The Bankruptcy Court today held a hearing on the Debtors’ motion seeking entry of an order approving the memoranda of understanding (the “MOU”s) among certain of the Debtors, US Airways, Inc. and any successor (“US Airways”) and the unions representing the Debtors’ and US Airways’ pilots and certain of the Debtors, US Airways and the TWU addressing the effect of the expected merger with US Airways. The Debtors represented that the MOUs are the product of good faith arm’s length negotiations among the parties, that Debtors and their stakeholders have a compelling interest in achieving a successful integration of the airlines, and that the MOUs position the Debtors to achieve these goals. The Committee stated that it supports this motion because the MOUs are integral to the merger which is integral to the Debtors’ emergence from chapter 11. No objections were raised. At the conclusion of the hearing, the Bankruptcy Court found that the relief requested was critical to the goals of this process and approved the motion. The Bankruptcy Judge stated that he was happy that the parties are on a path to cooperation to reach a good result.
With regard to the TWU, the MOU provides as follows:
i. New CBA Modifications. Upon the effective date of the merger, the terms and conditions of the new collective bargaining agreements of the seven TWU-represented workgroups that were previously approved by the Bankruptcy Court on June 28, 2012 and September 12, 2012, respectively, will continue to remain in full force and effect, except that:
(a) each TWU-represented employee will receive a 4.3% increase in hourly base wage rates above those provided in the new collective bargaining agreements in accordance with the table attached as Exhibit A to the TWU MOU; and
(b) certain letters of memorandum, which generally provide for profit sharing and “Me Too” protections will terminate and be of no further force or effect;
ii. Single Carrier/NMB. For each of the seven TWU-represented workgroups, the TWU shall file a single carrier application with the National Mediation Board no later than six months after the effective date of the Plan. If the single-carrier application results in the certification of the TWU as representative of any of the workgroups, the TWU and New AAG shall commence negotiations to achieve a joint collective bargaining agreement as soon as practicable.
iii. Integration. a. As soon as possible after the Plan’s effective date, the TWU intends to and will offer the employee representatives a proposal for the integration of the seniority lists of each of the (1) fleet service employees, (2) maintenance control technician employees, (3) M&R employees, and (4) stock clerk employees. If the employee representatives and TWU agree on an integration seniority list, New AAG shall accept such list so long as certain specified conditions are satisfied. If the TWU and the employee representatives do not agree on an integration seniority list for any of these four groups within 120 days following the Effective Date, either New AAG (the entity that is formed pursuant to the merger) or TWU may initiate an arbitration proceeding.
b. Because the TWU represents the remaining work groups ((1) dispatchers, (2) flight simulator technicians, and (3) ground school and simulator instructors) at both pre-Merger American and pre- Merger Airways, seniority integration for such employees will be determined according to TWU’s internal procedures. The TWU will complete such seniority integration process within 120 days after the Plan’s effective date. New AAG shall accept the resulting list so long as it satisfies certain specified conditions.
iv. “Me Too Letters.” The April 26, 2012 Me Too letters and the July 10, 2012 Me Too letters between AA and TWU executed in connection with the new collective bargaining agreements shall expire and have no force or effect upon the Plan effective date, subject to a limited reservation of rights. The Me Too letters generally provide protection to the employees represented by TWU against the possibility that other employee groups would negotiate more favorable terms than those contained in the agreements approved by the Court.
Lowenstein Sandler LLP
Sharon L. Levine
S. Jason Teele
Paul Kizel
Tania Ingman