[Senate Hearing 108-198]
[From the U.S. Government Publishing Office]
S. Hrg. 108-198
TWA/AMERICAN AIRLINE WORKFORCE INTEGRATION
=======================================================================
HEARING
OF THE
COMMITTEE ON HEALTH, EDUCATION,
LABOR, AND PENSIONS
UNITED STATES SENATE
ONE HUNDRED EIGHTH CONGRESS
FIRST SESSION
ON
EXAMINING CERTAIN ISSUES RELATIVE TO TWA/AMERICAN AIRLINE WORKFORCE
INTEGRATION
__________
JUNE 12, 2003
__________
Printed for the use of the Committee on Health, Education, Labor, and
Pensions
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COMMITTEE ON HEALTH, EDUCATION, LABOR, AND PENSIONS
JUDD GREGG, New Hampshire, Chairman
BILL FRIST, Tennessee EDWARD M. KENNEDY, Massachusetts
MICHAEL B. ENZI, Wyoming CHRISTOPHER J. DODD, Connecticut
LAMAR ALEXANDER, Tennessee TOM HARKIN, Iowa
CHRISTOPHER S. BOND, Missouri BARBARA A. MIKULSKI, Maryland
MIKE DeWINE, Ohio JAMES M. JEFFORDS (I), Vermont
PAT ROBERTS, Kansas JEFF BINGAMAN, New Mexico
JEFF SESSIONS, Alabama PATTY MURRAY, Washington
JOHN ENSIGN, Nevada JACK REED, Rhode Island
LINDSEY O. GRAHAM, South Carolina JOHN EDWARDS, North Carolina
JOHN W. WARNER, Virginia HILLARY RODHAM CLINTON, New York
Sharon R. Soderstrom, Staff Director
J. Michael Myers, Minority Staff Director and Chief Counsel
(ii)
C O N T E N T S
__________
STATEMENTS
Thursday, June 12, 2003
Page
Bond, Hon. Christopher, a U.S. Senator from the State of Missouri 1
Talent, Hon. James M., a U.S. Senator from the State of Missouri. 4
Case, Theodore A., Snellville, GA, former Secretary-Treasurer,
TWA Master Executive Council, Airline Pilots Association;
Sherry Cooper, Jupiter, FL, former IAM General Chairperson, TWA
Flight Attendants Union and former member, TWA Board of
Directors; Karen Schooling, Independence, Mo, TWA Flight
Attendant...................................................... 7
Brundage, Jeff, Fort Worth, TX, Vice President, Employee
Relations, American Airlines; and Edwin C. White, Jr., Fort
Worth, TX, Allied Pilots Association........................... 60
ADDITIONAL MATERIAL
Statements, articles, publications, letters, etc.:
Theodore A. Case............................................. 80
Sherry Cooper................................................ 83
Jeff Brundage................................................ 86
(iii)
TWA/AMERICAN AIRLINE WORKFORCE INTEGRATION
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THURSDAY, JUNE 12, 2003
U.S. Senate,
Committee on Health, Education, Labor, and Pensions,
Washington, DC.
The committee met, pursuant to notice, at 2 o'clock p.m.,
in room SD-430, Dirksen Senate Office Building, Senator Bond
presiding.
Present: Senator Bond.
Also Present: Senator Talent.
Opening Statement of Senator Bond
Senator Bond. [presiding]. Ladies and gentlemen, the Senate
Committee on Health, Education, Labor, and Pensions will come
to order.
This afternoon, we will receive testimony from those people
affected by the fallout from the integration of American
Airlines and the former Trans World Airlines. We have been
advised that Senator Kennedy has other commitments, and he may
or may not make it, so we are going ahead without him. We do
appreciate his cooperation and the cooperation of the chairman
of the committee, Senator Judd Gregg, who authorized this
hearing and permitted me to serve as the hearing officer today.
I am very pleased to be joined by my colleague, Senator Jim
Talent of Missouri. I have extended an invitation personally to
other Senators who have expressed an interest in this matter in
the debates and discussions we have had on the Senate floor and
elsewhere. This is a very busy day for the Senate, but I am
hoping that some of these people will be able to join us. In
any event, this record will be available for all members of the
committee and all Members of the Senate, and we will ask
explicitly both panels if they would agree to respond to
written questions that may be submitted up to a week after this
hearing and to be included as part of the record, and we would
ask that those who submit testimony agree to that provision.
What we are going to hear today is a story of how the once
promising combination of two great airlines turned into a
disaster for so many former TWA employees. Over the last 2
years, we have seen the promises turn into pink slips. Today is
our first opportunity to hear directly from all sides.
First, we intend to get to the bottom of what promises were
made. Second, we need to give former TWA pilots and flight
attendants the opportunity to tell their story. Third, we want
to hear from American Airlines, their employees and unions,
their positions and their perspectives.
In summary, we want to know why former TWA flight
attendants and pilots never received the comparable seniority
status at American Airlines that was promised to them.
These are important and painful questions for many families
in Missouri and across the Nation, and as I indicated earlier,
I am most grateful to the leadership of this committee for
their willingness to allow us to hold this hearing.
I am delighted, as I said, to be joined by Senator Talent
today.
All of us on this committee and indeed, all of us in the
Senate, certainly understand how tough times are right now for
our Nation's airlines. We understand how cutbacks in personnel
as well as cutbacks in other expenses have been needed in order
to keep the airlines in the air. There is no question that this
is a difficult time, and we sympathize with all in the airline
business.
Unfortunately, we have seen in Missouri that when it came
time to cut at American Airlines, the blade fell almost
exclusively on the former TWA workers, including pilots, flight
attendants, and to some extent, baggage handlers and ground
crews.
As most of you in this room know, on April 9, 2001,
American Airlines closed an asset acquisition deal ending a 75-
year history of TWA as an independent operation. At that time,
I offered my full support to and was a committed advocate of
the acquisition, and I pledged to the parties that I would do
whatever I could to help.
Thus, I was very pleased to hear the testimony of former
American Airlines CEO Don Carty before the Senate Commerce,
Science, and Transportation Committee when he stated: ``We look
forward to adding TWA's 20,000 employees to the American
Airlines family. We are keenly aware of TWA's illustrious
history and know that were it not for the hard work and great
performance of the people throughout TWA, they would not be the
perfect fit for American that we believe they are. We also
recognize what a good corporate citizen TWA has been in the
State of Missouri, and I can assure you that our company will
be as well.''
Now, in the lead-up to the bankruptcy court approval of
American's acquisition of TWA assets, a number of good faith
steps were taken by TWA. In particular, TWA, at the request of
American, agreed to enter into bankruptcy in order to shed some
of its other obligations. TWA employees, particularly the
pilots and flight attendants represented by their respective
unions, agreed, again at the request of American, to waive the
Allegheny-Mohawk provisions in their contracts in exchange for
written promises and assurances from American Airlines that
they would be integrated fairly into American Airlines'
workforce.
The Allegheny-Mohawk provisions in their contracts
guaranteed TWA pilots and flight attendants the option to have
their integration into a purchaser's workforce decided by an
independent neutral third party provided no agreement on
integration could be reached between TWA's and the purchaser's
unions. According to the provisions, this independent
arbitration would be binding.
These steps were taken with some risk to TWA and its
employees, but in the interest of integrating the two airlines
quickly and smoothly, the TWA pilots and flight attendants in
good faith placed their trust in assurances made to them by
American Airlines, its management and unions.
It is precisely what was conveyed by those assurances, who
made them, why they were needed, and what there substance was
that is at the heart of the matter before us today. In
particular, in a letter dated March 17, 2001, American Airlines
assured the TWA pilots that it would ``use its reasonable best
efforts with its labor organizations representing the airline
pilots craft or class to secure a fair and equitable process
for the integration of seniority.''
Since then, and in the wake of the airline industry's slump
following the 9/11 attacks, it is crystal clear that those best
efforts were not good enough. The simple fact is that there was
no significant integration of the seniority lists. The flight
attendants and most pilots were simply stapled to the bottom of
the senior lists, and when the cuts came, they came from the
bottom up.
The result--60 percent of all former TWA pilots were
stapled to the bottom of the seniority list at American
Airlines. Of the 40 percent of TWA pilots who were integrated,
more than half of these pilots--about 400 flyers--were actually
slated for mandatory retirement before the integration actually
took place. And for those few TWA pilots who did make it, they
were given seniority far below their counterparts of equal
experience. For example, the senior-most former TWA captain,
hired in 1963, was integrated into the same bracket as a 1985-
hire American captain.
The result is that many former TWA pilots with much more
flying experience and cockpit seniority actually have a lower
seniority rank than the first officer sitting in the copilot
seat next to the actual pilot. And ultimately, most of these
former TWA pilots are now out of a job, including many of our
friends here today.
However, as poorly as the pilots were treated, it has been
much worse for TWA's flight attendants. As of July 2, 2003, 100
percent of all former TWA flight attendants will have been
furloughed by American Airlines--nearly 4,200 employees. Let me
repeat that--100 percent furloughed, 4,200 employees. Best
efforts, indeed.
Because of this, I and others attempted on numerous
occasions to reinstate the concept of fair and equitable. On
October 1, 2001, I introduced S. 1479, the Airline Workers'
Fairness Act, with four of my colleagues in the Senate. The
following day, my colleague from Missouri, Congresswoman Jo Ann
Emerson, introduced the same legislation in the House. The
House bill had 31 cosponsors.
Late in October, I organized a marathon meeting between the
APA and ALPA--the two unions representing the pilots--here in
Washington. The meeting last for more than 36 hours, but a
resolution to the integration issue was not achieved. Some of
here in the room today participated in that meeting.
In December of 2001, I offered the Airline Workers'
Fairness Act as an amendment to the Department of Defense
appropriations bill. The amendment was adopted in the Senate,
but the provisions were removed in conference with the House.
On January 31, 2002, I sent a letter to the chairman of the
National Mediation Board, Frank Dugan, supporting the response
filed with the board by the ALPA--that is the TWA pilots'
union--in opposition to the determination that American and TWA
had achieved single-carrier status.
On February 14, I sent another letter to Chairman Dugan
supporting the International Association of Machinists and
Aerospace Workers on behalf of TWA's flight attendants and the
board's determination of whether TWA and American had achieved
single-carrier status.
Again this year, Senator Talent and I have been exploring
legislative options, including a revised version of S. 1479,
and we continue our efforts in this area.
It is clear to anyone who has watched this painful process
over the past 2 years that lives have been disrupted and in
some cases destroyed by what has transpired--jobs lost,
promises not met, anger, disillusionment, and despair replacing
the feelings of hope and sense of opportunity that the initial
TWA-American announcement had been greeted with.
Nothing we say or hear today can put the genie back into
the bottle. We cannot repair the relationships or restore the
trust, but we can lay out the facts and perhaps learn enough so
that no other family or employee will face this travesty again.
I thank all of you who have agreed to testify today. In
some cases, your testimony may open old wounds that you wish to
have left alone, but if we are to get to the facts, we must
hear your personal stories and must have the opportunity to
question those who are involved.
I am disappointed that neither Don Carty nor Bill Comption
are here today. I worked with both men extensively, developing
admiration and respect for them. To be honest, I trusted them,
as did their employees. We invited both. They were certainly
integral to the agreements that created the acquisition, but
their absence today does not lesson my interest or ability to
get the full facts on the table.
So again, I want to thank all of you who have agreed to be
here. I give you my assurance that while we hope our
questioning will be thorough and professional, it will be
courteous and fair.
With that, I will turn to my colleague from Missouri,
Senator Talent, for his opening comments.
Opening Statement of Senator Talent
Senator Talent. Thank you, Mr. Chairman.
I want to thank you for your work on this issue which goes
back several years. Also, I am grateful to Chairman Gregg and
Senator Kennedy for allowing me to sit in today even though I
am not a member of this committee; but I do have great interest
in this issue, both as a Senator from Missouri and also as
somebody who thinks this situation is quite unjust to a lot of
people.
I am not going to go over everything that Senator Bond did
in summarizing the events that brought us to this hearing
today. Just suffice it to say that American acquired TWA in
March of 2001. We all thought that was a good thing. We still
want it to be a good thing for everybody.
At the time, American promised TWA and the TWA employees
that they would be treated fairly as a result of the buyout,
and that promise was one of the conditions of the Federal
approval of the buyout. I do not think any of this is
contested. Certainly the expectation was that when the
representative employee groups merged, their seniority lists
would be dovetailed in the normal fashion, that the years of
service for TWA employees would count in the merged company and
the years of service for former American Airlines employees
would count in the merged company.
And, for whatever reason, which is I guess what we are here
to explore today, that did not happen, and nothing even close
to it happened. The former TWA flight attendants were stapled
to the bottom of the merged seniority list, and most of the TWA
pilots were also stapled to the bottom of the merged seniority
list.
I do not mean any disrespect to anybody here who was
involved in that, but in all my years in public office and in
the years when I practiced labor law, I have never seen a
merger that was a disadvantageous to one of the former employee
groups as this one was.
The effect is that employees who have been working for TWA
for decades are placed behind on the seniority list employees
who have only been working for American Airlines a year or two.
I do not think I go on a flight when a flight attendant
does not come up to me and tell me a story like, ``I have been
flying for 25 years for TWA, and I am about to be laid off, and
there are people who have been flying for only one or 2 years
who are not going to be laid off.''
But when you have layoffs and when you have a lot of
layoffs, the situation is not easy for anybody. We all
recognize that. I have spent 18 years in public life, and I try
not to get involved in these kinds of situations except to be
an honest broker where I can because I know it is difficult.
However there are thousands of people here who are in a
uniquely difficult situation because they have 10 or 15 or 20
years of seniority with a company, and when you get seniority
with a company like that, you believe reasonably--you develop a
reasonable expectation--that you have some protection in the
event of layoffs, and you order your life around that. You get
mortgages; your kids go to school; and then, all of a sudden,
when the rug is pulled out from under you, you have a reason to
ask what happened.
Thousands of people who worked for TWA for years and years
and years are in that position, and it is especially bad
because promises were made that would lead a reasonable person
to believe that that was not going to happen, that the opposite
of that was going to happen.
It is just clear to me that for some reason--I do not know
why--the people who were supposed to represent the interests of
the TWA employees in this process--the management, the union,
the NMB, for some reason did not, so they are now facing
layoffs, contrary to what I think were very reasonable
expectations, and I look forward to exploring these issues in a
fair and impartial way, and I know Senator Bond feels the same
way.
Thank you, Mr. Chairman.
Senator Bond. Thank you very much, Senator Talent.
We have all of your full statements in the record, and we
would ask you to try to summarize your statements in about 5
minutes.
I am reminded that while I promised that questions for the
record would be submitted within a week, the hearing record
will actually be left open for 2 weeks.
The first panel includes Mr. Ted Case, who is married and a
father of two and a graduate of Georgia State University. He
became a commercial pilot and started flying passenger jets in
1985 joined TWA as a commercial pilot in 1990. He served as a
union representative for TWA pilots in multiple capacities,
most recently as secretary-treasurer of the TWA Master
Executive Council, the TWA branch of ALPA, and was one of the
representatives on a TWA panel that directed and supervised the
pilots' merger committee discussions with American Airlines.
Our next witness is Ms. Sherry Cooper, a 27-year seniority
flight attendant hired by TWA in 1975. During her career, she
served as president of the Independent Federation of Flight
Attendants, president of the local lodge. She was a labor
director serving on the TWA board of directors from 1998 to
2001 and directly participated in the negotiations leading up
to American Airlines' acquisition of TWA.
Ms. Karen Schooling, a former TWA flight attendant, was
initially hired by Ozark Airlines in 1975. She has 28 years of
seniority. She and her sister were both former Ozark flight
attendants and were given full-seniority credit when Ozark was
acquired by TWO. Ms. Schooling is a widow--her husband passed
away 3\1/2\ years ago--and she has a son with great medical
challenges that I will let her describe.
These three witnesses all have one unfortunate thing in
common. They either will be furloughed on July 1, 2003 or have
already been furloughed.
Before we begin I have a statement from Senator Kennedy.
[The prepared statement of Senator Kennedy follows:]
Prepared Statement of Senator Kennedy
I welcome this hearing on the effects on employees of
American Airlines' purchase of TWA assets in 2001.
The employees of TWA hoped to continue their careers with
American. But 9/11 and the severe downturn in the economy had
an especially serious effect on the airline industry, and many
of the former TWA employees lost their jobs, as have many other
workers in other parts of the economy.
The economy continues to be troubled, and millions of
unemployed Americans are paying the price. The unemployment
rate is the highest in 9 years. Despite all the tax cuts that
the President says will produce jobs and growth, the fact is
that today nine million Americans are out of work, and one in
five of those Americans has been out of work for more than six
months.
The airline industry has been hard-hit. Since 9/11, over
200,000 workers in the airline and related industries have lost
their jobs. American Airlines hopes to stave off bankruptcy,
and has recently insisted on concessions in wages and benefits
from its workers. As part of these concessions, thousands of
workers will be laid off. Over 7,500 American flight attendants
and 3,000 pilots will soon be out of work.
TWA employees were in an especially difficult situation. In
early 2001, the airline was in bankruptcy. Liquidation seemed
likely, and the TWA employees would have lost their jobs and
many other benefits. In these circumstances, when American
Airlines offered to purchase the TWA assets, the TWA employees
voluntarily and specifically waived their right to any
arbitration of their seniority.
The seniority rule applied by American was negotiated in
arm's-length collective bargaining with the Allied Pilots
Association and the Association of Professional Flight
Attendants. The National Mediation Board determined that TWA
had become fully integrated into American Airlines as a single
carrier, and the TWA employees became subject to the seniority
rule that had been negotiated to address the issue.
Unfortunately, some former TWA employees believe that
American promised them a different seniority result. Others say
that the TWA and American Airlines unions had a duty to achieve
a different result. The employees have raised their claims in
federal court, and next Monday, the federal district court in
New York will hold a hearing on the flight attendants' request
for an injunction to stop lay-offs based on the current
seniority rule. Lawsuits have also been filed in St. Louis,
Chicago, and New Jersey, so the courts are clearly well
underway in considering these fact-intensive issues.
I'm concerned about Congress rushing in when the courts are
already well underway in considering these issues, and when the
controlling agreement was achieved through arm's-length
collective bargaining. It's particularly difficult for Congress
to step in when the employees themselves have waived their
right to arbitration. In the past, Senator Bond has proposed
legislation to reopen the seniority issue and send it to third-
party arbitration. We all wish that all the TWA employees and
all the American employees could keep their jobs. But Congress
should not try to tilt the balance, when our action would only
jeopardize more American Airlines employees' jobs, and ignore
decisions already made by the former TWA employees.
Senator Bond. With that introduction, I would invite Mr.
Case to begin his testimony.
STATEMENTS OF THEODORE A. CASE, SNELLVILLE, GA, FORMER
SECRETARY-TREASURER, TWA MASTER EXECUTIVE COUNCIL, AIRLINE
PILOTS ASSOCIATION; SHERRY COOPER, JUPITER, FL, FORMER IAM
GENERAL CHAIRPERSON, TWA FLIGHT ATTENDANTS UNION AND FORMER
MEMBER, TWA BOARD OF DIRECTORS; KAREN SCHOOLING, INDEPENDENCE,
MO, TWA FLIGHT ATTENDANT
Mr. Case. Chairman Bond and members of the committee and
guests, I sincerely appreciate the opportunity to appear before
you today. On behalf of my fellow pilots who were formerly
employed by Trans World Airlines, we welcome the opportunity to
testify on the record about the whole story, the real story
behind the most shamefully flawed seniority integration in
United States airline history.
Many of you are already familiar with some of the facts of
this crisis. To date, thousands of ex-TWA workers, including
ground workers, flight attendants and their families, have
suffered as a result of layoffs. The great State of Missouri
and the entire St. Louis region has felt a sharp economic shock
and emotional trauma caused by these massive job cuts.
The uniform hat that you see here today symbolizes
thousands of men and women who built TWA over more than 75
years and who now have seen American Airlines' promises
disappear.
I believe, like so many of my colleagues, that we became
pilots to serve the flying public, safely and responsibly, to
the best of our ability. I am honored to have been selected by
my fellow pilots to speak on their behalf today.
I am a married father of two, a graduate of Georgia State
University and have served as a representative of the TWA
pilots in multiple capacities. My interest in flying began as a
young boy watching my father fly as a pilot for Eastern
Airlines. I began flying when I was 20 years old and became a
commercial pilot in 1983, began flying for TWA in 1990. I loved
my job; I respected my employer; and above all, I believed in
my customer service mission for the past 13 years.
My world, and the lives of all of my former TWA colleagues,
dramatically changed in April 2001 when American Airlines
acquired TWA. As part of the acquisition, American offered
virtually all former TWA pilots employment. Quoting from
portions of the Bankruptcy Asset Purchase Agreement:
``Purchaser officers to offer employment benefits and
postretirement benefits to all employees actually hired by
Purchaser at levels substantially no less favorable than those
benefits provided to Purchaser's similarly-situated
employees.''
TWA employees took that promise to heart. When the
transaction was announced, I was a 10-year Boeing 767
international first officer. My American counterpart was also a
10-year Boeing 767 international first officer. Just last week,
I received a furlough notice, while my similarly-situated
American counterpart enjoys his or her continued employment.
To put this in a personal perspective, a good friend of
mine, Sally Young, a single mother of two and a 14-year veteran
and former TWA captain, will lose her job on July 2. I too will
lose my job on July 2 after 16 years as a career jet airline
pilot with over 13 years of seniority and experience with TWA
and American Airlines.
On April 9, 2001, the day before the transaction closed,
American hired Mr. B.D. White. Today, Mr. White, who has 2
years and 2 months of American Airlines experience and
seniority, continues to fly while Ms. Young, myself, and
hundreds more former TWA pilots like us are being furloughed.
Touching on Senator Bond's earlier comments, in February
2001, many of you heard Don Carty, former AMR CEO, State before
the U.S. Senate Committee on Commerce, Science, and
Transportation his commitment to ``adding TWA's 20,000
employees to the American Airlines family,'' a willing
commitment ``to the 20,000 TWA employees and their families
that no one else would make.''
Obviously, Mr. Carty said what the Senate Committee and the
bankruptcy court needed to hear to approve the deal, with no
intention whatsoever of living up to those commitments.
Unknown to us at the time American made those promises to
TWA employees, Congress, and the bankruptcy court, they were
also making promises to their unions. American's promises to
their unions empowered them to hijack the experience and
seniority of the TWA pilots and employees. It is now clear that
American's promise of employment was a hollow one designed only
to quell Congress' concerns and clear regulatory hurdles to
close the transaction.
American Airlines walked away with billions of dollars'
worth of TWA assets and market share. Once this was
accomplished, and the deal was no longer news, or under the
watchful eye of legislators, American callously discarded the
TWA employees.
Although American pilots claim to be ``sharing the pain''
of the airline's troubles, more than 87 percent of the pre-
transaction American pilots will retain their employment while
only 23 percent of the former TWA pilots will remain employed
by May 2004, as this chart indicates.
Members of the committee, we are not here seeking sympathy
or pity. We are here in the name of justice and fairness. We
are here in hopes that Congress can rectify this atrocity and
act so this tragedy can never again be repeated in another
workplace to the detriment of another working man or woman. We
ask only that our all-important seniority rights be handled
fairly and equitably as promised--no more, no less.
I hope that you and the American people can now clearly see
that our seniority was handled unfairly and inequitably by an
airline that can now only be called ``un-American Airlines.''
I thank you for the opportunity to speak before this
committee today, and I am happy to answer any questions.
Senator Bond. Thank you very much, Mr. Case.
Ms. Cooper?
[The prepared statement of Mr. Case may be found in
additional material.]
Ms. Cooper. Thank you, Senator Bond.
First of all, I am very honored to be here to speak to you
since I know how important this issue is to both you and
Senator Talent. This affects not only the lives and futures of
the TWA employees but the City of St. Louis and the State of
Missouri. I thank both of you for being here today to listen to
our comments.
On May 3, 2003, I received my 28th anniversary service
announcement; that very same day, I also received my furlough
notice as an American Airlines flight attendant.
Perhaps more than anyone else here today, I served in a
unique position at TWA. Not am I a soon-to-be-furloughed TWA
flight attendant, but I also sat on the TWA board of directors.
In January of 2001, I received a telephone call from Mr.
Bill Compton, former president of TWA. He told me there was a
``great deal'' for the TWA employees. First of all, he advised
me that all TWA employees would be protected, all retirees
would be protected, that the unionized employees would receive
greater job security and guaranteed jobs. We were told that all
TWA employees would receive greater pay and greater benefits--
in summary, that TWA employees would be better-off through the
agreement that he had reached with American Airlines.
There was only one catch. Even though American and TWA had
struggled very mightily to come up with a straight merger
transaction, there was a stumbling block. That stumbling was
Carl Icahn and his Karabu ticket agreement. The only way that
American could see fit to do the deal was to take Karabu out
for bankruptcy. Thus begins the biggest myth of all--that
American Airlines saved TWA from bankruptcy. I want to make it
perfectly clear to everyone--at the time of the agreement, TWA
was not in bankruptcy.
The asset purchase agreement guaranteed that all unionized
employees would be employed by American Airlines. Mr. Carty,
then CEO of American Airlines, promised that TWA employees
would receive the same benefits that the American Airlines
employees received. Our union contracts would need to be
modified in order to mirror those of the American employees.
Importantly, American Airlines agreed and insisted that all
seniority integration matters be worked out between the unions.
American agreed that there would be a fair and equitable
procedure and that it would adopt whatever process came out
between the facilitated talks of the two unions. For the flight
attendants, there simply were no talks.
The merger of a relatively small of senior flight
attendants from TWA would have had very little impact on the
overall picture, because most flew out of St. Louis, MO, a non-
American Airlines base. Unlike other carriers who went out of
business, the TWA employees were coming to the acquisition with
planes, routes, airport slots, reservation and maintenance
facilities, and the prized St. Louis hub. It was for all
intents and purposes our ``dowry.''
It is well-chronicled that American Airlines and Don Carty
touted the TWA purchase as a great acquisition. In his own
words, Mr. Carty stated, and I quote: ``American gains many
great assets from TWA but none as important as its talented
team of employees.''
American Airlines broke its written agreement with TWA
flight attendants by engaging in secret talks with APFA, the
American Airlines union. It negotiated an agreement that
stapled to the bottom of the APFA seniority list all TWA flight
attendants.
At the same time, APFA had agreed that it would allow those
former TWA flight attendants based in New York and St. Louis
some job protection. They would maintain that job protection as
long as we remained in our two hubs.
By contrast, when TWA purchased Ozark, all former Ozark
flight attendants received full seniority. Even APFA, when
American Airlines acquired both Air Cal and Trans-Caribbean,
agreed that those flight attendants would retain credit for
their years of service at those carriers. Ironically, even
American Airlines voluntarily provided full credit for
seniority to TWA nonunion and management personnel.
Following the aftermath of September 11, American Airlines
decided to shut down the New York TWA operation. It transferred
the former TWA flight attendants to St. Louis and took the
former TWA flights and gave them to more junior American flight
attendants. The New York flight attendants had two options--
transfer to St. Louis or be sent to the streets without a
paycheck.
Many of our former New York flight attendants did in fact
transfer and move to St. Louis. We began operating on the TWA
flights because we would retain our job security at St. Louis
as long as we flew on TWA LLC aircraft. Apparently, we were
wrong.
They have now determined that all remaining TWA LLC flight
attendants, ranging from senior of 27 years to 49 years of
seniority, will be furloughed effective July 2. Eighteen
hundred flight attendants with more than 50,000 years of
service to their communities will be losing their jobs. They
will be joining the other 2,400 TWA flight attendants on the
streets. At the same time, American flight attendants with less
than 3 years of seniority will be flying on TWA LLC aircraft
out of St. Louis.
To add insult to injury, for the first time in American
Airlines history, TWA flight attendants will be sent to the
streets without furlough pay. What makes it even worse is that
for the first time in American Airlines history, employees will
be losing 60 days of medical benefits.
For the most part, our group to be furloughed are women, 50
and over, who are primary caretakers for their children, for
their parents, and even for their grandchildren. We are facing
an uncertain future with one thing for certain--we have certain
personal and financial ruin. At the same time, American
Airlines admitted that it was funding pensions for more than 45
of its top executives.
It should be clear to everyone in this room that when
American Airlines promised ``two great airlines--one great
future,'' it was a lie. It undertook a pattern of activity
designed to solely eliminate the former TWA employees that it
once called TWA's greatest asset.
When American Airlines came to Congress asking for
financial aid after September 11, it received financial
assistance based in large part upon the TWA route structure.
When it sought reimbursement for security costs, it received
its reimbursement due in large part based on the TWA operation.
At the same time, it has taken our routes, our jobs, our
planes, our St. Louis hub and has handed us a pink slip.
I am a taxpayer who has paid taxes for more than 35 years.
Like all Americans, I have gone to work on a daily basis and
performed a meaningful job for a fair day's pay. I expected
fair wages. I have watched my tax dollars be spent to help
American Airlines survive this troubled industry. I have asked
for nothing in return but fairness. Both are tragically and
horribly missing in the TWA integration. There has been no
integration.
It has been reported that there is nothing this committee
can do, and my question is simple: Why not? We travel halfway
around the world to save the rest of the world for freedom. At
the same time, we are witnesses to an incredible injustice in
our own back yard. We are the greatest Nation on Earth. What
makes us so great is that we place our highest value on human
life. It realizes that the valuable citizen is what keeps us
strong. We are best-known for how we treat our most vulnerable
citizen, not our most powerful.
On behalf of the 20,000 TWA employees, I want more than
your sympathy. There would be no reason to be here today if
American Airlines had honored its commitment. We are asking
Congress to honor all that is right about America. We are
asking you to intercede on our behalf and restore the agreement
to a fair and equitable seniority integration.
Thank you.
Senator Bond. Thank you, Ms. Cooper.
[The prepared statement of Ms. Cooper may be found in
additional material.]
Senator Bond. I will indicate that a vote has started, and
we want to hear Ms. Schooling's testimony. Senator Talent and I
will have to go and vote, so we will ask that the committee
stand in recess, and we will come back for questions.
Ms. Schooling, we want to give you full time for your
statement, if you could make it 5 minutes, before we go vote.
Ms. Schooling?
Ms. Schooling. First of all, I want to thank you for taking
time to listen to my story. While mine may be an extreme case
of the hardship that the former TWA flight attendants are
facing, it nonetheless represents the hardship that all of us
will be facing on July 2, 2003.
I began my career in 1975 when I was 19 years old. I am
from Missouri, and the natural choice was to begin flying for
Ozark Airlines. When TWA acquired my airline in 1987, I had
been flying for 12 years. Instead of being stapled to the
bottom of the seniority list, I was given my full seniority. It
made all the difference in the world.
My younger sister, Maureen Short, also flew for Ozark and
became a TWA flight attendant. With her 25 years of combined
seniority, Maureen has already been furloughed to the street in
May.
I am a single mother of a son who has a rare condition
causing him to be profoundly disabled, both mentally and
physically. My son is 17 years old; he weights 32 pounds; he is
fed through a feeding tube and is in diapers and requires
constant care. My husband died 3 years ago of cancer. Many of
you would look at me and tell me how sorry you are for what has
happened to me in my personal life with my husband and my
child, but I see it as a challenge. Perhaps it is because of my
upbringing, and perhaps it is because of growing up in the
Midwest in the great State of Missouri, but I do not question
why God has given me this life. I love my child, and I love my
career.
What I do not understand is why both American Airlines and
the union that represents me have chosen to eliminate my
career. When American Airlines announced the TWA acquisition,
it promised ``two great airlines--one great career.'' It has
broken its promise to every TWA employee and spun a web of
deception that has broad social as well as safety issues.
I am scheduled to be furloughed on July 2, 2003. I will
lose my health insurance coverage for myself and my son.
Instead of providing 90 days of medical coverage, which it did
for all other furloughed employees prior to June 2003, it has
now determined that it will only provide 30 days' worth of
coverage. On top of that, both the company and the union agreed
that I would not receive any severance pay. Every other
employee prior to June 2003 received severance pay to help
defray the costs of a job loss.
I am facing total and complete financial devastation.
Because I took leave to care for my son, I will not even
receive full unemployment benefits to cover Ryan's care, let
alone household expenses. For most flight attendants, the
maximum we can receive weekly is $250. I can tolerate financial
downturn, and I can tolerate economic hardship. What I cannot
tolerate is the fact that American Airlines has broken its
commitment to all former TWA employees when it promised a
``fair and equitable'' process to determine seniority
integration.
I will not sit idle and tolerate the life-threatening
hardship that it will cause my son Ryan.
We are asking for your support to right the wrong. If I
have learned anything from what I have experienced personally,
it is that everyone deserves to be treated fairly and with
respect.
Thank you.
Senator Bond. Thank you very much, Ms. Schooling.
We will now declare a recess in the hearing in order for us
to go over and cast our votes. We will be back as quickly as we
can, which will probably take about 10 minutes, and we will
resume at the call of the chair.
We stand in recess.
[Recess.]
Senator Bond. The hearing will come to order, and we thank
you all for your patience and indulgence.
We will go back and forth with 5 minutes of questions and
probably go for two rounds, so we can get on to the second
panel as well this afternoon.
Mr. Case, in the written statement that has been presented
to us by Mr. White, he says on the supplemental CC that ``the
methodology drew considerably on the thinking and proposals of
the TWA pilots' own representatives and expressed in
approximately 25 negotiation sessions. Their thinking and
concerns went into both the construction of the seniority list
itself and also into the conditions and restrictions applied to
give added protection to the TWA pilots. There are only minor
differences between the two sides' positions.''
You were there, weren't you?
Mr. Case. Yes, sir, I was there in the background, coaching
or assisting our merger committee.
Senator Bond. Was that the case?
Mr. Case. No, sir, absolutely not. If they were minor
differences, I do not think the current employment situation
would be what it is. There were miles between the two parties.
There was never an agreement reached between the two parties.
As a matter of fact, American Airlines' vice president of
employee relations, when asked, replied that ``This is not a
fair deal.''
Senator Bond. Would that be Mr. Brundage?
Mr. Case. That would be Mr. Brundage.
Senator Bond. Did the TWA MEC Branch of ALPA ever agree to
any integration plan with American Airlines pilots' union, APA?
Mr. Case. No, sir. There were multiple offers and counter-
offers that went back and forth across the table, and as a
matter of fact, through fax machines, city-to-city, and there
was never an agreement reached.
Senator Bond. All right. Let me go to Ms. Cooper. Would you
please tell the committee the assurances you received of
American that you would not be stapled to the end of the
seniority list?
Ms. Cooper. Well, first of all, it is important to
understand that no union group at TWA gave American Airlines a
blank check. They made written assurances to us in exchange for
our board votes. They promised that there would be a process.
They promised that, first of all, they would stay out of the
process. They promised that we would have benefits that
mirrored those of American Airlines flight attendants. And they
promised that only after the two unions met and reached an
agreement would they adopt whatever agreement came out of those
talks. In our case, there were no talks.
We repeatedly demanded that American Airlines honor its
commitment to us that we be allowed to attend talks. They
instead chose to hold secret talks in which they stapled us. So
they in fact broke the agreement.
Senator Bond. Let me follow up on that. Secret talks--
obviously, they were kept secret--how did you find out about
them, and what information do you have on those talks?
Ms. Cooper. How I found out was that after the fact, there
was an announcement that an agreement had been reached, and 2
days after that, I confronted Mr. Brundage in person demanding
to know what talks had in fact taken place, when they had met,
how often they had met, what times they had met. And he
indicated that the talks had gone on, and he admitted that
despite the letters that were sent to him demanding our right
to attend the meetings, they ignored those demands and chose to
meet in secret. So that is how I found out, was through a press
release.
Senator Bond. Could you by any chance supply a copy of the
press release to the committee?
Ms. Cooper. I certainly can.
Senator Bond. Thank you.
[Document follows:]
Senator Bond. What negotiations did you participate in with
your counterpart American flight attendants?
Ms. Cooper. Zero, none, nada. There were no talks.
Senator Bond. Did American Airlines in any way attempt to
facilitate any such meetings?
Ms. Cooper. To the best of my knowledge, no. We repeatedly
asked American Airlines to set up the talks, and that is when
we discovered after the fact that talks had taken place without
us, and the only way we found out that there were talks was
through the press release that I stated earlier.
Senator Bond. Thank you.
Very quickly, Ms. Schooling, you were at Ozark, and you
were part of the acquisition by TWA. How was that acquisition
handled with respect to seniority rights?
Ms. Schooling. We got our full seniority at TWA.
Senator Bond. So you were given credit for the time you
spent at Ozark.
Ms. Schooling. Every year that we flew, yes.
Senator Bond. I assume you believe that that would be the
same process followed by the acquirer in this instance?
Ms. Schooling. That would be the best scenario. I just
think that being stapled to the bottom is totally unfair and
unacceptable.
Senator Bond. Thank you, Ms. Schooling.
I will now turn to Senator Talent for his questions.
Senator Talent. Thank you, Mr. Chairman.
I want to go a little bit into the whole issue of the
status of TWA at the time that this filing occurred, and I am
going to read from Mr. White's statement.
``Let us keep in mind the following: In light of the fact
that TWA was teetering on the verge of collapse and dissolution
at the time of the asset purchase''--is that true? Is that an
accurate description of the situation in our view? I will ask
Ms. Cooper and Mr. Case.
Ms. Cooper. That is not correct. In fact, at the time, in
December 2000, the unions had reached agreements with various
lessors to restructure the financial debt of TWA. In fact, I
was a direct participant in a search committee that had
selected a new president to take over TWA.
We also had an agreement with the unions to roll back
certain of our contracts--we had all hit our target amount. We
had hired someone to take over the company, and we were looking
to going forward. Mr. Compton would have been replaced in this
scenario, and we found out at the end of December that he in
fact was engaged in other talks, and it was only after I had
seen CNN that he reported to me as a member of the board of
directors that he had negotiated another deal.
Senator Talent. And in fact, American described TWA at the
time as a ``valuable asset,'' an important acquisition. They
did not treat it as a company about to go out of business that
they were going to----
Ms. Cooper. In fact, if I could follow up, I had been given
a copy of a powerpoint presentation that I believe American
presented to its own board of directors, claiming what a great
deal it was, how they had gotten TWA for less than its real
value, and that they believed that this was a great transaction
for them because they were, among other things, becoming the
world's largest airline and were acquiring the all-important
St. Louis hub. So they said it was a good deal, and they said
they got it for less than what it was truly worth.
Senator Talent. If you have a copy of that, I would like it
for the record--if that is all right, Mr. Chairman.
Senator Bond. We will accept it without objection.
Ms. Cooper. I will send that.
[Document follows:]
Senator Talent. Mr. Case, ALPA gave up in the course of
this its Allegheny-Mohawk protections, isn't that right?
Mr. Case. I would not directly say they gave up. Basically
what happened was that all the labor-protective positions in
our contract were required to be amended by American Airlines.
That was part of the purchase agreement. And as a matter of
fact--and I think this has escaped a lot of people--TWA was not
in bankruptcy. Bankruptcy was a requirement of the asset
purchase.
Senator Talent. Right. Even if TWA had gone back into
bankruptcy, that does not mean it was going to cease to
operate. It could have been restructured and come out, as in
fact it did.
Mr. Case. Absolutely not. TWA had proven to be a very
resilient airline, as a matter of fact, surfacing after two
previous bankruptcies, and a lot of that resilience was based
on the fact that the employees were very dedicated to making
sure that the airline continued to fly. It was in my opinion in
no way, shape, or form going out of business. And the
bankruptcy was simply a design of the sale.
Senator Talent. And what I was getting at was that even in
the back of your mind, there was a concern that without the
buyout, TWA might not be able to continue operating
indefinitely--and let us face it--that concern had been with
you guys for years and years; it was not an airline that was in
great shape financially. Nevertheless, you gave up or
sacrificed your employee protections, and I guess what I want
to ask is would you have done that if you had known that this
was going to be the result?
Mr. Case. Absolutely not, and as a matter of fact, through
that resilience, the employees had built an ability to have
labor directors on the board of directors with transaction-
blocking votes. There is absolutely no way that the employees
at TWA would have allowed the transaction to go through had we
known where we would be today.
Senator Talent. Yes, because from your perspective, it
could not have ended up worse than it did.
Mr. Case. Absolutely not, and as a matter of fact, in
exchange for our cooperation, for our amending our contract,
what we exchanged those provisions for was promises from
American of fairness and equity. And when their vice president
of employee relations does not see this as a fair integration,
how did they stand by and continue to sign it? They did not
have to sign the integration agreements with their labor
unions; they could have held that as a caveat to ensure a fair
seniority list integration.
Senator Talent. There are a couple more points I want to
bring up, and then I am done, Mr. Chairman, and I appreciate
your indulgence.
Mr. Case, in your longer written statement, you indicated
that American actually, just before the effective date of the
combination of the companies, did not just hire--you mentioned
one pilot that they hired who is going to keep flying when you
are not--but actually, they hired more than one, didn't they?
How many did they hire?
Mr. Case. Yes. There were hundreds who had been hired, and
as a matter of fact, on the specific date that you are talking
about, there was what they called, paraphrasing, a ``furlough
exchange program.'' What happened was that some of the American
pilots had been furloughed who had hire dates prior to April
10, 2001. There were 208 American pilots on furlough status
that were all hired prior to April 10, 2001. With the
implementation of Supplement CC, which was the integration
imposed upon us, 1,240-plus TWA pilots received a hire date of
April 10, 2001, so American was obligated to bring those 208
American pilots back and exchange them for some of staple-ees.
So around the May time frame, after a single carrier was
determined, they exchanged 208 American pilots; they brought
back Mr. B.D. White's group, and in exchange for that, they
placed TWA pilots on furlough in their place.
Senator Talent. Thank you.
One more thing, Ms. Cooper. In your exchange with Senator
Bond, you talked about talks that were never held. I think it
is important for the record if you could just set forth who was
representing whom. In the case of the flight attendants, who
represented each of the employee groups, and which of the
representatives had talks with American and which did not.
Everybody who knows the background knows that, but I do not
know how clear that was for the record.
Ms. Cooper. The International Association of Machinists and
Aerospace Workers represented the TWA flight attendants, and as
general chair for the flight attendants, I sent notices and
requests to American Airlines to hold the facilitated talks.
APFA, the Association of Professional Flight Attendants,
represented American flight attendants. We asked for those
talks to commence with the facilitator. American apparently
held talk with APFA; they held no talks with us. We attempted
as a follow-up to hold talks with TWA LLC because we were still
the bargaining representative. American showed up and refused
to discuss it with us and did not allow even TWA
representatives to meet with us over seniority.
Senator Talent. Did you talk with the APFA people at all?
Ms. Cooper. In talks about seniority--absolutely not. There
were no talks that ever took place on that issue.
Senator Talent. Thank you.
Thank you, Mr. Chairman.
Senator Bond. Thank you, Senator Talent.
Ms. Cooper, we asked Mr. Case a similar question. Is it
your belief that the American management could have refused to
accept the so-called integration agreement allegedly between
the employees of the two companies?
Ms. Cooper. Absolutely--and you do not have to take my word
for it. Mr. Baker, who was then a senior vice president of
American Airlines, clearly indicated that they had no
obligation to reach any agreement with APFA. In fact, he stated
that any agreements that would be reached would have to come
from the unions. In that powerpoint presentation that I
discussed earlier, it even points that out to the American
Airlines board of directors.
What he indicated would happen if there were no agreement
between the unions was the natural process of a national
mediation board, and once there would have been a single-
carrier determination, there would have been no conflict
between the unions, and APFA would have necessarily owed an
obligation to the TWA LLC flight attendants.
So American by its actions interfered. American by its
actions we believe committed fraud. American by its actions
broke its written agreement with us.
Senator Bond. Ms. Schooling, you are being furloughed July
2. How soon does your health care coverage expire?
Ms. Schooling. We are covered for 30 days from the time of
furlough.
Senator Bond. Do you have any employment lined up?
Ms. Schooling. No. I have not given it much thought at this
point.
Senator Bond. Thank you.
Mr. Case, did American Airlines ever bargain collectively
with you over seniority?
Mr. Case. No, sir, they did not. As a matter of fact, they
specifically said that they had no duty to bargain with us over
seniority and that it was specifically left between the two
unions; however, there were some actions that they took that
did not indicate that. Once again, if it was just simply
between the two unions, they did not have to sign off on
something that was not agreed to; they could have signed off
after something was agreed to or ensure that there was a fair
integration.
Senator Bond. Were there some provisions of American's
contracts with its union, APA and APFA, that were modified by
agreement between American Airlines and the unions before or
during the asset acquisition of TWA?
Mr. Case. Yes, sir, as a matter of fact, there were. The
APA contract, like many major airline contracts, requires that
all flying be done by the corporation's pilots. As such, the
APA had to amend their collective bargaining agreement or waive
a provision of their agreement to even allow TWA LLC to operate
with TWA LLC pilots.
Senator Bond. So in fact the company did achieve a change
in the labor agreement.
Mr. Case. Yes, sir. As a matter of fact, they achieved that
change by basically exchanging promises and guarantees with the
APA--in other words, it is the ``alter ego airline'' fear. Most
pilot groups and most flight attendant groups do not want to
see management start up an alter ego airline and operate a low-
cost or a separate carrier under the guise of a wholly-owned
subsidiary. So they put protective provisions in the contract
to make sure that that does not happen.
Senator Bond. Mr. Case, why didn't your national union,
ALPA help you? You were dues-paying members of ALPA, weren't
you?
Mr. Case. Yes, sir, we were. And as a matter of fact, on
the face of things, they appeared to be helping. Unfortunately,
there were multiple conflicts within the national union that
prevented a lot of their participation and assistance with us.
Senator Bond. Senator Talent, do you have any further
questions?
Senator Talent. One real quick one, Mr. Chairman.
Ms. Schooling, you say that you are getting 30 days of
health care?
Ms. Schooling. Yes.
Senator Talent. Is that what is typical for American
employees, or is that less?
Ms. Schooling. That went into effect in June 2003 with the
agreement that our union made with the company on the
concession package that we only get 30 days. It was 90 days'
paid medical coverage, and then it went to 30 days.
Senator Talent. Thank you.
Mr. Case. Senator, might I add just one point that I left
out a minute ago?
Senator Bond. Yes.
Mr. Case. Without getting too vulgar, this integration was
classified by American's vice president of employee relations
as ``a shit sandwich.''
Senator Bond. Well, I was going to ask if there was
anything else we need to add, but I think I will not ask that
question. [Laughter.]
To be serious, you understand that the record will be open
so that additional questions may be asked of each of you for
the record, and we would ask that you respond to those
questions in a full and timely manner.
Do you agree to accommodate that request?
Mr. Case. Yes.
Ms. Cooper. We will.
Ms. Schooling. Yes.
Senator Bond. Thank you very much. We very much appreciate
your testimony, and we will now hear from the second panel.
Mr. Case. Thank you.
Ms. Schooling. Thank you.
Ms. Cooper. Thank you.
Senator Bond. Mr. Brundage, is there anything we can get
for you to make that leg more comfortable?
Mr. Brundage. No, thank you, Senator.
Senator Bond. Having just gone through a similar
experience, I understand that this is not an easy thing for you
to do.
The second panel includes Mr. Jeffrey Brundage, vice
president of employee relations, appointed by American Airlines
in 2001, overseeing employee relations matters with all union-
represented employee groups. Previously, he served as managing
director of employee relations for flights since December 1999,
and for 7 years prior to joining American, Mr. Brundage worked
for the Airline Pilots Association International, most recently
as senior collective bargaining coordinator. He began his
aviation career as a pilot for Pocono Airlines before serving
in the same capacity for Atlantic Coast Airlines. He resides in
Cooleyville, TX.
Our second witness on this panel is Captain Edwin C. White,
an airline pilot employed by American Airlines since December
1977, a captain since 1987, currently a Boeing 777 captain
based in Dallas-Fort Worth. Prior to that, he served in the
United States Air Force, the DC. Air National Guard, and the
Air Force Reserves. He is a member of the Allied Pilots
Association Collective Bargaining Representative, currently
chairman of the APA Negotiating Committee. In 2001 he was
chairman of the APA's Mergers and Acquisitions Committee; on
behalf of the committee, he participated in extended
negotiations.
Gentlemen, we welcome you, and I would like to call on Mr.
Brundage first for his testimony. We will accept your full
testimony for the record, and if you could summarize in 5
minutes or so, we would appreciate it. Unfortunately, we have
gotten notice that there is going to be another vote coming up
before long, so we will try to get this in as quickly as we
can.
Mr. Brundage?
STATEMENTS OF JEFF BRUNDAGE, FORT WORTH, TX, VICE PRESIDENT,
EMPLOYEE RELATIONS, AMERICAN AIRLINES; AND EDWIN C. WHITE, JR.,
FORT WORTH, TX, ALLIED PILOTS ASSOCIATION
Mr. Brundage. Senator Bond, Senator Talent, thank you very
much for your invitation to speak on behalf of American
Airlines.
I am Jeff Brundage, vice president of employee relations. I
joined American Airlines in December 1999 after a career as a
pilot and a union leader. At American, I was actively involved
in the labor integration plan when the company acquired the
assets of TWA in the spring of 2001.
As you know, these are extraordinarily difficult time in
the U.S. airline industry. Since the events of September 11,
2001, the industry has lost more than 100,000 jobs and has
suffered perhaps more than any other industry from the economic
downturn, the effects of war and the threat of terrorism on
travel. So we certainly understand and appreciate your concerns
and Senator Talent's concerns about the jobs lost and the
effect on the people and the communities that you both
represent.
Today I want to use my time to offer you a little
background on American's acquisition of TWA's assets during the
early part of 2001 and our efforts to provide jobs to the
20,000 TWA employees who would have otherwise been facing the
liquidation of their company.
It was always our intent to provide jobs to the TWA workers
until their retirement, and we did everything we could to put
our newest employees on par with all other American employees.
In fact, we provided pay and benefits that represent one of the
most generous employee packages in the history of corporate
acquisitions.
Before TWA filed bankruptcy in January of 2001, it
approached the other major U.S. airlines about entering into
some kind of transaction whereby TWA could have continued to
operate. Only American was willing to make a comprehensive
proposal that saved the jobs of many TWA employees.
Under the asset purchase agreement, American voluntarily
agreed to provide employment to all unionized TWA employees.
The bankruptcy court found American's offer to be the only
qualifying offer and approved the asset purchase agreement. The
alternative was liquidation, and the immediate unemployment of
20,000 TWA workers.
Our goal was to successfully integrate the two airlines. We
knew that we would not be successful unless we had the good
will of the TWA employees. From the very beginning, we offered
TWA employees compensation and benefits that rewarded them as
if they had worked their entire career at American.
TWA employees were not brought on as new hires and lost no
pay, benefits, accrued vacation time, or sick leave. We gave
TWA employees full credit for their longevity for these
purposes.
As of January 2002, we put all TWA employees on American's
pay scale. Because TWA pay rates had been significantly lower
than those at American, the majority received a substantial pay
increase.
It is important to note that this was not a merger. As we
began the asset acquisition process, we had longstanding
obligations to the existing workforce at American of more than
100,000 employees and to the contracts negotiated with their
unions.
But the challenge of integrating two workforces goes beyond
matters of benefits and pay. It is the right and the
responsibility of the labor unions that represent our employees
to negotiate on their memberships' behalf on a wide range of
other contract provisions, including seniority and job
protection, and they are at issue today.
This, as you can imagine, was a difficult situation for all
involved. We had competing unions with competing interests, and
ultimately, these matters were resolved as internal union
matters. The company's role in the process was to use our best
efforts to facilitate the seniority integration process, and as
one independent arbitrator ruled, we did just that.
Even though the seniority integrations varied with each
work group--pilots, flight attendants and ground workers--
American met its commitment to provide former TWA employees
full credit for their years of service at TWA for all pay and
benefit purposes.
At the time of this asset acquisition, no one foresaw the
industry's impending financial crisis--a financial crisis that
regrettably has led to the furloughing of so many employees
throughout the industry, including at American.
The ultimate consequences for the TWA employees were not
the result of the integration plan, but rather an economic
downturn that forced layoffs and cutbacks throughout the
industry. The pain has been spread far and wide.
I appreciate the efforts of this Congress to provide aid to
the airline industry and assistance to the tens of thousands of
workers who have lost their jobs. I hope that we can all soon
anticipate better times for the U.S. airline industry and begin
to turn our focus toward recall our fellow workers.
Thank you for your attention, and I would be happy to
address your questions.
Senator Bond. Thank you very much, Mr. Brundage.
Captain White?
[The prepared statement of Mr. Brundage may be found in
additional material.]
Mr. White. Thank you all for giving us this opportunity
today.
My name is Edwin White. I have been an airline pilot since
1977 at American Airlines and a captain since 1987. During my
tenure at American, I have been a member of the Allied Pilots
Association, the union representing the pilots at American, and
have served in a variety of official positions at the APA. Most
pertinent to your purposes here, I served as chairman of the
APA Mergers and Acquisitions Committee, and in that position
negotiated the agreement known as Supplement CC that governed
the seniority integration of TWA pilots into American after
American purchased most of the TWA assets in a bankruptcy
proceeding in 2001. I am here to address that seniority
integration.
It is my understanding that a group of former TWA pilots
has charged that the pilot seniority integration established in
Supplement CC is unfair to them. I can tell you, Senators, that
I have heard that same charge from some incumbent American
pilots, namely, that the integration was unfair to the
incumbent pilot group. Complaints of this sort are standard in
any major seniority integration in the airline industry.
I take issue with those charges from both sides of the
house. What we sought to achieve in Supplement CC and what I
believe we did achieve, was an extremely fair expression of the
legitimate and realistic career expectations of both pilot
groups. The former TWA pilots were fully credited with what
they brought to the combined carrier--that is, aircraft and
sustainable jobs--and so were the American pilots. That to my
mind is the essence of fairness in a matter like this.
In my written statement to the committee, I have gone into
considerable detail on the significant research and thought
that went into Supplement CC and how it was based on virtual
mathematical projections of the career paths of every former
TWA pilot and every American Airlines pilot as of the date
American purchased TWA assets. That methodology drew
considerably on the thinking and proposals of the TWA pilots'
own representatives as expressed in approximately 25
negotiating sessions.
Their thinking and concerns went into both the construction
of the seniority list itself and also into the conditions and
restrictions applied to give added protection to the TWA
pilots.
Although you would hardly know it through the public
statements of some of the former TWA pilots, at the end of
those negotiations, there were only minor differences between
the two sides' positions. And as the TWA pilots informed us at
the time, they were willing to sign off on the final product of
those negotiations if American were willing to agree to certain
conditions that went beyond our capacity as employee
representatives to deliver.
Much of the unhappiness with Supplement CC of course
derives from the fact that the entire airline industry has been
in a tailspin since 9/11, resulting in massive furloughs
throughout the industry. I personally find any furlough
regrettable. No doubt the former TWA pilots have suffered
significantly due to furloughs. But before we find something
wrongful in that, let us keep in mind the following: In light
of the fact that TWA was teetering on the verge of collapse and
dissolution at the time of the asset purchase, the career
expectations of the TWA pilots were infused with a much higher
probability of furlough or, even worse, permanent unemployment,
than the American pilots.
Moreover, the APA had succeeded in negotiating furlough
protection for American pilots while the former TWA pilots'
representatives were unsuccessful in doing so. As a matter of
fundamental fairness, this aspect of the former TWA pilots'
career expectations also had to get factored into the
integration process.
Finally, although the TWA pilots knowingly and voluntarily
gave up whatever right they may have had to arbitrate
integration issues in order to save their jobs, the TWA pilots
did not in any way give up their absolute right to challenge
what they now call the defects of Supplement CC in the Federal
courts.
Indeed, they are exercising that right right now in the
Federal district court of New Jersey. As the courts have always
done in this area, the court will determine what is just and
proper in this situation, and it will do so not on the basis of
emotion but on the considerable body of law that has been
developed in scores of seniority integration cases. In short,
if the former TWA pilots have not been accorded their due--and
I sincerely believe they have--the court will provide the
appropriate remedy.
Finally, their court case is significantly advanced.
Motions to determine the claims of the former TWA pilots have
been fully briefed, and the court should render a decision in
the near future. With all due respect, I do not believe that
Congress should intrude into that orderly legal process.
Thank you.
Senator Bond. Gentlemen, unfortunately, we have started
another vote, but we will see how quickly we can go with the
questioning. Actually, Senator Talent, do you want to go ahead
and vote and come back?
Senator Talent. I think it would be better.
Senator Bond. All right. Why don't you go ahead----
Senator Talent. Oh--if you are going to stay, I will stay.
Senator Bond. All right.
Mr. Brundage, we have had an opportunity to work with you
and have great respect for your confidence and your dedication
and intellect. I was looking at page 3 of the summary of your
written testimony, and it says: ``The fact is that the unions
negotiated and agreed to an integration plan that attempted to
balance competing interests and preserve jobs.''
Based on what we have heard, I do not see that there was
any kind of agreement between the two sides on this most
important issue of the seniority plan. Would you care to
correct that statement based on what we have heard?
Mr. Brundage. Senator, the comment that I was credited with
at the end of the last testimony was made in a private meeting
with the TWA MEC, where I was attempting to encourage the MEC--
and I was invited into that meeting by myself, with a group and
their advisors, and this was at the conclusion of that 36-hour
stint that you asked us to participate in over at the Mayflower
Hotel. And the point that I was making was that under the
agreement that American had with the APA, our only option would
have been to have treated the TWA pilots as new hires. The
company has the right to choose whom we hire, but our union
contract dictates how they are placed on the seniority list.
The point I was making to the MEC was that however they
viewed the deal that had been discussed at the Mayflower, it
was clearly better than the alternative that American had
available to it in terms of how we put these people on the
list. And they then, after hours of deliberation and another
day, sent a letter by fax to me at American Airlines and to the
APA where they accepted the APA's integration agreement as it
was discussed at the Mayflower Hotel, but they also added to
that letter a number of conditions that they wanted to impose
upon American, some significantly burdensome economic
conditions in terms of how pay would be adjusted and those
types of things. So had I signed that letter when I received
it, had it not included those new conditions we had never
discussed, those economically burdensome conditions, and if the
APA had signed that letter--and I cannot attest to whether they
would have or not--as a result of the meetings you
commissioned, we would have had a voluntary agreement between
the two parties.
Senator Bond. Excuse me, Mr. Brundage, but when you make an
offer to one party and they come back with a counter-offer, if
you like some terms of the counter-offer and do not like some
other terms and you do not accept it, that is not an agreement.
I would like to see where they agreed to this proposition. The
fact that they say, OK, we will take this if you will do this
does not mean that you can say, Well, okay, they agreed to take
this, and we just decided we were not going to consider it----
Mr. Brundage. Senator, I must have misunderstood your
question. I thought your question was whether or not they have
agreed to the APA's proposal as to how to integrate seniority.
Senator Bond. I asked whether they had come to an agreement
on that proposal. Apparently, their somewhat positive response
was conditioned on other items which you and/or they or
somebody found unacceptable. That is not an agreement.
Mr. Brundage. I agree, but they were not items that were
related to how the seniority would be integrated. They were
items related to, for instance, pay.
Senator Bond. Yes, well, there was no agreement. You can--I
apologize. I am not going to get into an argument with you, but
that is not an agreement.
I would like to know from you gentlemen whose idea it was
to eliminate the protections. Here is the Allegheny-Mohawk
protection in the TWA contract.
Mr. Brundage. It was mine.
Senator Bond. It was yours.
Mr. Brundage. Yes.
Senator Bond. And why did you say you had to have it taken
out?
Mr. Brundage. Months prior to the acquisition that resulted
in American's purchase, American had been discussing with TWA
opportunities to potentially have a different commercial
arrangement. I was asked at that time to review the TWA
contracts and determine as to whether or not there were
inconsistencies or frictions between the two agreements,
because as you know, in the airline industry, that is one of
the most difficult issues.
I reported back to the people that I work for that based on
the agreements that we had with our employees at American, we
would have created a friction or a tension which was
unresolvable had we simply accepted the agreement to purchase
TWA with those Allegheny-Mohawk provisions in their agreement.
Senator Bond. But your pilots have Allegheny-Mohawk-type
protections, do they not?
Mr. Brundage. There are protections in the pilot agreement,
and I can refer to Mr. White, who is an expert on this area,
but their protections are in the event that American was
purchased, and if a purchaser conditioned the purchase of
American on the removal of those conditions, it would have been
up to the pilots to determine whether or not they were going to
stand by those provisions or modify those provisions. And in
the testimony provided by Mr. Case, that is the exact decision
that the TWA pilot group was faced with. They recognized that
we had said to them that there was no circumstance under which
we would make this asset acquisition if in fact those
Allegheny-Mohawk provisions were named because of the very
tension they would have created with our own employees. They
made that decision. They made that decision with full knowledge
of the commitments that we made.
Senator Bond. And the commitments that you made that we
have heard discussed here today were these employees, the crown
jewel, the St. Louis hub, and that you were going to see that
there was a fair integration. And did you know at the time that
there was going to be no effort whatsoever at resolving the
integration on something resembling an equal seniority time-
and-service basis?
Mr. Brundage. Richard Bloch, who is a pretty respected
arbitrator in the aviation industry, was asked to decide an
arbitration case brought forward by the Airline Pilots
Association, and the Airline Pilots Association claimed that
American had not lived up to its commitment to work toward a
process that was fair and equitable.
There are thousands of pages, or at least a thousand or
more pages, of testimony in that case where Arbitrator Bloch
confirmed that in his opinion, American did in fact meet the
commitments that it agreed to in the agreement with the Airline
Pilots Association, so----
Senator Bond. By providing a facilitator.
Mr. Brundage. By providing a facilitator, which is exactly
what we signed up for.
Now, sir, the Allegheny-Mohawk provisions and the term
``fair and equitable'' is clearly a legal distinction. I mean,
it results from the CAB and the old labor-protective
provisions. If in fact we had intended to provide those
Allegheny-Mohawk provisions, why would we have ever conditioned
our purchase of the assets at TWA on the removal of those
positions? To me, that is the inconsistency in the discussion
that I personally have a hard time resolving.
We specifically took the provisions that you are addressing
and told the employees of TWA: If you would like us to offer
you employment--and remembering this was not a merger; it was
an asset acquisition--if you would like us to offer you
employment, you have to understand that those provisions
prevent a tension, a conflict, with our existing agreements,
and we cannot accept them.
So the commitment we made was significantly different than
the ``fair and equitable'' commitment that exists in the
Allegheny-Mohawk LPPs. The commitment we made was simply to
facilitate a process, and when that process failed with the
pilots, at your request, we entered the fray and participated
in the Mayflower meetings.
Senator Bond. And it went nowhere, and that is the problem.
It was not a negotiation. You wound up--let me turn quickly to
Senator Talent.
Senator Talent. Mr. Brundage, as I look at this thing, the
question that comes to mind is what happened--I mean, what
happened?
Mr. Brundage. That is a great question.
Senator Talent. You are in labor relations. I do not
pretend to be an expert on labor relations and transportation,
but I know that in a typical industrial-type setting, this
could not happen. Right now, they are evaluating this in
Federal court. How did this happen?
Mr. Brundage. Well, first, you are correct. This is being
evaluated in court as we speak. But our promise was to hire the
TWA employees. And I said earlier--and it may seem to be a fine
point, but it is an important point--this was not a merger. And
you may refer in context to some of the things you have said in
the context of a merger, but this was not, and it was made
clear.
We also at the time we employed the TWA----
Senator Talent. Let me enter for just a second here. When I
have been around here for a couple years, I will remember to
push the button so the microphone works.
Yes, it was a buyout rather than a merger, so one of the
themes of your testimony and Mr. White's and the company's
position now is that basically, we were doing TWA a big favor.
Nobody else would take over this crippled airline. There is
sort of this underlying note. And yet the truth of the matter
is you guys did not do this out of charity. You thought this
was going to be a good deal for American Airlines. That is
correct, isn't it?
Mr. Brundage. Absolutely.
Senator Talent. So let us get that on the record. You would
have violated your duty to your shareholders if you did this
just as a matter of charity for TWA. And TWA did bring a lot to
the table that you do not always get in buyouts--they had
planes, they had maintenance facilities, a lot of expert
employees and all that, right?
Mr. Brundage. Yes.
Senator Talent. So this was going to be good for both
parties--that was the basis of it.
Mr. Brundage. Absolutely.
Senator Talent. And that was the expectation, that you
would emerge with a stronger airline which, Mr. White, would be
better for everybody's employees if that happened, or you would
not have made the deal.
Mr. Brundage. [Nodding.]
Senator Talent. OK. So, go ahead. I just wanted to get that
on the record.
Mr. Brundage. The commitment we made was to hire the TWA
employees, and we did that. We also agreed to provide full
longevity, which frequently is not done even in merger
situations, but for their service at TWA, we gave them full
credit for pay purposes and the pay scales and steps.
We also agreed to the facilitation of a fair seniority
integration process. We have talked about the legal
distinctions of ``fair and equitable.''
Let me put it in context if I can. We spent a considerable
amount of time in advance of that April transaction out at
employee meetings. I personally travelled with the senior
executives of the company to every base in the American
Airlines system and made a commitment to 100,000 employees in
person that we would not--we would not--attempt to subject them
to any seniority process that they were not agreeable to. We
were not going to make this transaction on the backs of the
American employees.
As you well know, prior to my arrival at American, there
was a very difficult occurrence in another acquisition by
American, and we had learned our lessons. We had learned our
lessons very clearly, and we were going out of our way to
inform our employees that we understood what their contract
said. Now, we also said that we were willing to accept whatever
process they were willing to accept as well, and in the case of
the IAM and the TWU, they used an arbitrated process.
Senator Talent. OK. So as I understand what you are saying,
and based on the comment that you made to the MEC--and I am not
going to repeat that, and I do think that that was language
that you used in a private meeting in a labor-management-type
situation, and let us face it, it is not like the elders at a
church getting together and discussing the future; so we all
need to understand that, and we have all heard language worse
than that in that kind of meeting--but basically, what you were
saying was, look, we know this is not very good for you--in
fact, this is lousy for you, this is ``bleep'' for you--but we
are buying you out, and it is what our current union wants.
That is really what you are telling us, that you were under
pressure from the American Airlines unions, and this was all
that you could give the TWA people.
Mr. Brundage. Actually, I was suggesting that what the TWA
people had gotten in the pilot case was actually better than I
had expected and that there were certain protections there, and
in fact at that meeting, American--one of the reasons American
came to that meeting was to try to bring some additional things
to the table.
Senator Talent. So you had no choice given what your
current employee workforce felt and had represented to you
through their union leaders.
Mr. Brundage. Who were living by the contracts that we had.
Senator Talent. OK. You had no choice.
Now, you did not make it worse, did you? You did not
intervene in this process to make it worse for the TWA people?
Mr. Brundage. The only way we could have made it worse was
by not attempting to help this facilitation process, because
our only alternative then would have been to have offered this
employment as brand, new hires, without anything other than a
promise of job, no seniority, no longevity, no benefits, none
of those things.
Senator Talent. So the point is that however bad it was,
that was what your current unions wanted; you did not make it
any worse?
Mr. Brundage. We tried to make it better, sir.
Senator Talent. OK.
Are we going to interrupt now? I have some more.
Senator Bond. Yes. We are going to have to recess this
hearing, and we will get back as quickly as possible.
Thank you.
[Recess.]
Senator Bond. We will resume the hearing and ask Senator
Talent to continue the line of questioning he was pursuing.
Senator Talent. Thank you, Mr. Chairman.
Mr. Brundage, we were just at the point where you had
testified that--I am going to paraphrase--while your evaluation
of the agreement to the MEC was in one sense substantially
correct, that it was a ``bleep'' deal--it was not a very good
deal for them--that nevertheless, you--``you'' meaning American
Airlines--had tried to make it better and certainly did not try
to make it worse.
Mr. Brundage. Correct.
Senator Talent. Since you have tried to make it better in
the past, and you agree it is a uniquely bad deal, would you be
willing to sit down if the union were willing to and talk about
making it better now?
Mr. Brundage. Sir, we could not have been clearer about the
conditions of this agreement. And we have heard some testimony
today that quite frankly is news to me, that the TWA employees
had a number of options at the time that this transaction
closed.
I am a believer that you need to simply State the facts up
front; everybody has got to be clear about what the game field
looks like and what the rules are and move forward.
I believe that American went out of its way to make sure
that our commitment to hire the TWA employees was clear. Our
expectations for what would happen was clear. And I think that
we need to be cognizant here of what a decision like the one
that you just suggested could reap in the future for airlines
or for other industries who may not be in the best condition
and whether there would ever be a suitor who would consider
coming in and taking that company and trying to integrate that
company and hire its employees, because if you agree to
purchase something, and you make what you are willing to do
absolutely clear and, in my opinion, you live up to the
agreement that was made at that time----
Senator Talent. Wait a minute. Hold on a second, because
you were willing to do more. You just said you wanted to make
it better, but you could not in light of what your current
unions wanted, which is frankly what I suspected from the
beginning when I looked at this. So you wanted to make it
better, so why not now? If the union were willing to do it, why
can't you sit down and readjust this seniority agreement before
the next round of layoffs go into place to make it more
equitable in light of what we both know the typical tradition
and practices in labor-management relations are?
I will let you finish.
Mr. Brundage. Maybe I have not been as clear as I would
like to be. American made it absolutely clear at the onset that
the issue of how seniority would be integrated would be an
issue to be solved by the unions. Seniority was not within the
purview of American, and we made that clear at the time of the
transaction.
We made a commitment to employ people. We made a commitment
to facilitate a process. That process was never defined, and it
was intentionally not defined. We agreed to an arbitrated
process in the case of the IAM and the TWU. We hired and paid
for a facilitator for both the flight attendants and for the
pilots. We encouraged at every opportunity the American unions
to use the facilities of that facilitator. But at the end of
the day, the game field said that seniority would be determined
by a decision of the unions.
Senator Talent. What I contest there, Mr. Brundage, in
light of the statements that Senator Bond has read regarding
the public statements of American Airlines officials as well as
private statements or statements that were made to him, I know,
and to other people is your statement that you made it
absolutely clear. Don't you think that if you had said to the
TWA pilots and to Ms. Cooper--with whom you did not even have
talks--``Look, you guys need to understand that all you are
going to get is what our current unions are willing to give
you. We are basically out of this game. We are going to hire a
facilitator but that is it''--do you think that they would have
given up Allegheny-Mohawk? Do you think they would have agreed
and supported the buyout as they did--because I don't know how
they could possibly have ended up worse.
Mr. Brundage. Well, as I said in my opening, I was an
employee of ALPA for some time, and I had very high regard for
the ALPA union, and I also had high regard for the IAM. They
have been around this business for a long time, and they are
very smart people.
I think it is important to note that those very smart
people, who probably understand Allegheny-Mohawk as well as you
or I do----
Senator Talent. Probably better than I do.
Mr. Brundage. [continuing]. Fully understood what they were
removing from those agreements to allow that asset acquisition
to take place and to provide for the opportunity to be hired by
American. So beyond that, I would be speculating on what they
were thinking, but my respect for those unions would indicate
they knew exactly what they were doing, and there was no
surprise.
Senator Talent. Can I have just one line of questions for
Mr. White, Mr. Chairman, rather than waiting? I know I am over
my 5 minutes.
Senator Bond. Go ahead.
Senator Talent. Mr. White, I have a letter dated April 18
from you to Captain Mike Day, who was chairman of the TWA
Merger Committee, the first sentence of which is: ``Attached is
the APA Mergers and Acquisitions Committee's reviewed seniority
integration proposal.'' And attached to that is, as part of
1(a), the statement: ``Seniority list merge date shall be on
the date on which American Airlines was declared the successful
winner of the auction for the assets of TWA 12 March 2001.''
I do not know if you are familiar with this letter or if
you remember it. And I am holding on by my fingernails to
understand what all this means, but as I understand it, that
meant that you had come to an agreement, at least on a
preliminary basis, with the TWA Mergers Committee that the
seniority list integration date would be 12 March 2001. Is that
what that means?
Mr. White. Yes, sir.
Senator Talent. Now, that is not the merge date that was
subsequently adopted by American, is it?
Mr. White. That is correct.
Senator Talent. And what was the merge date that they
subsequently adopted?
Mr. White. I believe it is April 10.
Senator Talent. Now, as I understand it, one of the
significant aspects of this is that had the merge date been 12
March 2001, so that the lists would have merged about a month
before the final buyout date, then the furlough protections of
the contract would have attached to the TWA employees. Is that
your understanding?
Mr. White. Yes, sir.
Senator Talent. So because the merge date was moved forward
to April 10, the TWA employees did not get the furlough
protections.
Mr. White. A portion of them did not.
Senator Talent. OK. How did we go from 12 March 2001 in
this letter dated April 18, 2001 to April 10? What happened?
Mr. White. What happened is when American Airlines
announced the purchase of the assets of TWA, I had not been
doing union work for a while--I had gotten out of it--and I was
asked to chair the merger committee, and we had a negotiating
committee that was relatively new, so we had myself and one
other member attached to the negotiating committee, and we were
attached to negotiate with that negotiating committee with
American Airlines on the transition agreement, which was the
``exception of scope'' clause that you asked about earlier.
The purpose of attaching us to that committee and then
having a couple members of the negotiating committee attached
to the merger committee in our discussions for the TWA pilots
was to make sure that we were keeping everything lined up.
Well, when we reached an agreement with American Airlines
on the transition agreement, and the contractual language
started writing, I did not end up getting involved in the
contractual language-writing of that process, and the
negotiating committee unbeknownst to me negotiated with
American Airlines for furlough protection for the pilots of
American Airlines because of the risk that was associated with
buying the assets of TWA, and that furlough protection was
going to go to pilots, absolute protection to the pilots as of
April 10 and then a soft furlough protection for pilots hired
after that.
Well, after the facilitation process was over, I had gone
on vacation and got a call, and they said that under the
auspices of Senator Bond's office, they wanted to have
discussions. So we came in to Washington, DC., and Jeff
Brundage became aware that we had talked to them about April
10, and he said they had negotiated for furlough protection and
were not successful in achieving furlough protection for their
pilots and that the corporation was going to stand by that
unwillingness to provide any furlough protection for the TWA
pilots.
So I explained that we had a problem in that we had reached
an agreement with the TWA pilots that we would use March 12,
and the negotiating committee was standing on one side, saying,
``We cannot back the date up,'' and we had American Airlines on
the other side saying I cannot give all the pilots furlough
protection. So I had gotten myself into a little bit of hot
water there.
So we sat down in discussions during that period of time
and discussed the three-party situation, and Jeff Brundage
offered to provide the furlough protection for the 1,095
pilots--not quite half of their seniority list that was going
to go on the integration--and that was something that American
Airlines was able to what I call ``pot-sweeten'' or bring to
the table that we could not offer.
So that is how that date got changed to April 10.
Senator Talent. I was getting at that. So it was American
Airlines that contacted you and wanted the date changed or
wanted some adjustment in that agreement?
Mr. White. I would not say so much as they contacted us;
they were sitting at the table when we were going over these
items, and when he heard that date, he sat upright and said,
``Wait a minute. We need to talk about this.''
Senator Talent. OK. Now, Mr. Brundage, I understood you to
say that you tried to make it better.
Mr. Brundage. Yes.
Senator Talent. This made it worse, didn't it?
Mr. Brundage. Sir, the pilots represented by ALPA, while
still at TWA, Incorporated, attempted to negotiate furlough
protection as part of the agreement--as a quid--for the
agreement to eliminate the Allegheny-Mohawk provisions of their
agreement.
At that time, it was made absolutely clear from American to
TWA that in light of the inherent risks of this commercial
transaction, there were no circumstances under which American
Airlines could proceed with the transaction if in fact it
included a commitment to provide furlough protection for the
employees we did not yet even have on our property.
Senator Bond. But, Mr. Brundage, you did get in and change
the agreed-upon date of March 12. Here, we have been hearing,
Boy, Mr. Carty told me this is strictly up to the unions. You
changed the date that the unions agreed upon. You accepted an
agreement with the flight attendants that the flight attendants
never made. You took a counter-offer from the TWA pilots and
said because part of the counter-offer was that they would
accept it on this condition, that that was an agreement.
It seems to me that you were all over the middle of these
negotiations and had a significant say in how they would come
out. And I find it hard to square that actuality with the
assurances that TWA employees got and, frankly, that I got in
my conversations with your top executives--who regrettably
cannot be here, so we cannot talk about their discussions. But
that was their understanding, it was my understanding, and
clearly, you had a major role in the terms that the unions
discussed--the one thing they agreed on you changed.
Senator Talent. I think I will yield back to you, Mr.
Chairman. [Laughter.]
Senator Bond. No--I just had a thought there, Senator.
Senator Talent. That was my last question, anyway. I may
have a few more. I assume you have a few, obviously.
Senator Bond. I have one or two that I wanted to bring up.
Mr. Brundage, about that time, there was a proposal that United
and American divide up USAIR. Weren't those discussions going
on?
Mr. Brundage. American was working with United to purchase
a portion of USAIR to potentially satisfy the Justice
Department requirements in that transaction, and yes, that is
correct.
Senator Bond. I had heard that American would agree to
accept the Mohawk-Allegheny provisions in the USAIR contract.
Is that accurate?
Mr. Brundage. No, sir. It is inaccurate. What we said to
the APA pilots was--and again, this was an ALPA/APA issue
because ALPA represented the USAIR pilots--we said to the
pilots at APA that the only way that the transaction could take
place--and I may not have the right aircraft type, but I
believe there were a number of 757s involved here--the only way
we would be able to acquire those 757s was if the pilots came
with those airplanes. We went to the APA and said to the APA
the only way the pilots will come with those airplanes is if
they get Allegheny-Mohawk 3 and 13 protection.
So essentially, we gave the APA veto power over whether or
not that portion of the transaction would ever occur based on
the exact same understanding that we used to ask the TWA pilots
to expunge that portion of their agreement.
So it was never offered by American. We told the APA: If
you guys think these airplanes are a good deal for American,
then you are going to have to help us in this transaction, and
you are going to have to step up to the plate on this portion.
And quite frankly, we do not believe we ever brought that to
conclusion because the deal fell apart, and I have no idea what
their answer would or would not have been.
Senator Bond. But the American Airlines management did not
get involved in negotiations between unions. You were the ones
who brought up, and you said that you were the ones who
required ALPA and the flight attendants to give up--ALPA to
give up its Mohawk-Allegheny rights.
Mr. Brundage. What we said was, to be accurate, we told
TWA, Incorporated that we would not conclude, we would not
finish, the asset acquisition process, that we would not
purchase the assets or offer the jobs if these provisions
remained in the TWA contracts. That was a condition to TWA,
Inc. It was their job to go and resolve those issues with their
unions. And in fact, at one point, it appeared that TWA was not
going to be successful and actually began to prepare what is
called an 1113 petition in their bankruptcy process to ask a
court to not simply change that provision but to in fact reject
the entire agreement.
That was something that, it is correct, it was American's
condition, but it was a condition put on TWA, Incorporated if
they wanted this transaction to be concluded.
Senator Bond. But by the same token, you were actively
engaged in modifying--the American management was modifying the
union's agreements. You had to go back and modify the agreement
with the APA, did you not, to bring the TWA ALPA employees on
board?
Mr. Brundage. We did not even need to speak to the APA if
we chose to simply hire them as new hires. That is within the
company's purview to do. We went to the APA and said: Look, we
think it makes sense to do more than that and to do it
differently, and there are provisions of your agreement that
control that relationship, so we would like to talk to you
about modifying that agreement in a way to improve our ability
to bring the TWA employees on the property. And that is the
transition agreement that Mr. White referred to.
Senator Bond. In order to get TWA to accept the offer and
not to pursue an option in bankruptcy, which they had done at
least twice previously, representations were made to them about
the fair and equitable treatment. You represented to them that
they had to give up their Mohawk-Allegheny protection, and at
the same time you were telling the TWA employees who were
actually members of management of TWA and those of us who had
an interest in it that they would be treated fairly and
equitably. you really were laying the groundwork to make sure
that they would not have to be integrated fairly into the
system. That is what came out, is it not?
Mr. Brundage. Oh, I disagree respectfully, sir. I believe
that our commitment was to hire those employees and to provide
them with credit for longevity for pay purposes and to work to
create a facilitated process that was fair and equitable. And
as I said earlier, that was put to the test of an arbitration
and to an arbitrator in the case of the pilots, and the
arbitrator clearly ruled that American had met the exact duty
that you are describing.
So I guess my opinion of it is maybe less important than
Arbitrator Bloch's opinion of it.
Senator Bond. And what about the promise to fence off St.
Louis, since the management of American made the representation
that the St. Louis hub, the airplanes, the personnel who
operated them, the traffic that they generated there, the
reputation that they had as the crown jewel, and that would be
protected? Whatever became of that promise?
Mr. Brundage. Senator, if I can transport myself back to
the days that we were in the process of trying to acquire those
assets, I can tell you that in my mind, I saw nothing but an
extraordinarily bright future, especially in light of the fact
that American at the time was constrained at Chicago and
constrained at Dallas.
As you know, the Congress was dealing with an airspace
system that was congested. There was no room at airports. We
had all the problems, and clearly, that was a wonderful
opportunity for American.
Fast-forward--two airplanes into the World Trade Center,
the Pentagon, and a field in Pennsylvania; business travel that
shrunk up to almost zero; overcapacity in the system. There is
no way that we could have predicted when we looked at the
network of American Airlines in 2001 that we would be sitting
here facing the kinds of trials and tribulations that the
airline industry faces today.
I can only talk to my perception and my good fait, and it
was exactly as you described it, and that is exactly what we
had intended. And I can only write off what has happened today
to a much larger circumstance than the integration of American
and TWA. As you well know, airline workers across the entire
country have been devastated by this, and there are way too
many stories like the stories we heard here earlier, and the
empathy for those folks is unbelievable----
Senator Bond. What do you say to Ms. Schooling?
Mr. Brundage. I say to Ms. Schooling that it deeply, deeply
hurts me. I never, never expected when I signed up to be vice
president of employee relations at American Airlines that
shortly after I took that position, I would be in the process
of laying off more than 20,000 people. It is one of the hardest
things I have ever done in my life. But, Senator, if we do not
focus on our turnaround plan, if we do not make a stable
economic foundation for American Airlines, we will not have
jeopardized 20,000 jobs across the country, we will have
jeopardized 100,000 jobs across the country.
Senator Bond. Well, I think we said at the beginning that
nobody in the spring of 2001 had any idea of the tragedy. What
we were concerned about was establishing a policy, a procedure,
that would be fair and equitable in operation should some
unforeseen, even catastrophic, occurrence arrive. But at the
time--and I remember this rather well, I think--seniority
protection was promised inside the fence. Now, when we were
told that the TWA employees will be unable to operate out of
St. Louis, that was, as I understood it, an area where the
fence was providing a separate seniority list for the TWA
employees who flew in and out of St. Louis and made that such
an important hub. That representation was made, and this was
not an expression, as I understood it, of intent or desire or
``we would like to''--this was, as I understood it, a ``we
will, and we are committed to it.''
Mr. Brundage. Senator, in the first month after the
transaction, actually, the IAM and ALPA continued to represent
the former TWA employees who are now employees of TWA LLC. At
the point in time that the NMB ruled that for labor relations
purposes, American and LLC were a single carrier, the
integrated lists for the first time became, for lack of a
better term, operative, and those integrated lists did contain
provisions to allow the TWA employees to use their seniority
for certain purposes at TWA in an exclusive matter--or ``super-
seniority,'' for lack of a better term.
But again, back to the representations we made at the time
of the transaction. The seniority issues would be worked out,
and American would abide by those seniority lists, and the
contracts only provide one way to reduce force, and that is in
reverse seniority order. That is the only option that we have
in terms of reduction in force.
There is no question that the former TWA folks have been
severely impacted by these reductions as have all the employees
who were American employees prior to the transaction. All of
the American family has been severely impacted, as have all of
the other airlines in the industry.
So I too share your concern about the devastation that has
been caused by all of this, but my focus and the company's
focus is to return the company to profitability, and these
folks today who have been furloughed have recall rights. And
obviously, we need to be very concerned about these folks
because they are still our employees, and they will be the
employees, if we are successful, that we call back to work.
Senator Bond. We certainly wish and hope that the airline
industry will recover and that they will be hired back, but we
are very much concerned about where they are.
Captain White, I would just ask you this. You have
Allegheny-Mohawk protections. Should, heaven forbid, something
go wrong, or go even further wrong, with American, and it is
put in the position where it must be acquired, what would you
do if you were asked to give up your Allegheny-Mohawk
protections?
Mr. White. I would give it up. The short answer--if it is a
question of hitting the street or going into negotiations, my
belief is--and I have been a negotiator for quite a while--that
arbitration shows a failure to negotiate in good faith. And I
am a believer that you can negotiate.
I would be happy to take this integration model that we
have here with the career path progression and use that for any
integration that I would be subjected to.
Senator Bond. Captain White, I think that is stunning.
[Laughter.] I mean, seriously, as far as--at least you all sat
in a room for 36 hours with ALPA, but as far as I could tell,
nothing happened. But in terms of the flight attendants--and I
know you were not responsible for the flight attendants--they
did not even get in the room, and that really bothers me, and I
am sorry, I guess we just do not understand, but it does not
strike me as something that any representative of employees
would be willing to accept, to get into a situation like this.
Mr. White. But that was the alternative, sir. A reporter
asked me--and I feel kind of foolish, because when we did the
seniority integration--I am a big believer that pilots should
talk to pilots about seniority list integration--and in fact we
had some argument about whether or not lawyers should be in the
room, because my view is that lawyers in the room means
litigation. And in the facilitation process that the company
brought forth, we sat down, and we talked to the lawyers, and
we decided to do the facilitation process, and the mistake I
made was that I agreed that it would be off the record. So we
had 2 weeks' worth of negotiations, which I thought were very
fruitful and in which talking off the record as a negotiator is
good because it allows you to air ideas without consequences
down the road and be quoted, etc, or be locked in.
The ALPA people brought in Dr. Tanin, who I found very
fascinating to work with, and he has been used before by ALPA
and is a very intelligent man, and he came up with this career
path model. In those 2 weeks, we were able to advance the
methodologies which I thought were good, and I thought that the
TWA pilots on that merger committee--Mr. Case, I have never met
before and have never seen him; he said he was involved in the
process, but I have never seen him before--but the committee
people that we worked with were very good in advancing their
case about their concerns about seniority list integration,
about working conditions as a result of that, and we
accommodated a lot of those suggestions in our seniority list
integration. The problem is that it was all off the record.
So I would say in good faith, I can sit here and say that
those negotiations did prove fruitful; they did prove to bring
a lot of the things that the TWA pilots suggested. For example,
you were asking Jeff Brundage about minimum size. One of the
last things that we did--and it was after the meetings that you
involved us in--is we went back to the company and said,
``Look, it makes sense to us. The pilots have a legitimate
complaint. What happens if we offer them all the seniority in
St. Louis, and St. Louis shrinks to zero? It made sense to us,
brought up by their pilots.''
So what did I do? I went to the company and said, Give me a
minimum percentage. And the company said, We intend to keep it
there, and I said, Put your money where your mouth is. And that
is how we have the 30 percent rule in there now.
So the short answer is that American Airlines has to keep
that St. Louis hub contractually in relation to Dallas and
Chicago, so in Missouri, you have those protections because I
put it in the contract. I did not have to, but it was a
suggestion that they did. And that is the kind of negotiating
that I tried to do, and those are the things that we put in to
try to protect the interests of the TWA pilots.
Senator Bond. Well, that part we appreciate, no question
about that, because that is important.
Mr. White. Yes, sir.
Senator Bond. Senator Talent, you have a couple more
questions.
Senator Talent. Yes, briefly.
Mr. White, I am going to ask you the same thing I asked Mr.
Brundage. Would you be willing to sit down and talk with the
company about how this might be made more equitable for the
former TWA employees?
Mr. White. No, sir, I would not. I have a duty of fair
representation to all pilots, and I would be subject to a lot
larger group lawsuit--plus the fact that we feel that the
integration that we did is an equitable solution based on the
career path model developments that we did based on Dr. Tanin's
ideology. So we think that we will hold up on that.
Senator Talent. OK. I am going to say that I appreciate
this hearing, and I appreciate you two coming here. I know it
has not been easy.
I am going to tell you what I think happened, and you guys
tell me if you agree with me, and if not, why I am wrong. I
think the company's officials anyway say this as a really good
deal. You said that a little while ago, Mr. Brundage--now, you
did not anticipate September 11, and that certainly upset all
of our expectations. I do not think you saw this as a rescue so
much as an opportunity to really enhance American Airlines'
prospects.
You both said, Well, we did not have to accept the TWA
employees--you could have traded them as new hires--and as a
matter of raw economic power, I do not know whether that is
true or not, but I think what is also true is that had you made
it clear that that is how you were going to treat them, as new
hires, or in fact had you made clear that they were going to
end up where the ended up on the seniority list, whatever the
economic power you may have had to do that, you would have had
very strong opposition to the buyout on those terms from the
Missouri and New York congressional delegations--of which I was
not a part at the time, so I am sort of free to speculate on
it.
So what happened was that promises were made, perhaps vague
promises, but promises were made that would have led a
reasonable person to believe that more would be done for these
people than was done. I mean, when you make a statement, ``For
its part, American Airlines agrees to use its reasonable best
efforts with its labor organizations representing the airline
pilots and flight engineers crafts or classes to secure a fair
and equitable process for the integration of seniority,'' and
the company then not only does not do that, does not
aggressively do that, but then pushes changes that makes their
protections worse--and I understand what you said about why you
did it, Mr. Brundage, but if I am reading that language, I am
thinking they are really going to make an effort to do this
notwithstanding whatever raw economic power they have, and then
afterward, we find out that the people are being treated this
way. That is my view of it, and if that is wrong, I would sure
like you all to set the record straight--and I am going to let
you do that. I am not going to cut this off.
Mr. White. I will take the first shot at that, sir, if you
do not mind. I was elected chairman of the merger committee
toward the end of January, and we arranged our first meeting
with the TWA pilots somewhere around February 7, 8, or 9,
somewhere in that time frame. We asked for 3 days, and I think
we got one.
At that very first meeting, I said very clearly: We will
not do date of hire--will not do it, will not consider it, will
not be there. And I also said very clearly that we will not do
Allegheny-Mohawk, and we will not do arbitration. That was in
February, sir, before they waived their Allegheny-Mohawk
provisions.
At the end of February, we had scheduled three different
bargaining sessions of 3 days each, most of which were
canceled, but on March 1, we gave them our initial proposal
which proposed to put somewhere in the neighborhood of 700 or
800 pilots on our seniority list.
I was very clearly with them, sir, very clear, and that was
before they waived their Allegheny-Mohawk.
So I would like to say that I was very straightforward and
honest with them up front about where APA was. Now, I think
that in discussions with them and the methodology that Dr.
Tanin put forward, we changed it because we had looked at other
mergers where they had put 767 captains behind 767 captains,
and that was our first proposal. And we ended up putting 767
captains behind our 777 captains. And that was because of Dr.
Tanin's methodology, and we took a look at that, and we agreed
with that. But we were very straightforward and honest with
them up front.
So I understand what you are saying, but they had an
opportunity to meet with us several times before they waived
it. They had no doubt in their minds that we were not going to
do date of hire--no doubt. I was as straightforward with them
as I am with you now, sir. That is how I like to deal.
Mr. Brundage. Senator, I will just refer back to the fact
that the RLA has a dispute resolution process, and it is pretty
well-respected and is a prerequisite to even being able to get
a matter into the courts.
The commitment that we made was a written commitment. The
actions that we took were well-documented. I have spent a
considerable amount of time testifying in an arbitration
process as to the details of what took place surrounding that
commitment to use our best efforts.
I will not offer my opinion. I will stand by the opinion of
an independent neutral arbitrator who listened very carefully
to all of the testimony--all of the testimony, both from the
ALPA committee, from the company, who read the documents, who
had access to all the factual information--and I will be happy
to submit to you the arbitrator's award on point.
Senator Bond. Mr. Brundage, Ms. Cooper said that you had
first come to an agreement with the American Airlines flight
attendants' organization, announced it before you ever talked
with her or any of the other flight attendants. Is that
accurate?
Mr. Brundage. Sir, we negotiated separately with the TWA
LLC flight attendants because the representation was different.
The TWA flight attendants at the time were represented by the
IAM, and this all occurred prior to the NMB single-carrier
ruling.
So as a result, yes, the TWA LLC labor folks were dealing
with the TWA LLC employees represented by the IAM, and the
American labor folks, a completely separate group, were working
with the American flight attendants, represented by the APFA.
Now, I do not know that this was a negotiation. I do know,
because I have spoken to this about him personally, that Robert
Roach, who is the general vice president of the IAM, actually
attended a meeting of the APFA board of directors for the very
purpose of discussing seniority integration between IAM and
APFA.
I also know that I hired Richard Casher, another respected
arbitrator and facilitator, and Mr. Casher was employed for the
purpose of attempting to facilitate those discussions between
the IAM and the APFA.
Now, Senator, I was never----
Senator Bond. Was there any discussion between the two?
Mr. Brundage. I honestly cannot answer that question. I was
never party to a discussion. I do know that Mr. Casher showed a
great degree of frustration in his ability to get the parties
together. I also know that during that period of time, I do not
believe that either of the parties, the IAM or the APFA, ever
moved from their opening position.
So if my assumption is correct that neither of them ever
moved from their opening position, I think it is fair to assume
there was probably not much negotiation.
Senator Bond. So it was enough for American Airlines under
the fair and equitable undertaking to pay several hundred
bucks, maybe a grand, to a facilitator and say, ``Good luck,
that is it''?
Mr. Brundage. Well, I can tell you that my efforts were
significantly greater than that, personally, in trying to
encourage the APFA to meet with the IAM representatives.
Senator Bond. What about the ticket agents, passenger
agents--how were they integrated.
Mr. Brundage. I think, as you know, they were represented
by the IAM at TWA and at American, they were not represented,
and as a result, the certification was extinguished at the
point that we became a single carrier for labor representation
purposes, and we created a ``protected cell,'' for lack of a
better term, at St. Louis for those employees. There were some
American employees, a small number of American employees, who
had the first seniority slots, but then the balance of the
former TWA employees had access to all of the jobs in St.
Louis, both at St. Louis and those who were not in St. Louis,
and the ones not in St. Louis were put on a list so that they
had priority ahead of any American employee to bid back into
St. Louis. There was also Colorado Springs and a reservation
office that had that same protected cell. But they were given
the 4-10 hire date, and they were provided, again, full credit
for their longevity at TWA--and I think we have skimmed over
that a couple of times, but that is a pretty significant
economic commitment, and I agree with the Senator, this was not
something that we took lightly, and it was not just purely an
economic issue or an issue to simply get through the process in
the Congress.
American clearly recognized that we needed to try to do
things to have a workforce that was going to be behind us, and
we were not going to be successful unless that occurred, so we
provided full credit for that longevity for those employees.
Senator Bond. Mr. Brundage, Captain White, we appreciate
the testimony and the time that you and all the other witnesses
have put in today. As I stated earlier, you understand that the
record will be open so that additional questions may be asked
for the record. A number of our colleagues are following this
and may have questions, and we would expect that you could
respond to those questions in a full and timely manner. Is that
agreeable with you, gentlemen?
Mr. White. Yes, sir.
Mr. Brundage. Yes.
Senator Bond. Both of you agree.
Again, this is a very important subject, and we obviously
have not come to agreement, but I express my thanks to all the
parties who have participated and presented their views.
If there is no further business to come before this
committee, the committee stands in adjournment.
[Additional material follows.]
ADDITIONAL MATERIAL
Prepared Statement of Theodore A. Case
Mr. Chairman, and Members of the Committee: Chairman Bond and
Members of the committee, I sincerely appreciate the opportunity to
appear before you today. On behalf of my fellow pilots who were
formerly employed by Trans World Airlines (TWA), we welcome the
opportunity to testify on the record and under oath about the whole
story, the real story behind the most shamefully flawed seniority
integration in United States airline history.
Many of you are already familiar with some of the facts of this
crisis: to date thousands of ex-TWA workers--including ground workers
and flight attendants--and their families have suffered as a result of
layoffs; the great state of Missouri, and the entire St. Louis region
has felt a sharp economic shock and emotional trauma caused by these
massive job cuts. The flying public--already reeling post 9/11--has
been faced with drastic schedule and service reductions due to these
cuts.
I believe, like so many of my colleagues, that we became pilots to
serve the flying public--safely and responsibly--to the best of our
ability. I am honored to have been selected by my fellow pilots to
speak on their behalf today.
I am a married father of two, a graduate of Georgia State
University and have served as a union representative of the TWA pilots
in multiple capacities.
My interest in flying began as a young boy watching my father fly
as a pilot for Eastern Airlines. I began flying when I was 20, I became
a commercial pilot in 1983, and began flying for TWA in 1990. I loved
my job; I respected my employer; and above all, I believed in my
customer service mission.
My world--and the lives of all of my former TWA colleagues--
dramatically changed in April 2001. That is when American Airlines
acquired TWA. As part of the acquisition, American offered me and
nearly all former TWA pilots' employment, promising to: ``provide
employment benefits and post-retirement benefits to all employees
actually hired by American, at levels substantially no less favorable
than hose benefits provided to American's similarly situated
employees.'' (From the ``Asset Purchased Agreement''--Article X--
EMPLOYEE MATTERS 10.1 Hiring Obligations. Upon the occurrence of the
Closing, Purchaser shall (i) offer all of Sellers' union employees (all
of whom are listed on Schedule 10.1(a)) (other than personnel who (A)
have previously been terminated by Purchaser or an entity controlled by
Purchaser or (B) would not be qualified for employment under
Purchaser's general hiring policies as in effect at Closing) employment
by Purchaser or one or more entities controlled by Purchaser at
compensation levels substantially equivalent to those currently enjoyed
by similarly situated employees of Purchaser or such controlled entity,
(ii) offer employment to certain members of TWA's executive management
and those non-union employees listed on Schedule 10.1 (b) on a case-by-
case basis at Purchaser's sole discretion and (iii) provide employment
benefits and postretirement benefits to all employees actually hired by
Purchaser pursuant to (i) and (ii) above at levels substantially no
less favorable than those benefits provided to Purchaser's similarly
situated employees. Any Seller employees to be hired by Purchaser or an
entity controlled by Purchaser in accordance with this Section 10.1
will be hired in accordance with terms and conditions established by
Purchaser or such entity (and, where applicable, in accordance with and
pursuant to collective bargaining agreements relating to employees of
Purchaser or such controlled entity).
10.2 Union Matters. All offers of employment made by Purchaser in
accordance with Section 10.1(i) above and all benefits to be provided
pursuant to Section 10.1(iii) above will be conditioned on acceptance
by all such employees of Purchaser's work rules then in effect and in
effect after the Closing Date from time to time that are generally
applicable to similarly situated employees of Purchaser. Purchaser and
Sellers agree to encourage their respective unions to negotiate in good
faith to resolve fair and equitable seniority integration. Prior to
Closing, TWA shall amend all existing Collective Bargaining Agreements
relating to any present or former employee of TWA to provide that (i)
scope, successorship, and benefits provisions of the Collective
Bargaining Agreements are not applicable to or being assumed by
Purchaser as part of or as the result of the transactions contemplated
by this Agreement, and (ii) consummation of the transactions
contemplated by this Article X will not violate or breach in any manner
any provision of any Collective Bargaining Agreement (collectively, the
``CBA Amendments''). The sale closed and we all became employees of a
newly-fashioned entity--not an airline--but a shell corporation called
TWA, LLC, a wholly-owned subsidiary of American.)
Our seniority story is quite atypical, when considering other major
airline seniority integrations. In the vast majority of previous major
airline mergers pilot seniority integration was based upon a date of
hire (DOH) basis or some type of DOH ratio with conditions and
restrictions to protect the pre-merger career expectations of both
pilot groups
Despite my more than 13 years of TWA seniority, I was given a new
seniority date with American of April 10, 2001, the day the transaction
closed--all of my years of earned service up to that date were
obliterated from my record. I am now facing a July 2 layoff. Adding
insult to injury is the fact that American hired pilots off the street
on April 9, 2001 (one day before the acquisition closed), and these new
hires continue to fly today. Indeed, from the date the acquisition was
announced until the date the sale closed, American hired over 300 new
pilots, all of whom were given more seniority than the vastly more
experienced TWA pilots. Today there are more than 1200 TWA pilots
scheduled for furlough or unemployed and on the street. All of this
because of the way our seniority was handled, or mishandled.
Why do we care so much about our seniority? Seniority is the
bedrock of employment benefits with any career. Seniority is the
American dream for the American worker. In the airline industry
seniority is everything, determining: where you live, where you fly;
what you fly; whether you fly as captain or first officer, pay rates,
and of course, the order in which you lose your job, should a layoff
occur.
I wear an American Airlines' uniform, I am covered under American's
health and retirement benefit plans, and fly American aircraft on
American Airlines flights. Despite those facts, my fellow TWA employees
and I have been treated as nothing more than ``furlough fodder'' to
protect the jobs of the employees hired at American prior to April,
2001. Why this inconsistency? It was all part of the ruse, the
conspiracy between the world's largest airline and two powerful pilot
unions to crush the ex-TWA employees, and take their jobs. Those two
unions were attempting to merge into one, and the TWA pilots stood in
their way. They had no interest in representing or protecting USE
pilots.
By all accounts, the cost-cutting, experience--downsizing,
seniority--busting scheme is working. By July 2nd, fewer than 900 of
the original 2349 TWA pilots will remain American Airlines employees.
Meanwhile, every single one of the approximate 11,000 pilots who were
on American's payroll as of April 9, 2001, has kept their jobs. This
integration is much more akin to a process of segregation and
discharge, rather than an efficient and seamless combination of
employee groups. No reasonable person could say this integration was
fair and equitable. It was a travesty. Indeed, Jeff Brundage, VP
Employee Relations for American, stated in October 2001 to the TWA
pilots, that the seniority cram down was a ``s----t sandwich'' that the
TWA pilots had to eat.
And this is only the tip of the iceberg.
Just last week American Airlines released ``The Master Reshuffle
Bid', an announcement of American's pilot staffing for the next 12
months. Without getting too technical, this document (which I offer
into the record) shows that by May 2004--in less than one year--only
27% or approximately 630 of the original 2,349 TWA pilots will remain
with American. The TWA pilots slated to lose their jobs by then include
large numbers of TWA Captains, with 15 plus years of experience at TWA
and American. These massive staffing reductions mean, that not only
will the St. Louis hub dramatically shrink to a fraction of its present
size (not to mention its size prior to American's acquisition of TWA),
but hundreds more TWA pilots will lose their jobs.
The fact is that over 1,200 TWA pilots were ``stapled'' to the
bottom of the seniority list. That is, TWA pilots, including TWA
Captains hired as early as March, 1989 were stripped of every bit of
their seniority, and given a seniority date of April 10, 2001. Captain
Mike McFarland, the most senior TWA Captain, was stripped of 21 years
of seniority. Captain McFarland was hired in 1964, but he was
integrated with the 1985 hire pilots of American Airlines!
At the same time this is happening to the former TWA pilots, the
more junior American Airlines pilots will invade the shrinking TWA St.
Louis domicile, further displacing the jobs of former TWA pilots and
encroaching on what can no longer be classified as a ``hub'' in St.
Louis.
Although American pilots claim to be ``sharing the pain'', more
than 87% of pre-transaction American pilots will retain their
employment while only 23% of the former TWA pilots will remain employed
by May 2004.
It is an accepted fact among airline industry experts that one of
the most important aspects of airline mergers is the seniority
integration of the merged work forces. This issue has been contentious
in many mergers, however in the vast majority of previous combinations,
agreements were reached or arbitrations settled the disagreements.
The TWA-American integration is a textbook example of what happens
when the process spins wildly out of control. I previously outlined the
outrageous inequity in the way seniority was handled. But you also must
understand the impact this is having on employee morale and cooperation
in a business where teamwork means everything. Just last week an
American Airlines pilot (whose name I will withhold publicly but gladly
provide to the committee upon request), apparently incensed over this
very hearing, posted an email threatening to poison the food of former
TWA pilots. I offer a copy of this email to be placed into the record.
It is an excellent example why seniority integrations, to be
successful, must be done fairly and equitably.
It is crucial to know that when American started courting TWA, it
was insistent on two preconditions to acquisition: 1) American required
that TWA declare bankruptcy; and 2) TWA's unionized workers amend
certain provisions contained in their collective bargaining agreements.
Those provisions, known as Allegheny/Mohawk LPP's, would have allowed
us to mediate and arbitrate our seniority integration should the
parties not agree to a fair integration.
Allegheny/Mohawk provisions had been around for many years and
although the Civil Aeronautics Board and its requirement to apply LPP's
in seniority integrations became part of a bygone era with
deregulation, airline managements and unions continue to abide by these
``LPP's'' generally writing them into their collective bargaining
agreements; until, of course the largest airline combination in
history.
While the TWA unions contemplated American's demands to amend our
contracts, American Airlines directed TWA Inc. to file a motion under
Sec. 1113 of the bankruptcy code to strip us of those provisions. This
drastic assault was a result of demands made by American's own unions.
In our case, American's pilots' union, the APA, demanded that it alone
control the seniority integration for all pilots. American agreed to
give APA unfettered control over the integration and structured their
purchase offer to solidify that control.
In effect American empowered their unions to treat the TWA
employees unfairly, by requiring these amendments to our protective
provisions. American and its unions held a gun to the heads of the TWA
employees. Not coincidentally, own union, ALPA, was engaged in merger
talks with the APA at the very time our jobs were on the line. In
exchange for our acquiescence to American's coercive demands, the
Carty-led American Airlines promised to use its ``reasonable best
efforts'' to help us work out our integration with the APA. We believed
federal law offered some insulation from mistreatment because
American's promise became a substitute for those exchanged LPP's. And
given those assurances, the TWA pilots attempted to negotiate with our
American Airlines counterparts, unaware of the wholesale slaughter
ahead.
We now know we were duped. American considered its global promise
of ``reasonable best efforts'' to mean simply one thing--writing the
check for a ``facilitator''. The APA dictated the facilitation's terms
and conditions down to the last detail. Those restrictive conditions
stripped the facilitator of all of his authority, and any meaningful
ability to bring the parties to consensus. TWA pilot representatives
met with the APA on multiple occasions, including meetings in the
presence of the facilitator in the summer of 2001, but the discussions
went nowhere. This is not surprising because we now know American and
APA had already cut their own deal, which not only protected every
American pilot from furlough, but which guaranteed the American pilots
the ability to cannibalize the jobs of the TWA pilots for literally
decades to come! The APA had no reason to negotiate in good faith, or
to deal fairly with the TWA pilots because they rigged every aspect of
the game in advance. No agreement was reached and the discussions
failed. During and after this period, we asked to bargain directly with
our employer, American, over our seniority. American told us that it
was not our employer, and that we had to talk to--you guessed it--the
wholly owned subsidiary shell corporation, TWA LLC. At other times
American stated that the seniority discussions were out of their
control, and were to be entirely the purview of the employee groups
involved. We went to TWA LLC, and were told that only American could
talk about our seniority. Neither company would talk to us regarding
seniority. We believed then, and we believe now that American and TWA
LLC were one and the same; they were ``alter egos'' of the same
company. The sham has now been exposed: American created this wholly
owned subsidiary in part to avoid its bargaining obligations to us;
creating a ``shell game'' forcing us to dance around in circles, while
enabling their employee groups to cherry pick our seniority, and our
jobs.
There are numerous sidebars and footnotes to this integration
atrocity. For example, the imposed integration, known as Supplement CC
to APA's contract, eviscerated our seniority. An important fact tying
the seniority deal to the corporate subterfuge is that Supp. CC was
announced on November 8, 2001. The very next day APA filed with the
National Mediation Board to declare TWA LLC and American a single,
integrated carrier. APA waited until it had cut its final deal on
seniority with American, and then made its move to implement that deal.
At that same time, American closed every TWA pilot domicile with
the exception of St. Louis. Pilots who previously lived and flew on the
East and West Coasts for decades were forced to displace to St. Louis.
Please remember these key words--fair and equitable--in considering
this evolving picture. Seniority has been wiped out. American forced
all of the TWA pilots out of our jobs in the cities where TWA had
operations, ordered us to fly exclusively from St. Louis, and gave our
jobs in those cities to the American Airlines pilots. Once in St.
Louis, the TWA pilots were stripped of our international routes, and
many of our higher paying positions. Meanwhile, much less experienced
American pilots continue living in their city of choice and enjoying
schedules, captaincies and our routes overseas, as if no merger ever
occurred.
To put this in a personal perspective, a good friend of mine, Sally
Young, a single mother of two and a 14 year-veteran former TWA Captain,
will lose her job on July 2. I too, will lose my job on July 2 after 16
years as a career jet airline pilot, with over 13 years of seniority
with TWA and American Airlines. American gave me a seniority date of
April 10, 2001. On April 9, 2001, American hired Mr. B.D. White. Today
Mr. White, who now has 2 years and 2 months of American Airlines
experience and seniority, continues to fly while Ms. Young, myself and
hundreds more former TWA pilots like us are being furloughed.
In February 2001 many of you heard Don Carty, former AMR CEO state
before the U.S. Senate Committee on Commerce, Science, and
Transportation, his commitment to ``adding TWA's 20,000 employees to
the American Airlines family.'' A willing commitment ``to the 20,000
TWA employees and their families that no one else would make.''
Obviously Mr. Carty said what the Senate Committee and the
Bankruptcy Court needed to hear to approve the deal, with no intention
whatsoever of living up to those commitments.
Members of the committee, we are not here seeking sympathy or pity.
We are here in the name of justice and fairness. We are here in hope
that Congress can rectify this atrocity and act so this tragedy can
never again be repeated in another workplace to the detriment of
another working man or woman.
We ask only that our all important seniority rights be handled
``fairly, and equitably,'' as promised. No more and no less. I hope you
and the American people can now clearly see that our seniority was
handled unfairly and inequitably by an airline that can only now be
called Un-American Airlines.
Thank you for the opportunity to speak before this committee today.
I am happy to answer any questions.
Prepared Statement of Sherry Cooper
Senator Gregg, thank you for allowing me to testify before the
Senate Subcommittee on Health, Education, Labor and Pensions concerning
the TWA/American Airlines Workforce Integration. Senator Bond, thank
you for chairing the hearing on this all-too-important issue. To be
perfectly candid with you, there was no integration. In fact, what
American and the Association of Professional Flight Attendants have
done is to arbitrarily discriminate against former TWA employees and
segregate them to the bottom of the seniority list. There has been no
integration.
On May 3, 2003, I celebrated a milestone in my flying career. I
began my 28th year as a Flight Attendant. That same day, instead of
receiving recognition from American Airlines, I received a furlough
notice. My career in the airline industry was over.
Perhaps more than anyone else here today, I held a unique position
at TWA. Apart from the fact that I am a TWA line Flight Attendant, I
also served on the TWA Board of Directors from 1998 to 2001 as a Labor
Director, representing the International Association of Machinists and
TWA Flight Attendants. I directly participated in the approval of the
sale of TWA to American Airlines.
On January 9, 2001, I received a telephone call from Mr. Bill
Compton, former President of TWA to tell me about the ``great deal''
that was waiting for the TWA employees. During that conversation, Mr.
Compton stated the following: (1) That all TWA retirees would be
protected; (2) That TWA unionized employees would be guaranteed jobs
and greater job security; and (3) That TWA employees would receive
greater pay and benefits.
In summary, the TWA employees would be better off through the
agreement he had reached with American Airlines. There was only ``one''
catch. Even though American and TWA had struggled mightily to come up
with a straight merger transaction, we would have to file for
bankruptcy for one reason--and one reason only. The reason was Carl
Icahn. As many of you may recall, Carl Icahn had been prior owner of
Trans World Airlines. In negotiating his departure in 1994, TWA had
been required to enter into a series of ticket arrangements under which
Mr. Icahn had been allowed to sell deeply discounted TWA tickets
through a corporation he owned known as ``Karabu.'' Mr. Compton advised
me that the only way that American could see fit to do the deal was to
take Karabu ``out'' through bankruptcy. And so, the TWA Board of
Directors met the following week to hammer out the terms of the deal
with American Airlines. Thus begins the biggest myth of all--that
American Airlines saved TWA in bankruptcy.
I want to make this perfectly clear. At the time of the agreement,
TWA was NOT in bankruptcy. As a member of the Board of Directors, we
agreed to file for bankruptcy in order to eliminate the Karabu ticket
agreement.
Quite honestly, as a Labor Director, I wanted some assurances that
TWA employees would receive protection. The Asset Purchase Agreement
guaranteed that all unionized employees would be employed by American
Airlines. Because of the well known problems that had surfaced with the
Reno acquisition, American Airlines announced that it would take its
time to ensure a smooth and orderly transition. Mr. Carty, then CEO of
American Airlines, promised that the TWA employees would receive the
same ``benefits'' that the American Airlines employees received. Our
union contracts would need to be modified to ``mirror'' those contracts
of the American employees. Because American flight attendants did not
have Allegheny-Mohawk Labor Protective Provisions, our contract would
have to be modified to match theirs. Importantly, both American
Airlines and TWA management insisted that all seniority integration
issues would necessarily be worked out between the Unions. It was
agreed that the Unions to ultimately work out how the seniority would
be integrated. American Airlines agreed to hire an independent
facilitator to arrange meetings between the Unions and use it best
efforts on behalf of the TWA employees. It promised that there would be
a ``fair and equitable'' process and that it would adopt the
``process'' that came out -of the facilitated talks.
The American Flight Attendants numbered in excess of 22,000
employees. By contrast, TWA Flight Attendants totaled approximately
4,200 individuals. The merger of a small group of senior Flight
Attendants would have relatively little impact on the overall picture
because most flew out of St. Louis, MO--a non American Airlines base.
The balance flew out of New York. Unlike other carriers who went out of
business whose employees then sought employment at other airlines, this
would be an orderly transaction because the TWA employees were coming
to the acquisition with planes, routes, airport slots, reservation and
maintenance facilities, and the prized St. Louis hub. It was--for all
intents and purposes--our dowry.
It is well chronicled that Don Carty and American Airlines touted
the TWA purchase as a great acquisition. In a powerpoint presentation
to its own Board of . Directors, American management happily noted that
it acquired TWA for far less than it was worth. In his own words, Mr.
Carty stated that ``American gains many great assets from TWA, but none
as important as its talented team of employees.'' Quite clearly, the
team of employees were highly trained and experienced professionals. He
threw a barbecue for the TWA employees. Little did we realize at the
time--but the TWA employees were the entree at the barbecue.
Instead of holding talks for the two Unions--the Association of
Professional Flight Attendants and the IAM--American Airlines engaged
in secret talks with APFA--it negotiated an agreement with APFA that
all TWA Flight Attendants would be stapled to the bottom of the APFA
seniority list. American broke its written agreement with the TWA
Flight Attendants. At the same time, APFA had agreed that it would
allow those former TWA Flight Attendants based in New York and in St.
Louis that they would receive some job protection in the form of a
fence. In other words, we would retain our combined TWA and AA
seniority as long as we remained in our two (2) hubs. We would be
allowed some sort of job protection in those bases. By contrast, when
TWA purchased Ozark, all former Ozark Flight Attendants received full
seniority. Even APFA, when American Airlines acquired both Air Cal and
Trans Caribbean, agreed that those Flight Attendants retain credit for
their years of service at those carriers. Ironically, even American
Airlines voluntarily provided full credit for seniority to TWA non-
union and management personnel.
Following the aftermath of September 11, American Airlines decided
to shut down the New York TWA operation. It transferred the former TWA
New York flights to more junior AA Flight Attendants. American Airlines
gave New York Flight Attendants two (2) options: They could be
furloughed to the streets without a paycheck or accept a transfer to
the remaining TWA base in St. Louis. Many of our former New York Flight
Attendants elected to transfer to St. Louis. After all, we would retain
job security as long as TWA, LLC flights continued to operate out of
St. Louis. We were wrong. American and APFA first violated its own
agreement by transferring St. Louis International flights to more
junior American Flight Attendants. They have now determined that all
remaining TWA, LLC Flight Attendants--all with more than 27 years of
seniority--will be furloughed effective July 2, 2003. Eighteen hundred
(1800) Flight Attendants with seniority totaling more than fifty
thousand (50,000) years of service to the airline industry will lose
their jobs. They will be joining 2,400 other TWA Flight Attendants. At
the same time, American Flight Attendants with less than three (3)
years seniority will be flying on TWA, LLC aircraft out of St. Louis.
To add insult to injury, both American Airlines and APFA agreed as
part of their recent concessionary agreement that the scheduled July 2
furloughees will hit the streams with no severance pay. For the first
time in the history of American Airlines, Flight Attendants will lose
their jobs without any cushion of severance pay. What makes it even
worse is that for the first time in American Airlines history,
employees losing their jobs will lose Company-paid medical benefits.
Instead of providing 90 days of medical coverage, American Airlines
will only be providing 30 days of coverage. For the most part, the
group about to be furloughed are women--fifty and over--who are primary
caretakers for their parents, children, and grandchildren. They will be
facing an uncertain future with one thing for certain--personal and
financial ruin. At the same time, American admitted that it was funding
pension plans for 45 of its top executives. It had also approved
``retention'' bonuses for its senior executives--however--due to the
public outcry, it has abandoned the retention bonus program. Recently,
the American Airlines Board of Directors expelled Don Carty. By
anyone's definition, he left in disgrace due to his failure to be
honest with employees about senior executive pay packages and
incentives.
American Airlines has asked you to believe that all that has
transpired with TWA has been above board and in the open. Can you
honestly believe a corporation in light of its most recent
shortcomings? I would hope not. American has told you that the no one
anticipated the tragic events of September 11. It is one thing to make
financial decisions to recover from our greatest tragedy. It is quite
another to capitalize on that event at the expense of former TWA
employees.
Needless to say, we have filed lawsuits against both American and
APFA. Among other grounds, we are suing American Airlines for fraud.
The most recent filing--submitted this week--concerns their concerted
effort to eliminate all former TWA Flight Attendants based in St.
Louis.
It should be clear to everyone in this room that when American
Airlines promised ``two great airlines--one great future''--it was a
lie. Instead, it undertook a pattern of activity designed solely to
eliminate the former TWA employees that it, once called TWA's greatest
asset.
When American Airlines came to Congress. asking for economic help
following the aftermath of September 11, you stood up and gave
financial assistance to the carrier. The assistance American received
was based--in part--on the TWA route structure. When American Airlines
sought reimbursement for security expenses at airports, the money it
will be receiving will be based--in part--on the TWA, LLC operation. At
the same time, American has sought--and received--financial assistance
from you--based on what I and my fellow employees ``brought to the
table,'' it has thrown us aside arguing that ``we should be grateful
that we have a job.'' We have no job. American has taken our jobs--our
routes--our planes--our St. Louis Hub--and has handed us a pink slip.
I am a taxpayer having paid taxes for more than thirty-five (35)
years. Like almost all Americans, I have gone to work on a daily basis
and performed a meaningful job for my employer. I. have expected a fair
wage for a fair day's worth of work. I have watched my tax dollars be
spent on both social programs and weapons. I have watched my tax
dollars be used to assist troubled corporations and rightfully help the
family farmer. I have asked for nothing in return but that I be:
treated with decency and fairness. Both of those- are tragically--
horribly--missing in the TWA American Airlines workforce integration.
It has been reported that there is nothing that this Committee can do
to help right this wrong. My question is simpler Why not? We travel
halfway around the world to fight for freedom At the same time, we are
witness to an incredible injustice in our own backyard only to be told
that it is beyond our control. America is the greatest nation on earth.
What makes it so great is that it has long-championed the rights of
individuals. It has placed its highest value on human life. It realizes
that a nation is best known for how it treats its most vulnerable
citizen not its most powerful. A country prospers because of the
everyday citizen--not because of its CEO's, Union Presidents, or--
even--U.S. Senators. On behalf of the more than 20,000 former TWA
employees, I want more than just your sympathy. I want--and demand--
that you honor all that is right about America. Intercede on our behalf
and restore the process to a fair and equitable seniority integration.
Prepared Statement of Jeff Brundage
Mr. Chairman and Members of the Committee: Thank you for your
invitation to speak on behalf of American Airlines. I am Jeff Brundage,
Vice President of Employee Relations. I joined American Airlines in
December 1999 after a career as a pilot and union leader. At American I
was actively involved in the labor integration plan when the company
acquired the assets of TWA in the spring of 2001.
As you know, these are extraordinarily difficult times in the U.S.
airline industry. Since the events of September 11, 2001, the industry
has lost more than 100,000 jobs and has suffered perhaps more than any
other industry from the economic downturn, the effects of war and the
threat of terrorism on travel.
So we certainly understand and appreciate your concern about the
jobs lost and the effect on the people and the communities you
represent.
Today, I want to use my time before you to offer a little
background on American's acquisition of TWA's assets during the early
part of 2001 and our efforts to provide jobs to 20,000 TWA employees
who would have otherwise been facing the liquidation of their company.
It was always our intent to provide jobs to the TWA workers until
their retirement, and we did everything we could to put our newest
employees on par with all other American employees. In fact, we
provided pay and benefits.that represent one of the most generous
employee packages in the history of corporate acquisitions.
Before TWA filed bankruptcy in January of 2001, it approached other
major U.S. airlines about entering into some kind of transaction
whereby TWA could continue to operate. Only American was willing to
make a comprehensive proposal that saved the jobs of many TWA
employees.
Under the asset purchase agreement, American voluntarily agreed to
provide employment to all unionized TWA employees.
The Bankruptcy Court found American's offer to be the only
qualifying offer and approved the asset purchase agreement. The
alternative was liquidation and the immediate unemployment of 20,000
TWA workers.
This is clearly and thoroughly documented in the written testimony
of the Allied Pilots Association. As they point out, every court that
has reviewed those transactions has agreed that there simply were no
alternatives available to TWA workers.
Our goal was to successfully integrate the two airlines' workforces
and combine our forces to build the largest, most successful airline in
the world.
And we knew that we would not be successful unless we had the
goodwill of the TWA employees. Indeed, from the very beginning, we
offered TWA employees compensation and benefits that rewarded them as
if they had worked their entire career at American.
TWA employees were not brought on as new hires, and lost no pay,
benefits, accrued vacation time or sick leave. We gave TWA employees
full credit for their services for these purposes.
As of January 2002, we put all TWA employees on American's pay
scale. Indeed, because TWA pay rates had been significantly lower than
those at American, the majority received a substantial pay increase.
TWA employees hired by American also received the same travel
privileges, pension benefits and retiree benefits we offer all American
employees.
Finally, although we were under no obligation to do so, we agreed
to assume $515 million in accrued liability on the books of TWA for
retiree medical, providing medical coverage to both existing retirees
of TWA as of April 9, 2001, who may otherwise have had no coverage, and
future retirees among the employees who came to American.
It is important to note again that this was not a merger. As we
began the asset acquisition process, we had long-standing obligations
to our existing workforce of more than 100,000 employees, and to the
contracts negotiated with their unions. And as I just outlined, we did
everything we could within the terms of those contracts to provide
20,000 TWA employees with the same pay and benefits we offered our
existing employees.
But the challenge of integrating two workforces goes beyond matters
of benefit's and pay. It is the right and responsibility of the labor
unions that represent our employees to negotiate on their memberships'
behalf on a wide range of other contract provisions, including
seniority and job protection that are at issue today.
This, as you can imagine, was a difficult situation for all
involved. We had competing unions with competing interests. And
ultimately, these matters were resolved as internal union matters. The
company's role in the process was to use our best efforts to facilitate
the seniority integration process. We did that. In fact, an independent
arbitrator found that we met our best efforts commitment in the pilot
integration.
Even though the seniority integrations varied with each work
group--pilots, flight attendants and ground workers--American met its
commitment to provide former TWA employees full credit for their years
of service at TWA for all pay and benefit purposes.
At the time of this asset acquisition, no one foresaw the
industry's impending financial crisis--a financial crisis that
regrettably has led to the furloughing of so many employees throughout
the industry, including at American.
Once again, no one could have predicted the events of 9/11, or the
devastating financial fallout that followed. But the fact is that the
unions negotiated and agreed to an integration plan that attempted to
balance competing interests and preserve jobs. Therefore, the ultimate
consequences for the TWA employees were not the result of the
integration plan, but rather an economic downturn that forced layoffs
and cutbacks throughout the industry. The pain has been spread far and
deep.
I appreciate the efforts of this Congress to provide aid to the
airline industry and assistance to the tens of thousands of workers who
have lost their jobs. I hope that we can all soon anticipate better
times for U.S. airlines and their employees.
Thank you for your kind attention, and I will be happy to address
your questions.
Whereupon, at 4:45 p.m., the committee was adjourned.]