AMR Corp. is attempting to expand its scope clause to aircraft with fewer than 89 seats, establish a flat pay structure that encompasses both domestic and international bids for flight attendants and outsource about 40% of the work currently handled by its mechanics and fleet services workers.
The revisions are included in term sheets issued by the operator to its unions late last week as the first step in new contract negotiations under AMR’s Chapter 11 reorganization. Details can be negotiated and consensual agreements reached under this so-called Section 1113 process, although AMR also has the option of asking its bankruptcy court to impose the contracts on each employee group.
About $1.25 billion in concessions is being requested from labor, which equates to about 20% of AMR’s total payroll costs. Some concessions, such as the proposed pilots contract, come mostly from increased work hours and new work rules, while other groups, such as the Transport Workers Union-represented mechanics and fleet service clerks, provide a majority of their savings from a reduced work force and increased outsourcing.
That 20% cost reduction means AMR’s mainline pilots will contribute about $370 million to the total savings, while flight attendants add a further $230 million. The mechanics and flight services clerks account for $210 million and $150 million, respectively, while a 1,400-worker reduction in management and support staff provides $165 million.
AMR’s non-unionized airport services and reservations staff agents have yet to receive their term sheets, although the company estimates these groups will provide $95 million in annual savings, again 20% of the current cost. The remainder is assigned to dispatchers, trainers, simulator technicians and stores employees, all of whom are represented by the TWU.
Each new contract is proposed to last six years from an April 1, 2012, signing date, says AMR in its term sheets. All offers include revised medical coverage and the termination of the company’s four defined benefit pensions; defined contribution pensions replacing these include company matches of 5.5% for most employee groups, although pilots are offered a 13% match.
The changes requested by AMR are significant. Some 40% of AMR’s mechanics workforce will be cut under the restructuring plan, reducing the group to about 6,500 staff. Most will be based at AMR’s Tulsa, Okla., facility (which loses 2,100 jobs), although some 500-600 staff will be retained at the Texas Aero Engine Services Ltd. (TAESL) facility, formed in 1998 to overhaul some of the carrier’s engines. TAESL is a joint venture with. The loss of AMR’s Fort Worth facility at Alliance Airport means an end to widebody maintenance at AMR; that work will be outsourced under the company’s proposal.
Fleet services jobs also will be contracted out as the group sheds 40% of its headcount, with cabin cleaning, fueling and cargo handling targeted. Work also will be outsourced at airports with fewer than 20 daily departures.
These terms, like many of AMR’s demands, were included in the company’s pre-Chapter 11 negotiations, as is the new pay structure for the operator’s mainline pilots. The new pay bands, while slightly revised from an offer made to pilots in early November, still group aircraft by seating capacity, rather than aircraft type, and break them down into small narrowbody, narrowbody, large narrowbody/small widebody, widebody (with pay rates the same forand 787 pilots) and ultra-large twin-aisles, such as ’s 747 and the .
A significant change, though, comes with the proposed scope clause revisions. Under its plan, AMR will be able to contract any capacity up to 88 seats per aircraft, a dramatic change from the mostly 50-seat limit contained in the current scope clause. The contracted fleet also will be allowed to grow to 255 aircraft or 50% of the mainline inventory, whichever is greater.
Broader code-share rights also are included in AMR’s proposal, allowing the operator to place its code on other domestic carriers’ services, possibly even an East Coast shuttle. Pilot works hours also increase.
Flight attendant ranks will decline by 2,300 under the company’s term sheet, although the main thrust of this proposal is a new pay structure that eliminates a distinction between domestic and international flights and overhauls duty hours. AMR also revises the flight attendants bidding system and how it manages reserves.