AA, mechanics forge contract

See previous stories about American Airlines and its Tulsa operations. Negotiators for bankrupt American Airlines and its mechanics and stock clerks reached a tentative six-year contract agreement late Tuesday that provides 15 percent wage increases over six years, improved health insurance and other benefits. The tentative agreement, which must be ratified in a vote by 11,000 mechanics and stock clerks during the next month, also includes a 3 percent day-of-signing bonus for the mechanics and a 3.5 percent day-of-signing bonus for the stock clerks. "There were enough improvements that we thought it was necessary to bring it back to the membership for a vote," said John Hewitt, chairman of maintenance at Transport Workers Union Local 514 in Tulsa.

Neither the company nor the TWU could provide further details on the tentative agreement, such as how many layoffs among the mechanics and stock clerks would be necessary in Tulsa and companywide. More information on the tentative agreement will be provided on Wednesday, officials said. About 5,000 mechanics and related workers are employed at American's maintenance and engineering base in Tulsa. Altogether, the airline employs about 7,000 people locally. In a parallel development Tuesday, American CEO Thomas Horton disclosed for the first time that his management team is evaluating "a range of strategic options, including potential mergers, which could make the new American even stronger." Horton told employees in an email message that management and the board of directors in collaboration with American parent AMR Corp.'s creditors committee are examining potential merger candidates. The examination includes an economic analysis of synergies, costs and tax and capital structure implications of potential mergers, Horton said. "We have assessed many possible combinations in the past, including, of course, an acquisition of US Airways," Horton said. "... I have held the view that it is best that we first put our own house in order before considering a complex and challenging airline acquisition. That is just common sense. But it is also prudent merger strategy, should we take that path, to assure that we begin from a position of greatest strength and stability." Important elements in stabilizing the company either for a potential merger or as a stand-alone company would be contract agreements with the TWU, the Allied Pilots Association and the Association of Professional Flight Attendants, industry analysts say. U.S. Bankruptcy Judge Sean Lane has postponed three times a decision on AMR's motion to cancel its collective bargaining agreements with the three unions. He has agreed to delay a ruling on the motion until after tentative agreement ratification votes are completed in mid-August. American executives said they need 20 percent cost savings from each of the three unions, non-union employees and management - $1.25 billion a year - layoffs of up to 13,000 workers and increased revenue of $1 billion annually to emerge from bankruptcy and compete successfully in the industry. During the last two months, five TWU work groups agreed to the company's "final" offer of 7.5 percent wage increases over six years, while the mechanics and related workers and stock clerks rejected it. APFA negotiators rejected the final offer, declining to present it to their members. American's pilots will vote later this month on a tentative contract agreement calling for 14 percent wage increases over six years and a claim against AMR in the form of a 13.5 percent equity stake in the newly reorganized American Airlines. The tentative agreement reached between American, the mechanics and stock clerks includes the initial 3 percent wage increase, 3 percent wage increases after 12, 24 and 36 months, and 1 1/2 percent wage increases in each of the final two years. American spokesman Bruce Hicks said the agreement addresses the concerns of the TWU workers as well as achieving the cost savings the company needs. "As with APA, we were able to reduce the amount of targeted cost savings for these two TWU work groups, in this case by about $35 million annually," Hicks said. "Through this reduction, and a reallocation of profit sharing, we were able to provide additional pay raises, an adjustment to industry pay rates after three years, and changes in active medical benefits." Key points of tentative contract 1 . 15 percent wage increase over six years. 2 . Improved health-care coverage over previous offer. 3 . Market readjustment, based on industry compensation, after 36 months. 4 . Can reopen full contract negotiations after four years. AMR Corp. timeline January 2003: Fort Worth-based AMR Corp. reports $3.5 billion loss for 2002, the largest annual loss in airline history. February 2003: Citing unsustainable losses of more than $5 million a day, American asks its labor leaders and employees for $1.8 billion in annual savings through changes in wages, work rules and benefits. May 2003: American implements significant cuts, which include laying off 7,000 workers, including 718 in Tulsa, where the airline employed about 10,000. The company also says it is reviewing its three maintenance bases - in Tulsa, Fort Worth and Kansas City, Mo. - for possible cutbacks. September 2003: After passage of the Vision 2025 improvement and incentive package, which includes $22.3 million in capital improvements for American's Tulsa maintenance center, the airline announces that it will add work in Tulsa and not close the base. May 2007: The state appropriates $5.7 million from the state's Opportunity Fund, which contains surplus state money that is used to create jobs, and the city of Tulsa kicks in $4.3 million in local funds to build American the 81,400-square-foot wide-body Hangar 80 at Tulsa International Airport. Nov. 29, 2011: AMR Corp. and AMR Eagle Holding Corp., the parent companies of American Airlines and its regional affiliate American Eagle, file for Chapter 11 bankruptcy protection. They submit voluntary petitions to reorganize, saying it's in the best interest of the companies and their shareholders. Feb. 1: American announces that it will cut 13,000 jobs nationwide, including 2,100 in Tulsa - 30.9 percent of jobs here. Tuesday: American and the union for its mechanics and aircraft stock clerks reach a tentative agreement on a reduced package of concessions, leaving only flight attendants still negotiating with the bankrupt carrier. D.R. Stewart 918-581-8451 a class="ArticleLink" href="mailto:[email protected]"[email protected] SUBHEAD: The tentative deal must be ratified in a vote by 11,000 TWU members during the next month.