Hot News for October 2009

Maintenance & Engineering Center,
P. O. Box 582809,
Tulsa, Oklahoma 74158-2809

Carmine J. Romano
Senior Vice President
Maintenance & Engineering
October 28, 2009

Dear Colleagues,
Today we are announcing a difficult but important step in resizing and reshaping our M&E operation. As American, like the rest of the industry, continues to reduce capacity, we must be strategic in structuring a maintenance system that serves the needs of the fleet we fly today as well as the plans in place for our airline in the future.

We are making critical changes to the M&E footprint to take into account our reduced flying and a fleet that has shrunk from a high of more than 900 planes to approximately 600 today. In addition, we are responding to the changes resulting from the major network re-alignment we announced earlier this year.

As our dock plan has shown, next year we will wind down all operations at our Kansas City Maintenance Base. We have now finalized plans and will close the location in September. We are also making major changes on the line, affecting SFO, which will become a Class II station, and closing the Class II stations in MCI, DTW, MSP, and SJC. In addition, St. Louis line operations will be downsized to adjust to the reduced flight schedule. These adjustments will also occur in September.

Unfortunately, these changes will cause a reduction of up to 700 positions, both management and union, in the M&E and supporting departments’ workforce. Others could be impacted through bump and roll. We are working diligently to find ways to minimize the impact on our people and will provide voluntary separation options for our TWU-represented employees.

These options include Stand-in-Stead programs at affected locations. We will also offer an optional separation allowance of $12,500 for eligible employees in Kansas City and St. Louis, who choose to leave the company before September 2010. More details will be available through your manager in the coming weeks. Management and support staff will receive separation benefits, including severance,
based on level and seniority.

Our goal with these changes is to move toward a more flexible, cost-efficient operation that improves flow and takes into account the long-term impact of the recession on travel, deep capacity cuts across the industry, and a corresponding decline in the MRO business, along with the changes to our network and corresponding fleet size.

Despite this difficult decision, we should not let it detract us from continuing with our efforts to make the M&E team a success. After all, we are a company that takes responsibility for ourselves and has never used the bankruptcy process to cut costs. We must and will continue to provide superior performance and dependability, streamline our operations, improve efficiency, and attract third-party business. We all remain committed to performing as much of our aircraft maintenance in-house as we are able to accomplish on a competitive basis and to providing quality improvements and continued enhancement to the skills of our workgroup that I believe has made us the best M&E operation in the industry.

Our group has shown great resilience and professionalism through some difficult challenges, and this will be one of them. Nevertheless, I believe we are making the kind of changes now to lay the groundwork for a strong M&E operation, delivering the highest quality product on a competitive basis to our airline and our third party customers.

Sincerely,
(Original Signature on File)
Carmine Romano

>>> .pdf version <<<

HEADS UP
10.28.2009 | For AA Managers Level 5+

Subject: American Announces Changes to Maintenance Operations for 2010

Summary: American is today announcing a series of difficult but important steps in re-sizing and reshaping our Maintenance and Engineering (M&E) organization to better align the operation with our flying, fleet and future plans.

Key messages:

• As American, along with the rest of the industry, continues to reduce capacity, it’s crucial that we structure our maintenance system to serve the needs of the fleet we fly today as well as the plans in place for our airline in the future.

• We’re making critical changes to the M&E footprint to take into account reduced flying and a fleet that has shrunk from a high of more than 900 planes to approximately 600 today. In addition, we are responding to the changes resulting from the major network re-alignment we announced earlier this year.

• Changes will include:

• We will wind down all operations at our Kansas City Maintenance Base and will close the location in September 2010.
• Line Maintenance changes will also occur in September 2010:
  • San Francisco (SFO) will be downgraded to a Class II station
  • Line maintenance operations will be discontinued at San Jose (SJC), Detroit (DTW), and Minneapolis-St. Paul (MSP)
  • Line maintenance operations in St. Louis (STL) will be downsized due to the reduced flight schedule

• Unfortunately, it’s expected that approximately 700 positions, including management and unionized employees, will be eliminated by this change, as well as others impacted through bump and roll.

• We understand the impact these changes have on our affected employees and will provide voluntary separation options for our TWU-represented employees. Impacted employees will receive information from their managers in the weeks ahead on the options available to them.

• We remain committed to performing as much of our aircraft maintenance in-house as we are able to accomplish on a competitive basis.

• Our goal with these changes is to move toward a more flexible, cost-efficient operation that improves flow and takes into account the long-term impact of the recession on travel, deep capacity cuts across the industry and a corresponding decline in the MRO business, along with the changes to our fleet size.

• American is committed to examining all areas of our business and taking the necessary steps to position the company for long term success. These changes are challenging, but we hope, in the end, they will be the right thing to do to win in the marketplace and ensure the overall success of American.

• Bob Reding will send a Special Jetwire announcing the changes to all employees later this morning.

Subject Matter Expert: Mark Easton, Maintenance Business Operations, mark.easton@aa.com; MaryAnne Cipperly, Human Resources, maryanne.cipperly@aa.com

From: Videtich, Donald
Sent: Wednesday, October 28, 2009 4:57 AM
Subject: M&E September 2010 Planned Reduction

Brothers,

Attached are talking points for the Maintenance and Engineering 2010 Business plan. These talking points are being sent to all level 5 management and above at 0500 this morning. Yesterday myself along with Carmine Romano visited MCI and met with Gordon Clark and his Executive Board along with some MCI Management. Carmine briefed the group as to the planned closing of MCI next year in September. We then flew back to DFW and met with the TWU Leadership of Local, 521, 529, 563, 564 and their MD’s. Carmine and Ken Durst briefed them on the impact to their stations.

All of these planned changes take place September 2010 when the flight schedule changes (from summer to fall)

A short summary of what the M&E Plan is for next September is as follows:

STL- going from 12 to 8 overnight aircraft (Keeping MD80 B Check and 757 I Check) (Daily AA flights from 44 to 33)

SFO- downsizing from a Class 1 to a Class 2 due to the routing of the 767 they will lose their 767 B Check. They will have 9 overnight aircraft. The hangar is currently under review M&E management wants to keep the hangar due to performing overnight checks on Hawaiian Air 767. The schedule actually gains a 767 by moving 767 B Check to MIA.

SJC- Closing the station for maintenance going to 3 overnight aircraft (MD80 maintenance access not needed)

DTW- Closing the station for maintenance going to 2 overnight aircraft (MD80 maintenance access not needed)

MSP- Closing the station for maintenance going to 5 overnight aircraft (MD 80 maintenance access not needed)

Other panned changes in workload distribution:

Currently MIA has 2 737 B Checks (5 Day Lines) going to one line next September due to the retrofit going to 160 seats (38D Type 737)– it will then go to one 7 day line and then will move to LGA. Miami will transition to performing the 5 day 767 B check (from SFO).

LGA will transition to performing a 737 B Check (from Miami) and one MD80 B Check will go away (Maintenance access for one MD80 B check not needed)

ORD work load will be going up- due to 38D type 737 fleet size growing which will increase the workload and growth in B Checks (ORD two five day B check lines going to two seven day B check lines)

Stand in Stead program will be available, along with an optional separation allowance of $12,500 for M&E eligible TWU employees in Kansas City and St. Louis who choose to leave the company before September 2010. The effective date of each separation will be determined at management’s discretion due to specific operational requirements.

In the Company’s talking points they show an approximate headcount reduction of TWU, Support and Management by location of:

o MCIE: 490
o STL: 80
o SFO: 100
o MSP: 19
o DTW: 15
o SJC: 18

We believe (along with Management) the numbers reported for STL and SFO are too high and the Locals along with their management folks are going to work through them and match them to the planned workload.

I would like to thank the affected Presidents for coming to DFW on short notice to attend this briefing by management and Gordon and his guys for being so gracious and professional while getting the worst news possible for MCI.

Again, the attached talking points are going out at 0500 this morning- please feel free to update your folks (via talking points) and my summary please don’t email this infomation. This is the first time we have been briefed of a planned change so far in advance we litterally have 11 months to prepare our affected members and hopefully mitigate the impact through voluntary exits from the company.

Fraternally,

Don V

Donald M. Videtich
International Representative
Air Transport Division
Transport Workers Union of America, AFL-CIO
1791 Hurstview Drive
Hurst, Texas 76054

Talking Points and Q&A
October 28, 2009

Talking Points
• Today American is announcing a difficult but important step in re-sizing and reshaping our M&E operation. As American, along with the rest of the industry, continues to reduce capacity, it’s crucial that we structure our maintenance system to serve the needs of the fleet we fly today as well as the plans in place for our airline in the future.

• We’re making critical changes to the M&E footprint to take into account reduced flying and a fleet that has shrunk from a high of more than 900 planes to 600 today, as well as the major network re-alignment we announced earlier this year which aims to eliminate unprofitable flying and reallocate resources to hubs, or cornerstones, in Dallas/Fort Worth, Chicago, Miami, New York and Los Angeles.

• Changes include:

• We will wind down all operations at our Kansas City Maintenance base and will close the location in September 2010.
• Line Maintenance changes will also occur in September 2010:
  • San Francisco (SFO) will be downgraded to a Class II station
  • Line maintenance operations will be discontinued at San Jose (SJC), Detroit (DTW), and Minneapolis-St. Paul (MSP)
  • Line maintenance operations in St. Louis (STL) will be downsized due to the reduced flight schedule

• Unfortunately, it’s expected that approximately 700 positions, including management and unionized employees, will be reduced by this change, as well as others affected through bump and roll.

• We understand the impact these changes have on our affected employees and will provide voluntary separation options for our TWU-represented employees. Impacted employees will receive information from their managers in the weeks ahead on the options available to them.

• We remain committed to performing as much of our aircraft maintenance in-house as we are able to accomplish on a competitive basis.

• Our goal with these changes is to move toward a more flexible, cost-efficient operation that improves flow and takes into account the long-term impact of the recession on travel, deep capacity cuts across the industry and a corresponding decline in the MRO business, along with the changes to our fleet size.

• American is committed to examining all areas of our business and taking the necessary steps to position the company for long term success. These changes are challenging, but in the end, they will be the right thing to do to win in the marketplace and ensure the overall success of American.

Details of Voluntary Options Offered

• At this time, a Stand in Stead program will be available, along with an optional separation allowance of $12,500 for M&E eligible employees in Kansas City and St. Louis who choose to leave the company before September 2010. The effective date of each separation will be determined at management’s discretion due to specific operational requirements.
• An employee must be 50 years of age and have at least 15 years seniority January 1, 2010 to be eligible.
• The separation incentive includes regular severance (up to 13 weeks, depending on the employee’s seniority) plus a special severance allowance of $12,500.
• The optional separation allowance is being offered to eligible M&E employees at Kansas City and St. Louis to lessen the “bump and roll” churn in the system. It is also equal to the allowance given to protected employees if they sever their rights to recall or relocate.
• An employee’s status as protected or non-protected is determined by the present collective bargaining agreement with the TWU.
• Management and support staff (including M&E coordinators) will receive separation benefits consistent with company policy.

Employee/Manager Q&A

Why are we doing this now?
We’re making critical changes to the M&E footprint to take into account reduced flying and a fleet that has shrunk from a high of more than 900 planes to 600 today, as well as the major network re-alignment we announced earlier this year which eliminated unprofitable flying and reallocate resources to hubs, or cornerstones, in Dallas/Fort Worth, Chicago, Miami, New York and Los Angeles.

How many jobs will be impacted by these changes?
Unfortunately, it’s expected that approximately 700 positions, including management and unionized employees, will be eliminated by this change, as well as others impacted through bump and roll.

We estimate the reductions to include roughly 490 in MCI. In Line Maintenance, we anticipate station closures resulting in reductions of approximately 15 in DTW, 19 in MSP and 18 in SJC. Downgrading SFO and STL will reduce 100 and 80, respectively.

When will affected employees be notified?
Departmental managers will provide more information to affected employees as it becomes available. We recognize the strain this announcement places on all of our employees and will make every effort to lessen necessary reductions through voluntary options that will be made available to the affected departments.

What voluntary options will be offered?
We are working diligently to find ways to minimize the impact on our people and will provide voluntary separation options for our TWU represented employees.

Will a VBR be available?
A VBR will not be available, but M&E TWU-represented employees at the affected locations will be able to apply for the Stand in Stead program. We will also offer an optional separation allowance of $12,500 for eligible M&E TWU-represented employees in Kansas City and St. Louis who choose to leave the company before September 2010. The effective date of each separation will be determined at management’s discretion due to specific operational requirements. An employee must be 50 years of age and have at least 15 years seniority as of January 1, 2010 to be eligible.

Why are Kansas City and St. Louis M&E employees the only ones to receive the optional separation allowance?
The optional separation allowance is being offered to eligible M&E employees at Kansas City and St. Louis to lessen the “bump and roll” churn in the system. It is also equal to the allowance given to protected employees if they sever their rights to recall or relocate.

An employee’s status as protected or non-protected is determined by the present collective bargaining agreement with the TWU.

Why aren’t we giving management voluntary options?
We are still in the process of reviewing options for management and support staff (including M&E coordinators). The options could include possible placement in other positions within the company or separation benefits consistent with company policy.

Which stations will be most impacted by the opportunity for TWU employees to “bump and roll?”
We can’t determine that at this point. The stations will be determined by the number of employees that have the contractual obligation to displace more junior employees within the system.

Will there be additional reductions in M&E in 2010? What about the rest of the organization?
What we have announced today represents our complete plan for 2010 at this time. Given the volatility of fuel and the global economic environment at this time, we must remain flexible to address unforeseen elements in the future. But, this is our current plan.

Will we be adding work at any of the other base or line maintenance locations in 2010?
Overall, these actions will result in a net decrease in positions for M&E. However, as part of this plan, we expect to reallocate work among locations and this redistribution will probably result in some stations having more work and positions than before.

I thought we were investing in new planes – how will we maintain more aircraft with less people?
Our fleet replacement plans are exactly that – replacement of our existing fleet with new and more modern airplanes – and do not represent growth in our fleet or our capacity. For the fourth quarter of 2009 we expect our capacity to be down 13.5 percent compared to the fourth quarter of 2007. We recently removed our entire fleet of Airbus 300s from our active fleet, and we are in the process of retiring our MD-80 fleet as we replaced them with Boeing 737-800s. The new aircraft will also require less maintenance for the near future as heavy checks do not occur early in the life of a new airplane.

Will there be a reduction in the number of management positions, as well?
Yes, the reduction in M&E management and support staff positions will be proportional to the TWU-represented reductions.

Why are you closing the high performing Kansas City base?
We’re adjusting the M&E footprint to streamline the operation to become more efficient and cost-effective. These changes take into account reduced flying and a fleet that has shrunk from a high of more than 900 planes to 600 today, as well as the major network re-alignment we announced earlier this year.

What happened to the MRO work American was trying to obtain to keep the base?
We have continued to work at exploring opportunities to preserve and grow our MRO business in Kansas City. In the last 10 months we have met with nearly a dozen air carriers across the globe to respond to RFPs for third party work. These proposals ranged from aircraft modifications to C-checks. In almost all cases, our bid was deemed uncompetitive, largely due to our labor costs compared to those of our off shore competitors.

How was it determined which line maintenance locations would close or be downgraded?
Our M&E reductions better match our maintenance footprint to the number of aircraft and amount of flying we now have. These locations were chosen because the company no longer needs as many stations to serve the MD-80 fleet as it gets smaller, especially if the work being done was redundant to what could be accomplished at other locations.

STL: Schedule reductions and MD80 retirements will decrease the workload at STL.
SFO: The airline’s flying schedule going forward does not support the access needed to perform 767 B-checks in SFO, hence the check line will move. SFO will continue to do overnight maintenance, engine washes, and specialty work.
DTW, MSP, SJC: Schedule reductions have left DTW, MSP and SJC with smaller footprints and redundant fleet access.

Do these changes signal that American will begin outsourcing more of its maintenance?
No. We have always said that, as long as we can keep in-house maintenance economically competitive for the company, we intend to keep doing most of our maintenance with our own employees at our own bases. These reductions represent only a move to make the scale of our maintenance operation match the size of our fleet and flying.

How much money will the company save with these changes?
Savings figures will be impacted HR programs, including the number of employees choosing the separation program, and we will have more details to share at a later date.

Why can’t we just raise prices as a way to return to profitability?
Over the past couple of years, AA has worked aggressively to generate additional revenue through higher ticket fares and new service charges. Those efforts have generated hundreds of millions of dollars, but they have not been enough to achieve consistent profitability. Customers are incredibly sensitive to minor price differences – a sensitivity that is even greater in today’s climate. When competitors with lower unit costs don’t match a fare increase – it does not stick and we cannot afford to be uncompetitive on price – even when it’s $5 or $10.

Why do we continue to reduce our operations in Missouri?
American is reshaping its maintenance operation to better align the M&E footprint to its present fleet. We examined all options and unfortunately, this made the most sense financially and based on our M&E operational needs.

The downsizing of our St. Louis operation is due to our recently announced schedule reductions and the MD80 retirements, which are decreasing the workload at the station.

Is American in trouble financially?
The airline industry and American are experiencing enormous challenges, and the recession is taking a disproportionate toll on airlines. The industry continues to face significant uncertainty regarding the depth and length of the current recession and the effects this will have on the long term demand for travel. Although fuel prices have declined from last year, we have recently seen a significant rise in the price of this commodity along with ongoing tightness in the credit markets.

That said, we have done a lot over the past several years, such as paying down debt and bolstering our cash balance to strengthen our airline to face these challenges. Since July 2009, we completed financing and liquidity transactions totaling about $5 billion, giving us flexibility for the short term, and money to invest for the airplanes, facilities and technology that is critical to our success in the years to come.

How does this announcement impact contract negotiations with the TWU?
These changes are independent of our contract negotiations with our unions. However, this decision underscores the incredibly difficult economic environment and the need to reach flexible, realistic and sustainable agreements with our unions.

What will the line stations that are discontinuing line operations do about any daily maintenance problems that arise?
These stations will have daily as-needed outsourced maintenance, as we have at other stations without line maintenance.

Will Airport Services Title II employees at the affected line stations be impacted as well?
The impact to other departments supporting the M&E operation at stations is not known at this time.

Additional External Q&A

Approximate headcount reduction by location

• MCIE: 490
• STL: 80
• SFO: 100
• MSP: 19
• DTW: 15
• SJC: 18

Approximate current headcount by location, including affected employees

• MCIE: 490
• STL: 180
• SFO: 240
• MSP: 19
• DTW: 15
• SJC: 18

Former TWA M&E employees by location:

• MCIE: 481
• STL: 178
• SFO: 18
• MSP:
• DTW: 0
• SJC: 0

How many M&E positions have been eliminated in the past few years?
Since 2004, American has involuntarily eliminated 1,240 M&E positions.

How many positions has American eliminated in the past few years?
Since 2001, American Airlines has reduced its Full Time Equivalent headcount by 42 percent.

Has American previously offered voluntary programs to M&E employees? How many separations were taken?
American has offered voluntary programs to its M&E employees in the past. 1,181 M&E employees have taken voluntary separations since 2004.

Details By Location

• MCIE – Closing maintenance base & Class II line station
  • Approximate Number of Affected Employees: 490
  • Total AA Employees Presently at Location: 587 (Base and Airport)
  • We acquired the Kansas City base with TWA in 2001. Since then, the base has performed various types of maintenance including airframe modifications (767 interior modifications, 757 winglet installations, 767/MD-80 Aircell installations and are currently performing 767 winglet installations and avionics upgrades); airframe scheduled maintenance (767 checks); contract airframe modifications and maintenance; and AA components repairs.
  • NOTE: Of the TWU represented employees in Kansas City, 268 are immediately retiree eligible, meaning they are over the age of 55. An additional 90 are ages 50-55. So, 88 percent of the workforce is eligible for the special separation allowance. And, 66 percent are eligible to receive the special separation allowance and then retire.
• STL – Downsizing maintenance operation, keeping hangar
  • Approximate Number of Affected Employees: 80
  • Total AA Employees Presently at Airport: 1,745
  • STL handles overnight maintenance on MD80 and 757 aircraft.  They have an MD80 B-check line and 757 interior check line, both of which will continue to operate.  However, schedule reductions and MD80 retirements will decrease workload at STL.
• SFO – Downsizing maintenance operation from a Class I to a Class II
  • Approximate Number of Affected Employees: 100
  • Total AA Employees Presently at Airport: 1,741
  • SFO handles overnight maintenance on MD80, 757, and 767 aircraft. They currently have a 767 B-check line. The airline’s flying schedule going forward does not support the access needed to perform 767 B-checks in SFO, hence the check line will move. SFO will continue to do overnight maintenance, engine washes, and specialty work.
• SJC – Eliminating Class II maintenance operation
  • Approximate Number of Affected Employees: 18
  • Total AA Employees Presently at Airport: 152
  • SJC performs overnight maintenance on MD80s. Schedule reductions have left this station, along with DTW and MSP, with small footprints and redundant fleet access. 
• DTW – Eliminating Class II maintenance operation
  • Approximate Number of Affected Employees: 15
  • Total AA Employees Presently at Airport: 120
  • DTW performs overnight maintenance on MD80s and 737s. Schedule reductions have left this station, along with SJC and MSP, with small footprints and redundant fleet access.
• MSP – Eliminating Class II maintenance operation
  • Approximate Number of Affected Employees: 19
  • Total AA Employees Presently at Airport: 120
  • MSP performs overnight maintenance on MD80s and 737s. Schedule reductions have left this station, along with SJC and DTW, with small footprints and redundant fleet access. 

FOR IMMEDIATE RELEASE

October 8, 2009

Transportation Labor Urges Action on Stalled-Out Legislation, Vows to Protect Aviation Workers Harmed by International Joint Ventures

WASHINGTON, DC – Transportation union leaders are urging action on key transportation legislation that, if delayed further, forestalls needed improvements to our nation’s aviation and surface transportation systems and eliminates a major source of job creation so badly needed across the country. In their annual fall meeting today, leaders of the 32 unions that comprise the Transportation Trades Department, AFL-CIO (TTD) also agreed to enlist the help of Congress to protect aviation workers from international joint ventures that give U.S. carriers additional ways to outsource jobs.

“Our focus is always on creating and preserving good jobs, but it is especially relevant during these tough economic times. Transportation unions are looking for every opportunity to put workers back to work, and to protect those who are getting paychecks,” said Edward Wytkind, President of the Transportation Trades Department, AFL-CIO. “With unemployment still too high, we just can’t support postponing overdue transportation legislation that would invest in America and create millions of jobs.”

The TTD Executive Committee welcomed as its guest speakers Senator Patty Murray (D-WA), John Porcari, Deputy Secretary of the Department of Transportation, Deborah Hersman, Chair of the National Transportation Safety Board, and Elizabeth Shuler, the newly elected AFL-CIO Secretary-Treasurer.

The TTD Executive Committee focused on an agenda that includes completing the overdue multi-year Federal Aviation Administration reauthorization bill – already extended seven times by Congress – and the surface transportation reauthorization that expired September 30. TTD affiliates discussed the troubling trend of international joint ventures in aviation that, if left unchecked by Congress, could cause further job loss among U.S. pilots, flight attendants and ground crew. The Executive Committee also focused on a strategy for the ongoing national high speed rail initiative focusing on the need to create good jobs, ensure compliance with key worker protection requirements and rail statutes, and fully utilize Amtrak and its veteran workforce for new high speed rail systems.

Evidenced by seven short-term funding extensions, Congress has been unable to complete work on the FAA reauthorization. These delays have left many safety, infrastructure, technology and worker rights issues unaddressed. Meanwhile, until Congress acts, FedEx will continue to use its special treatment under our labor laws to deny its truck drivers and mechanics the right to form unions.

“The flying public as well as private and public sector aviation workers cannot afford more political gridlock in completing this important legislation,” Wytkind said.

Some want to defer action on a multi-year surface transportation reauthorization bill until 2011. While the economic stimulus bill focused on short-term job growth and addressing immediate infrastructure needs, the reauthorization bill would build on that effort and create or sustain six million good jobs in six years. Transportation labor – and many business groups including the Chamber of Commerce – endorses an increase to the fuel tax to raise the revenues needed to address an investment deficit that will cost $1.8 trillion to fix, according to the American Society of Civil Engineers.

“Americans suffering in this recession can’t wait until 2011 for job opportunities,” Wytkind said. “Our transportation system and infrastructure are plunging into a state of severe disrepair and can’t wait two years or longer for new investments.”

As U.S. air carriers engage in international joint venture agreements, American workers must be protected. Some U.S. carriers are looking to exclusively outsource flight operations to their foreign partners to boost profit margins. Pilots, flight attendants and ground workers could see their employers become “ticket agents” for their foreign flying partners, and will see their work hours cut as foreign carriers turn to their own employees – or others – to perform the work. Congress must step in to protect U.S. aviation workers.

“This isn’t hyperbole – in United’s joint venture with Aer Lingus, all the flights will be advertised as United’s but in reality Aer Lingus aircraft and employees will be used,” Wytkind said. “Congress must act to prevent U.S. airlines from using these ventures to offshore jobs.”

On high speed rail, the Executive Committee vowed to push for Amtrak as the centerpiece of the historic high speed rail transportation program initiated by President Obama. TTD affiliates also reaffirmed the need for federal transportation regulators to vigorously enforce the rules and regulations attached to the high speed rail program.

“Amtrak is the only legitimate provider of true high speed rail in this country,” Wytkind said. “And Amtrak workers have the skills and experience necessary to deliver on the President’s vision for a new era of high speed rail in America.”

To read the policy statements that were approved on each of these issues, please visit www.ttd.org.

The Transportation Trades Department, AFL-CIO, represents 32 member unions in the aviation, rail, transit, trucking, highway, longshore, maritime and related industries. For more information, visit www.ttd.org.

Taxing Health Care Benefits:
The Wrong Prescription

The Senate Finance Committee health reform bill would slap a 40 percent excise tax in 2013 on health care plans valued more than $8,000 for individual coverage or $21,000 for family coverage (with adjustment for plans in high cost states and plans with retirees or workers in high-risk occupations). Taking into account projected cost increases, that works out to about $6,500 for individual plans and $17,000 for family plans in today’s dollars. This would amount to an enormous tax on workers’ health care benefits that would grow very quickly, as insurers increase premiums by an equivalent amount. It would shift health care costs onto the backs of workers, fail to bring down the growth of health care costs, and be politically disastrous.

The excise tax would hit union and nonunion plans alike.

• Unions are estimating that members would be slammed with disastrous new costs, with assessments over the next 10 years projected at:
• $8,454 for individual coverage and $21,529 for family coverage per active CWA member for the most popular health care plan offered to its members in 25 states.
• $5,266 for individual coverage and $12,484 for family coverage for every CWA pre-Medicare retiree.
• $12,000 for individual coverage for each of 500 United Steelworkers members working in a large paper facility in Maine and $12,201 per USW retiree, with family coverage at $23,000 for workers and $25,056 for retirees.
• $16,400 for individual coverage and $50,000 for family coverage for each of the 600 USW active members working in one production facility in West Virginia.
• $35,300 for family coverage for 16,000 Airline Pilots Association (ALPA) members with union-negotiated plans.
• $22,021 to $24,179 for family coverage, depending on the state, per active UAW member employed by one of UAW’s largest employers.

Over time, the tax would hit lower and lower cost plans. After 2013, the threshold amount at which the tax applies would rise at a much slower rate than plan costs are expected to rise, exposing more and more lower-cost plans to the tax.

The excise tax would be a direct tax on many workers and retirees covered by Taft-Hartley multi-employer plans, self-funded plans and the retiree plans recently established in the auto industry and as part of bankruptcy reorganizations.

The excise tax would be an indirect tax on other workers and retirees covered by union-negotiated plans, because insurance companies likely would pass costs on to workers.

The excise tax would cause some employers to reduce benefits to avoid the tax altogether, shifting the burden of paying for health care costs onto the backs of workers.

The excise tax would not bring down health care costs. There is no evidence that taxing health benefits—by taxing insurers and employers that provide higher cost plans or by capping the tax exclusion for individuals—would rein in private-sector spending on health care. The enormous waste in our health care system is not driven by consumers. The vast majority of health care spending is for people who genuinely need care, not people who demand care because their insurance covers it. Most treatments occur because doctors recommend them, regardless of coverage. The key to reining in health care spending is to get providers to deliver care in more cost-effective ways. Increasing out-of-pocket costs may actually lead consumers to forgo necessary care and make counterproductive health care decisions.

Many health care plans have higher costs for reasons that have nothing to do with wasteful or unnecessary care. The cost of health insurance varies widely depending on factors that have nothing to do with any supposed indifference of consumers to the cost of care—factors such as geography, size of the employer and percentage of the company’s workforce that is older or sick.

For example, the Steelworkers represents workers at a small manufacturer of name-brand sporting goods, where layoffs due to international competition have left a highly skilled workforce whose average age is over 60 and who average 40 years of experience. Family coverage costs almost $21,000. This is 40 percent more than the average for a similar USW group with the same plan, simply because of the age and health conditions of the group.

Union-negotiated plans are not “Cadillac” plans offering excessive benefits. The benefits provided under union-negotiated plans are roughly comparable to those of other plans, but over the years union members have consistently chosen to give up higher wage increases in exchange for limits on out-of-pocket health care costs.

The excise tax is the opposite of reform. One of the principal goals of health care reform is to guarantee quality, affordable health care for working families as health care costs spiral out of control.The excise tax would raise health care costs for workers, including some of the most vulnerable workers—workers in small firms, workers in firms with sicker employees and workers in firms with older employees.

The excise tax would be political disaster. In a recent national poll, 54 percent opposed “placing a tax on the highest-cost private insurance policies in order to pay for health care reform,” and 34 percent were strongly opposed, while 41 percent were in favor.

There are better ways to pay for health care reform. In the House health care reform bill, the robust “public option” would lower the price of reform by $110 billion over 10 years and the “pay or play” requirement would save over $160 billion. The House bill would impose a graduated surtax on adjusted gross income over $280,000 for singles and $350,000 for married couples, raising $543.9 billion over 10 years. President Obama has proposed capping itemized deductions at 28 percent, which would raise $318 billion over 10 years. One proposal to apply the Medicare payroll tax to investment income would raise $160.3 billion from 2012 to 2019.

A Fairer Way to Pay for Health Reform

The Senate Finance Committee bill would raise $205 billion over 10 years by imposing a 40 percent tax on high-cost health insurance plans, and those costs would be passed on to workers one way or another. Yet there are several alternative proposals for financing health reform that would not punish workers.

The wealthy should pay their fair share for health care reform. Tax cuts since 2001 have disproportionately benefited the richest five percent of Americans, and the wealthiest one percent will have received over $700 billion from the Bush tax cuts over the 2001-2010 period. The top one percent also reaped two thirds of the income gains from the 2001-2007 economic recovery, so it makes sense to ask the wealthiest households to contribute more to the financing of health care reform.

The cost of health reform is lower than the cost of the Bush tax cuts. The 2001 and 2003 Bush tax cuts cost two and a half times as much as the most costly health reform bill moving through Congress.

Another fair way to pay for reform would be a surcharge on the wealthiest one percent of taxpayers.

• The House health reform bill would impose a surcharge on individuals earning more than $280,000 per year and couples earning more than $350,000 per year.
• Only the top 1.2 percent of all households in America would pay the surcharge.
• The surcharge would raise $543.9 billion over 10 years.
• The surcharge would effectively require the wealthiest one percent to give back some, but not all, of the Bush tax cuts.

One fair way to pay for health reform would be President Obama’s proposal to limit itemized deductions for the very wealthy.

• Itemized deductions subsidize certain activities at a higher rate for wealthy families than for middle-income families.
• Here’s one example: a taxpayer in the 35 percent tax bracket today saves 35 cents of every dollar she spends on mortgage interest, while a taxpayer in the 15 percent bracket saves only 15 cents on the dollar.
• President Obama has proposed limiting, but not eliminating, this unfairness by capping itemized deductions for taxpayers in the top two income tax brackets (35 and 33 percent) at 28 percent.
• President Obama’s proposal would affect only the top 1.3 percent of taxpayers. Over 90 percent of this tax increase would be paid by the wealthiest one percent, and over 99 percent would be paid by the wealthiest five percent.
• A report by the Center on Budget and Policy Priorities concluded that President Obama’s proposal would reduce charitable giving by only 1.9 percent.
• President Obama’s proposal would raise $318 billion over 10 years.

Another fair way to pay for reform would be to apply the Medicare payroll tax to unearned income.

• The Medicare payroll tax applies to wages and salaries, but it completely exempts wealthy investors whose income comes in the form of unearned income such as capital gains, stock dividends, interest, rents, royalties, and other investment income.
• One proposal to pay for health reform within the health care system would extend the Medicare payroll tax to most types of unearned income other than pension income and Social Security benefits.
• Over 73 percent of this tax increase would be paid by the wealthiest one percent of taxpayers, and over 90 percent would be paid by the wealthiest 5 percent. The average tax increase for the bottom three quintiles of taxpayers would be $2.
• This proposal would raise $19 billion per year and $160.3 billion over the period 2012-2019.

The public option and “pay or play” would lower the price of reform.

• A robust public option tied to Medicare rates would save $110 billion over 10 years in the House health reform bill.
• The requirement that employers provide health coverage or pay into a common fund to finance coverage would raise over $160 billion over 10 years in the House bill.
• The Senate Finance Committee bill—which raises $205 billion over 10 years by taxing high-cost health plans—omits the public option and “pay or play.”

Health Care Reform Would Be a Boon to Small Business

Small businesses and their employees pay more today for health insurance. Small businesses pay on average 18 percent more than larger firms for identical health plans. Smaller businesses have steeper costs because of higher and more variable health risks, lack of competition among small-group insurers, and higher administrative expenses. Administrative costs account for 20 to 25 percent of premiums for small business plans, compared to 10 percent for larger firms. Because employers pass these costs on to workers, average contributions by employees in small firms are 30 to 45 percent more than in large firms.

Small businesses that provide health coverage today are subsidizing firms that do not. Small businesses that provide coverage today pay a hidden fee of well over 15 percent because insurers pass on the cost of uncompensated and under-compensated care. As a result, firms that do not provide health coverage to their employees enjoy an unfair competitive advantage over those that do.

Without reform, health care costs for small businesses will spiral out of control. Insurance costs for small businesses have increased 129 percent since 2000. Without reform, employers will have to pay 6 percent more for insurance next year, and more than twice as much over the next decade.

Small business owners and their employees account for the largest share of the uninsured. Nearly half of the uninsured worker population is employed by a small business. Only 46 percent of firms with fewer than 10 employees offer health insurance, compared to 98 percent of firms with more than 200 employees. Much of the decline in employer-provided coverage since 2000 is due to erosion in coverage by small firms.

Small employers would be among the biggest winners from health care reform.

• Health care reform—especially with a robust public option—would dramatically reduce spiraling health insurance costs for small businesses.
• Health care reform—especially with a robust public option—would also reduce the number of uninsured Americans, further reducing costs for firms that already provide coverage.
• Small firms would have access to the new health insurance exchanges, where they would enjoy the benefits of large-group rates normally available only to large employers, lower administrative costs, greater transparency, and the ability to offer greater choice of plans.
• Health care legislation also includes key insurance reforms that would limit costs for small groups: prohibiting insurers from excluding coverage based on pre-existing conditions; prohibiting insurers from selectively refusing to renew coverage; prohibiting insurers from charging different premiums based on gender, occupation, or pre-existing condition; and requiring a standardized annual out-of-pocket spending limit.
• The House reform bill would provide tax credits for small employers to cover up to 50 percent of the cost of premiums.

Small firms that provide health coverage should not have to continue subsidizing those that do not. Congress should keep employers that fail to provide health coverage from gaining a competitive advantage by shifting their costs on to employers that do provide coverage. A requirement that every employer provide coverage would create the widest possible coverage at the least cost to the government without disrupting the employer-provided coverage of workers who now receive it. Most reform proposals already include a hardship waiver for employers that cannot meet this requirement, so a blanket exemption for small businesses is not necessary.

Health care reform should not further burden small businesses that already provide coverage. In an industry like construction where small firms compete for the lowest bid, imposing new costs on businesses that provide health coverage while exempting low-road contractors from the requirement to provide coverage could have a devastating impact. The small business exemptions in both Senate health reform bills would exempt over 90 percent of the construction industry, and one House bill would exempt 85 percent of the industry. Any exemption should be tied to payroll and revenue, and should be no higher than the exemption in the House bill for firms with less than $250,000 in payroll. All subsidies and tax credits for small businesses should be available inside and outside the exchange, as in the House bill. There should also be a requirement that bidders on federally-assisted contracts provide health insurance to their employees, as well as safeguards to prevent low-road employers from misclassifying their employees as independent contractors.

A surcharge on the wealthiest one percent of taxpayers is a fair way to pay for health reform, and it would have no effect on 96 percent of all small businesses. The House bill would pay for money-saving reforms with a surcharge on the top 1.2 percent of all households in America—individuals earning more than $280,000 per year and couples earning more than $350,000. Only 4.1 percent of taxpayers with any business income would pay this surcharge. (Half of those taxpayers earn less than one-third of their income from small businesses—so they are not what we think of as truly “small business owners.”) The remaining 95.9 percent of small business owners would be completely unaffected by the surcharge, but would benefit from the many cost-saving reforms in the legislation.

A Public Health Insurance Plan Makes Reform Work

What we are asking for: A public health insurance plan should be an option for everyone, alongside private health insurance plans. The public health insurance plan would compete on a level playing field with private plans and would be administered by government but funded through premiums.

A public health insurance plan makes coverage more affordable.

• Escalating health care costs are a growing burden for working families, employers and the government. A public health insurance plan will have lower administrative costs than private health insurance plans and it will not have to earn a profit. These features, combined with its ability to establish payment rates, will result in lower premiums for coverage through a public health insurance plan.
• Through competition, even those purchasing coverage through a private health insurance plan will benefit from lower costs. When premiums are lower, that means less spending on federal subsidies for those who qualify for financial help.

A public health insurance plan drives quality improvements and more rational provider payments.

• A public health insurance plan can introduce quality advancements and innovation that private insurance companies have little incentive to implement.
• Just as Medicare has led the way with payment reforms that are driving quality improvements now being adopted by private plans, a public health insurance plan can develop innovative payment mechanisms, expand quality incentives and adopt evidence-based protocols.

A public health insurance plan promotes competition and keeps private plans honest.

• Consolidation in the private insurance industry has narrowed price and quality competition. In fact, in 2005, private insurance markets in 96 percent of metropolitan areas were considered highly concentrated and anti-competitive, which left consumers with little choice.
• A public health insurance option, coupled with a more regulated private insurance market, will break the stranglehold a handful of companies have on the insurance market and will give consumers enough choices to vote with their feet and change plans.

A public health insurance plan guarantees stable and continuous coverage.

• Private insurance plans can change their benefits, alter cost-sharing, contract with different providers and move in and out of markets. A public health insurance plan always will be there to provide coverage when it is needed and it offers security as we build a new system of highly regulated private health insurance options.
• A public health insurance plan available to everyone will provide rural areas with the security of health benefits that are there when rural residents need them, just as Medicare has been a constant source of coverage while private Medicare Advantage and Part D plans churn in and out of rural areas every year.

The public supports a public health insurance plan option.

• A public health insurance plan is supported by 73 percent of voters, even when they hear the sharpest insurance industry attacks. This includes Democrats (77 percent), Independents (79 percent) and Republicans (63 percent), as well as urban (73 percent) and rural (71 percent) voters.

Private health insurers are fighting to make sure no public health insurance plan cuts into their market at a time when we’re enacting reforms to cover everyone. Some of the compromises offered would let private plans have their way.

• Some compromise proposals would hamstring a public plan so much that it would look and act just like a private plan and couldn’t achieve the savings and stability we need.
• Another compromise, called the “trigger” proposal, would let private plans run the show and a public plan would only kick in later under certain conditions. But this “trigger” will never get pulled. It’s just a way to put off indefinitely any hope of a public health insurance plan. That’s the same promise we heard when Medicare Part D was enacted with only private plans participating, and we have never seen a Medicare-provided drug benefit.

Pay or Play: Holding Costs Down,
Leveling the Playing Field

What we are asking for: As a part of getting to universal health coverage, employers must be required either to offer coverage to their workers or pay into a fund to finance coverage for uninsured workers. And employers that contribute to pre-Medicare retiree benefits should get relief.

Health reform must build on what works, which for 160 million Americans is the employer-based system.

• A pay or play requirement will build on the current employer-based system by encouraging more employers to offer coverage and penalizing those that do not.
• The vast majority of the uninsured are in families with at least one full-time worker. Making employer-based coverage stronger will help cover more uninsured workers.
• Pay or play will shore up employer-based coverage and minimize disruption for those who now have coverage and want to keep it.

An employer requirement will hold down costs and bring in needed revenue.

• Pay or play holds down federal costs by keeping employers from dumping low-wage workers into new subsidized plans.
• Pay or play generates revenue to help fund subsidies for low-income individuals and the uninsured.

An employer requirement will level the playing field.

• Pay or play at fair and reasonable levels will level the playing field so free-rider firms can’t shift costs to employers that offer good benefits.
• A recent study found more than $1,000 of every family plan premium goes to cover the cost of care for the uninsured, most of whom are workers.

Businesses and their allies will argue they can’t afford to meet this requirement in such a bad economy.

• The vast majority of firms that currently offer health coverage will not see any new costs. They will see their costs go down when we eliminate cost shifting and make reform more sustainable.
• The only firms that may see their costs increase are those that don’t offer benefits or offer benefits that are too inadequate to meet a reasonable test.
• The vast majority of firms that don’t offer health coverage are small and mostly lowwage. Health care reform will give small firms more affordable options for providing their workers with health benefits, probably in combination with additional subsidies for those with low-wage workers.
• Any new costs can be offset by gains in higher productivity and a healthier workforce. Comparable increases in the minimum wage have not led to the economic dangers predicted.

Relief for employers that provide benefits for pre-Medicare retirees.

• Employers that contribute to retiree health benefits for workers ages 55 to 64 deserve relief. This population generally has higher health care costs, and people in this age bracket who don’t have employer coverage cannot find affordable coverage on their own. Policy options include allowing this group to buy into Medicare, using reinsurance aimed at higher-than-average costs to spread those costs more broadly, and expanding Medicare eligibility to begin at age 55.

~ A Message from T.C. Gillespie, Pres. Tarrant County CLC, AFL-CIO ~
Sept. 29, 2009

To all concerned re: AFL-CIO Health Care Reform Actions

Healthcare can't wait - Congress is shaping health care reform legislation right now. To influence health care reform, we must turn up the heat now with calls and letters to Congress within the next two weeks and tell Congress to enact health care reform that:

• Controls costs,
• Provides guaranteed coverage for all Americans,
• Holds insurance companies accountable,
• Includes a public health insurance plan option,
• Requires all employers to pay their fair share,
• And rejects new taxes that would further hurt working families
  

The AFL-CIO is counting on union leaders to get at least 10% of membership involved in the push for members to call Congress on October 7th, the national call-in day.

Be a part of the solution and spread the word today. Open the links below to be heard!

http://www.senate.gov/general/contact_information/senators_cfm.cfm?State=Tx
John Cornyn & Kay Bailey Hutchison contact info here

http://clerk..house.gov/member_info/index.html
Find your member info here

"Tips for Calling" when you reach the Congressional office, say a few words your personal experiences why health care reform is critical to you and your family...Ask if you can count on the member's support for health care reform that includes a strong public health ins. option....Thank the person for conveying your message."

"We should not force working people to pay more for the insurance they already have in the form of increased taxes; working families are struggling already. It's time to rein in the insurance companies so they can't deny coverage or raise costs whenever they choose; people and their doctors should make health care decisions - not insurance companies. It's time Congress to side with working families and not insurance companies."

~excerpts from AFL-CIO Toolkit for September-October '09 Health Care Actions

Your feedback is welcome and your time appreciated in this matter; and it only takes a few moments to make the call. Thank you in advance for doing your part!

In Solidarity,
T.C. Gillespie

sent by: Laura Sparano
Tarrant County Central Labor Council, AFL-CIO
4025 Rufe Snow Drive
North Richland Hills, TX 76180
817-284-1461
817-595-4894 fax

Sick Of It

A tremendous amount misinformation continues to circulate regarding regarding health care reform and it is difficult to separate the myth from reality, especially as the measure evolves and changes in Congress. Therefore it might be instructive to note who is voicing the biggest objection to change. Not surprisingly it is the biggest insurance companies. They have the most to loose. While our overall cost is going up, our coverages are going down and our co-pays going up, those companies are lobbying Congress to maintain the status quo, so as to protect their outrageous profits and executive bonus packages. And they are doing it with your money. The following is provided by the AFL-CIO for you to conveniently voice your objections.

Gary Moffitt
Legislative Director

In the past week, more than 10,000 activists across the country have contacted their insurance companies to demand that they stop denying care and stop using our premiums to lobby against health insurance reform.
Here at the AFL-CIO, we asked the insurance commissioners in Connecticut, Indiana, New York and Pennsylvania to investigate how insurance company lobbying costs are affecting our health insurance premiums. It's sickening that insurance companies are fighting health care reform with OUR MONEY!

We want real health insurance reform, including a strong public option, and it's time insurance companies got out of the way. Join us. Tell your insurance company that you are sick of it.

• Click here if a Blue Cross Blue Shield company provides your health insurance. 
• Click here if UnitedHealthcare provides your health insurance. 
• Click here if Aetna provides your health insurance.
• Click here if Humana provides your health insurance.
• Click here if CIGNA provides your health insurance.
• Click here if a different company provides your health insurance.
• Click here if you don’t have health insurance.

In solidarity,
Marc Laitin
AFL-CIO Online Mobilization Coordinator

Democratic Rally

October 3rd, Weatherford

Marc Veasey, Wendy Davis

Candidates: Bill White, John Sharp, Felix Alvarado, Hank Gilbert, Bill Burton, Jeff Weems

>>> Click For Details <<<

Musicians to Blast Canned Music at Ballet Opener
$700K paid to two Ballet Board Members, then Orchestras Ousted
Ballet Robbed Musicians’ Jobs to Cover Losses,
Fleeced patrons out of legit show

Click here to read more:
http://www.musiciansdfw.org/ballet_crisis/ballet_press_release10.pdf

WHO: The Dallas-Fort Worth Professional Musicians Association, affiliated Local 72-147 of the
American Federation of Musicians, which represents more than 1700 professional musicians
across North Texas and Southern Oklahoma, including musicians of the Dallas and Fort Worth
Symphony Orchestras and The Dallas Opera Orchestra.

WHAT: Professional musicians will protest Texas Ballet Theater’s canned music policy by forming
picket lines and distributing informational leaflets at the company’s season opening
performances, October 2, 3 and 4 in Fort Worth.

WHERE: Bass Performance Hall, 4th and Commerce Streets, Fort Worth, Texas.

WHEN: Friday, October 2, 2009, 6:30pm – 8:00pm; Saturday, October 3, 2009, 6:30pm – 8:00pm;
Sunday, October 4, 2009, 12:30pm – 2:00pm.

WHY: Texas Ballet Theater says it will not use its pit orchestras – the Fort Worth Symphony and
Dallas Opera Orchestras – and instead will utilize “canned” pre-recorded tracks for its 2009/10
season. The Ballet company has traditionally employed the Fort Worth Symphony Orchestra to
accompany its seasonal performances at Bass Hall in Fort Worth, and has used the Dallas Opera
Orchestra for holiday Nutcracker performances in Dallas. The company’s decision to replace
live orchestra with recordings has eliminated hundreds of jobs for professional musicians and
deprives audiences of a legitimate ballet performance. “Texas Ballet Theater is cheating patrons
by charging regular ticket prices with no advance notice that the orchestra pit is empty. Patrons
paid for live music, but they won’t get it,” said Musicians’ Union president Ray Hair.
“Recorded music cannot replace the power, beauty and freshness of a live orchestra. With no
orchestra, Texas Ballet Theater presents artificial ballet.” In June 2008, the ballet company
traveled to China and paid $30,000.00 for recordings it used to displace musicians in March of
this year. The company boasted that it saved between $600,000 and $700,000 by emptying its
orchestra pit last season and outsourcing local musicians with recordings, some made in China.
Information obtained by the Union shows that prior to the company’s fiscal collapse in August
2008, two of Texas Ballet Theater’s Board of Directors were paid six figure annual sums
totaling more than $700,000.00 which went unreported in the company’s IRS filings. Board
members of non-profit organizations are generally expected to serve without compensation. The
Union will protest the ballet’s canned music policy with informational picket lines and
leaflets at all performances during the 2009/10 season.

For further information, visit www.musiciansdfw.org or contact Local 72-147 President Ray Hair
at (Metro) 817-469-6040 or 817-988-5238 (cell).

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