 ext., 8271.

From the APFA Hotel Department, the long Dallas layover will change effective July 30th. Also, we have new short-layover hotels for BOS, EWR and BWI. Please see the APFA Web site for details. APFA is preparing to review the long San Francisco layover hotel as well as the Nashville and Ft. Myers hotels. If you have any comments or suggestions, please email the APFA Hotel Department at [email protected]. A quick update on one of our SAN layover hotels – it will no longer cash checks for crewmembers. Please check www.apfa.org for the name of this hotel. There is an ATM in the lobby for your convenience. And finally, regarding smoking in layover hotels, Marriott has announced that more than 2,300 of their hotels (including Fairfield, Courtyard and Renaissance hotels) will become non-smoking effective September 1, 2006. Also, our Rome layover hotel is now 100% smoke-free. Please remember there are very strict policies and fines if you choose to smoke in your hotel room.

Legislation Update:
Flight Attendant Fatigue Study
APFA is pleased to report that due in part to your efforts in addressing Congress on the issue of F/A Fatigue, the Senate Transportation Appropriations Subcommittee agreed to insert $500,000 to further study flight attendant fatigue. Although the FAA released the previous fatigue report only two weeks ago, the Subcommittee was able to include money just as the bill was going for a vote in subcommittee and full committee last week. The bill language directs CAMI to further study the fatigue report recommendations (see the full report on APFA’s Web site). APFA was instrumental in getting the additional study funding with its fatigue summit last year as well as our lobbying efforts, and we appreciate the committee taking swift action to include it in their bill. The Senate Transportation Appropriations bill passed out of committee on July 20 and will next go to the Senate floor for a vote.

Pension Bill:
We are hopeful that the pension conference report will be resolved this week as it is the final week before the House leaves for its August recess. Time on the House floor is scheduled toward the end of this week to vote on this conference report.

Foreign Control of U. S. Carriers:
Senators Daniel Inouye (D-HI) and Ted Stevens (R-AK) succeeded in attaching an amendment to the Transportation Appropriations bill during committee vote that would prohibit the Department of Transportation (DOT) from moving forward to implement its proposed rule changing the foreign ownership rules. Currently Congress prohibits a foreign entity from controlling a U. S. carrier. The DOT’s proposed rule would ignore Congress’ limitation and allow a foreign entity to control the economic and marketing aspects of a carrier while requiring that safety and security remain under U. S. control. U. S. carriers and labor organizations find this proposal unworkable and would jeopardize CRAF flying in case of an emergency. The DOT has stated that it will implement its proposal in August. The Transportation bill will probably not be voted on in the Senate until September.

Wright Amendment Agreement:
The newly concluded agreement concerning Love Field lifting the Wright Amendment is included in the Senate Transportation Appropriations bill. Several senators made note during the committee mark-up (vote) that they had reservations about the agreement believing that there are antitrust considerations. This provision will require further discussion on the Senate floor.

House Homeland Security Committee:
Rep. Ed Markey (D-MA) succeeded in getting language attached to the Homeland Security Committee authorizing bill that directs the Assistant Secretary of Homeland Security (Transportation Security Administration) to prohibit scissors of any length (except ostomy scissors shorter than four inches) and tools (including screwdrivers, wrenches and pliers) from being carried aboard a passenger aircraft operated by an air carrier or foreign air carrier in air transportation or interstate air transportation. This provision is in response to the change made by TSA last December allowing scissors and blades onto aircraft and was accepted as a bi-partisan amendment to the bill. While this seems to be good news, there is no comparable Senate committee or Senate bill so it is uncertain what, if anything will be done about this.

Industry News: On Thursday, July 20, 2006, AA announced it filed an application with the US Department of Transportation to operate daily nonstop service between DFW and China’s Beijing Capital International Airport (PEK). If approved, this new service will begin in March 2007.

Following AMR’s and Southwest’s profits reported last week, Alaska, JetBlue and US Airways followed suit. Alaska reported a 2nd quarter profit of $55.5 million, up from $17.4 million in last year’s Q2; JetBlue posted a Q2 profit of $14million, up $1 million from last year’s Q2; and US Air posted a Q2 profit of $305 million profit compared with a $3 million loss in the same quarter last year.

Bankruptcy Watch: Delta Airlines signed leases on 10 former AA (TWA) 757-200’s for delivery July ’07 – November ’07. Delta’s feeder airline – Comair – is still in talks with its Flight Attendants union – the Teamsters Local 513, however, no agreement has been reached. Further talks are scheduled for the 2nd week of August. Comair has not yet imposed work rules following the bankruptcy judge’s determination that Comair could abrogate the contract between the parties since no deal had been reached.

Northwest Airlines has been billed $22 million from lawyers and consultants working on its bankruptcy. These fees will go before the bankruptcy judge and if approved, will bring the total amount NW Airlines has spent on bankruptcy professionals to $45 million in about 10 months.

Fuel Watch: As of Tuesday, July 25th, a barrel of crude oil cost $73.75, up .21 cents from last Wednesday’s price. The crack spread price was $16.28, down $2.88 from last week’s price. This brings the cost of one barrel of jet fuel to $90.03 – down $2.67 from the price of jet fuel a week ago.

One year ago July, the price of a barrel of crude was $59.03, and the crack-spread price was $10.73. The total for one barrel of jet fuel a year ago was $69.76, about $21 less than the price of a barrel of jet fuel today.

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Please remember we have 3,895 APFA members on furlough and ten members serving the military full time. That’s it for this week. Thank you for calling the APFA Hotline.