July 16--American Airlines union groups are sorting out how to divvy up an equity stake in the new company that could be worth around $1.76 billion.
Representatives of the Transport Workers Union will meet Tuesday to try to finalize who is eligible for the equity distribution and how much each worker will get.
The pot for TWU members, which covers about 25,000 maintenance and related workers, could be worth as much as $359 million and cover 3.46 percent of the new company created by the pending merger of American and US Airways.
Current negotiations would give about $16,200 to an aircraft maintenance technician with 15 years experience and $12,180 to a fleet service clerk with the same tenure.
The Allied Pilots Association will get 9.72 percent of the new company, possibly totaling more than $1 billion for its 9,000 members.
But at least for American's maintenance workers, including more than 5,000 at the Tulsa Maintenance & Engineering Center, the actual distribution is a complicated formula based on years of service and various grievances dating back as far as 2003.
"This is what I call a high-class problem, a situation where we are actually giving people money," said Tom Roth, a consultant who has been working with the TWU to split up the equity share. "But it is complicated."
American Airlines and US Airways promised a share of the new company to American's labor union groups to try to get workers to support the deal months before the merger was even announced. Unions say the equity split will help cover employee losses from bankruptcy, including frozen pensions and cuts to benefits.
Flight attendants are set to get about 2.16 percent of the new company, and 1.66 percent will go to nonunionized employees, including ticketing agents and lower-level management.
The equity shares will be paid entirely in stock, sometime after the deal closes.
US Airways and American Airlines officials have affirmed that they plan to close the merger by the end of September. But the deal is dependent on approval from the court handling American's bankruptcy, plus anti-trust approval from the U.S. Justice Department.
For maintenance workers to be eligible for any stock distribution, they will have to be employed by the company on the date of the bankruptcy, Nov. 29, 2011, and a date in the near future yet to be determined. Workers who were furloughed and on other leaves of absence also qualify, but not those who retired or left the company during the bankruptcy process.
The shares would be distributed over a period of 120 days after the initial stock in the new company is issued.
The share for maintenance workers is split between five areas being determined by local union hall presidents, lawyers and consultants. About 42 percent of their share will be allocated based on how long they have been in their work group and how long they have worked at the company.
About 18 percent of the TWU equity share will be determined by what kind of pension losses employees took. Some 35 percent will go equally to all members based on a "me too" provision, which was more equity given to the TWU to keep up with equity shares given to other labor groups.
A small portion of the deal comes from a grievance the union filed against American Airlines for outsourcing Boeing 757 work in violation of the collective bargaining agreement with maintenance workers.
Another small chunk comes from health benefit cuts that were negotiated by the union and American Airlines in 2003 but totaled great savings than expected in later years.
Roth said the complicated split is set up to reward employees who have sacrificed the most during the American Airlines bankruptcy.
The TWU plans to hold back about 5 percent of shares to cover any employees who don't get their proper payout because of technical errors. That money would eventually be distributed to all maintenance employees.
The Allied Pilots Association is in arbitration over its equity share because some members objected to how the amount could be split, said Tom Hoban, a spokesman for the labor group.
"The average for each pilot is about $120,000 pre-tax, and this is based on damage done to pilots during the bankruptcy," he said. "But it is very complex."
But Hoban said many pilots who lost more than $1 million to their pension and the equity distribution will only begin to cover their losses.
The pilots union is also working to get a law passed to make the distribution tax-exempt.
"Of course the tax man will take 30 percent off the top," Hoban said. "This should be treated more like a normal retirement account."
How much money will the unions get?
Worker groups are promised about 17 percent of the new company. Here is the estimated value based on U.S. Airways' current stock price of $17.76.
Worker group Share of new company Estimated value
Maintenance 3.46 percent $359 million
Pilots 9.72 percent $1.009 billion
Flight attendants 2.16 percent $224 million
Non-union 1.66 percent $172 million
Kyle Arnold 918-581-8380
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