Our goal is to achieve a consensual agreement with our TWU-represented Mechanic and Related employees that allows us to emerge from restructuring as a profitable and successful company.  American needs productivity improvements and flexibility to reach our savings targets. Our company bears an extraordinary responsibility to do this right, and do this once. The approach we take will be respectful, open and straightforward.

We conducted a comprehensive review of our operations, our competitive position and our financial structure and designed a business plan to allow us to exit restructuring and vigorously compete and win.

All Employee Restructuring Objectives

• Reduce employee costs

• Our approach to employee savings is focused on preserving base pay rates as much as possible by increasing productivity or relying on outsourcing
• Implement universal changes to active and retiree medical for current employees
• Remove and relax restrictions on our business

• Remove structural barriers that limit flexibility and ultimately growth
• Eliminate pension underfunding obligations

• Terminate defined benefit plans to eliminate the company’s more than $800 million annual funding obligation
• Implement new first-dollar profit sharing plans

Overview of Mechanic & Related Proposals

• Targeted Annual, Permanent Cost Savings: $210 Million (20% of Mechanic & Related’s total costs)
• Reduce workforce by about  40%, approximately 4,300 positions

• Seeking the closure of AFW, affecting approximately 1,200 positions

• Work at TAESL is anticipated to continue with 500-600 TWU-represented American employees
• Job reductions of up to 2,100 positions in Tulsa
• Move 450 employees from  AMTs to OSMs
• Flexibility to outsource up to 40 percent of aircraft maintenance work that is currently done in-house
• Modify work rules to improve productivity and efficiency
• Outsource specific Facility, Automotive and Plant maintenance work
• Allow for flexibility to schedule work on weekends without restriction
• Eliminate the ASM cap
• Reduce max vacation by one week
• Establish a five-year recall right limit for furloughees
• Eliminate system and station protections

Rationale

• Successful restructuring goes beyond competitive benchmarking.  Any previous estimates of our employee cost gap aren’t relevant to our current situation. We are facing a far different challenge in the restructuring process, one that requires that we get to a cost and operational structure that allows us to successfully implement our business plan.
• Outsourcing allows us to run a maintenance operation with a cost structure better aligned with the industry as a whole, while still preserving some key in-house maintenance functions.
• For the work we maintain in-house, we must change current work rules to give us the flexibility to operate in the same manner as a Maintenance, Repair and Overhaul (MRO) facility at a similar cost structure.
• Eliminating the ASM cap from all TWU contracts will let American optimize its network and schedule.  We would be able to improve the use of our regional network by allowing mainline jets to be redeployed for new opportunities and to place smaller jets on lower demand flights.