[Senate Hearing 108-198]
[From the U.S. Government Printing Office]



                                                        S. Hrg. 108-198

               TWA/AMERICAN AIRLINE WORKFORCE INTEGRATION

=======================================================================

                                HEARING

                                 OF THE

                    COMMITTEE ON HEALTH, EDUCATION,
                          LABOR, AND PENSIONS
                          UNITED STATES SENATE

                      ONE HUNDRED EIGHTH CONGRESS

                             FIRST SESSION

                                   ON

  EXAMINING CERTAIN ISSUES RELATIVE TO TWA/AMERICAN AIRLINE WORKFORCE 
                              INTEGRATION

                               __________

                             JUNE 12, 2003

                               __________

 Printed for the use of the Committee on Health, Education, Labor, and 
                                Pensions


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          COMMITTEE ON HEALTH, EDUCATION, LABOR, AND PENSIONS

                  JUDD GREGG, New Hampshire, Chairman

BILL FRIST, Tennessee                EDWARD M. KENNEDY, Massachusetts
MICHAEL B. ENZI, Wyoming             CHRISTOPHER J. DODD, Connecticut
LAMAR ALEXANDER, Tennessee           TOM HARKIN, Iowa
CHRISTOPHER S. BOND, Missouri        BARBARA A. MIKULSKI, Maryland
MIKE DeWINE, Ohio                    JAMES M. JEFFORDS (I), Vermont
PAT ROBERTS, Kansas                  JEFF BINGAMAN, New Mexico
JEFF SESSIONS, Alabama               PATTY MURRAY, Washington
JOHN ENSIGN, Nevada                  JACK REED, Rhode Island
LINDSEY O. GRAHAM, South Carolina    JOHN EDWARDS, North Carolina
JOHN W. WARNER, Virginia             HILLARY RODHAM CLINTON, New York

                  Sharon R. Soderstrom, Staff Director

      J. Michael Myers, Minority Staff Director and Chief Counsel

                                  (ii)

  




                            C O N T E N T S

                               __________

                               STATEMENTS

                        Thursday, June 12, 2003

                                                                   Page
Bond, Hon. Christopher, a U.S. Senator from the State of Missouri     1
Talent, Hon. James M., a U.S. Senator from the State of Missouri.     4
Case, Theodore A., Snellville, GA, former Secretary-Treasurer, 
  TWA Master Executive Council, Airline Pilots Association; 
  Sherry Cooper, Jupiter, FL, former IAM General Chairperson, TWA 
  Flight Attendants Union and former member, TWA Board of 
  Directors; Karen Schooling, Independence, Mo, TWA Flight 
  Attendant......................................................     7
Brundage, Jeff, Fort Worth, TX, Vice President, Employee 
  Relations, American Airlines; and Edwin C. White, Jr., Fort 
  Worth, TX, Allied Pilots Association...........................    60

                          ADDITIONAL MATERIAL

Statements, articles, publications, letters, etc.:
    Theodore A. Case.............................................    80
    Sherry Cooper................................................    83
    Jeff Brundage................................................    86

                                 (iii)

  

 
               TWA/AMERICAN AIRLINE WORKFORCE INTEGRATION

                              ----------                              


                        THURSDAY, JUNE 12, 2003

                                       U.S. Senate,
       Committee on Health, Education, Labor, and Pensions,
                                                    Washington, DC.
    The committee met, pursuant to notice, at 2 o'clock p.m., 
in room SD-430, Dirksen Senate Office Building, Senator Bond 
presiding.
    Present: Senator Bond.
    Also Present: Senator Talent.

                   Opening Statement of Senator Bond

    Senator Bond. [presiding]. Ladies and gentlemen, the Senate 
Committee on Health, Education, Labor, and Pensions will come 
to order.
    This afternoon, we will receive testimony from those people 
affected by the fallout from the integration of American 
Airlines and the former Trans World Airlines. We have been 
advised that Senator Kennedy has other commitments, and he may 
or may not make it, so we are going ahead without him. We do 
appreciate his cooperation and the cooperation of the chairman 
of the committee, Senator Judd Gregg, who authorized this 
hearing and permitted me to serve as the hearing officer today.
    I am very pleased to be joined by my colleague, Senator Jim 
Talent of Missouri. I have extended an invitation personally to 
other Senators who have expressed an interest in this matter in 
the debates and discussions we have had on the Senate floor and 
elsewhere. This is a very busy day for the Senate, but I am 
hoping that some of these people will be able to join us. In 
any event, this record will be available for all members of the 
committee and all Members of the Senate, and we will ask 
explicitly both panels if they would agree to respond to 
written questions that may be submitted up to a week after this 
hearing and to be included as part of the record, and we would 
ask that those who submit testimony agree to that provision.
    What we are going to hear today is a story of how the once 
promising combination of two great airlines turned into a 
disaster for so many former TWA employees. Over the last 2 
years, we have seen the promises turn into pink slips. Today is 
our first opportunity to hear directly from all sides.
    First, we intend to get to the bottom of what promises were 
made. Second, we need to give former TWA pilots and flight 
attendants the opportunity to tell their story. Third, we want 
to hear from American Airlines, their employees and unions, 
their positions and their perspectives.
    In summary, we want to know why former TWA flight 
attendants and pilots never received the comparable seniority 
status at American Airlines that was promised to them.
    These are important and painful questions for many families 
in Missouri and across the Nation, and as I indicated earlier, 
I am most grateful to the leadership of this committee for 
their willingness to allow us to hold this hearing.
    I am delighted, as I said, to be joined by Senator Talent 
today.
    All of us on this committee and indeed, all of us in the 
Senate, certainly understand how tough times are right now for 
our Nation's airlines. We understand how cutbacks in personnel 
as well as cutbacks in other expenses have been needed in order 
to keep the airlines in the air. There is no question that this 
is a difficult time, and we sympathize with all in the airline 
business.
    Unfortunately, we have seen in Missouri that when it came 
time to cut at American Airlines, the blade fell almost 
exclusively on the former TWA workers, including pilots, flight 
attendants, and to some extent, baggage handlers and ground 
crews.
    As most of you in this room know, on April 9, 2001, 
American Airlines closed an asset acquisition deal ending a 75-
year history of TWA as an independent operation. At that time, 
I offered my full support to and was a committed advocate of 
the acquisition, and I pledged to the parties that I would do 
whatever I could to help.
    Thus, I was very pleased to hear the testimony of former 
American Airlines CEO Don Carty before the Senate Commerce, 
Science, and Transportation Committee when he stated: ``We look 
forward to adding TWA's 20,000 employees to the American 
Airlines family. We are keenly aware of TWA's illustrious 
history and know that were it not for the hard work and great 
performance of the people throughout TWA, they would not be the 
perfect fit for American that we believe they are. We also 
recognize what a good corporate citizen TWA has been in the 
State of Missouri, and I can assure you that our company will 
be as well.''
    Now, in the lead-up to the bankruptcy court approval of 
American's acquisition of TWA assets, a number of good faith 
steps were taken by TWA. In particular, TWA, at the request of 
American, agreed to enter into bankruptcy in order to shed some 
of its other obligations. TWA employees, particularly the 
pilots and flight attendants represented by their respective 
unions, agreed, again at the request of American, to waive the 
Allegheny-Mohawk provisions in their contracts in exchange for 
written promises and assurances from American Airlines that 
they would be integrated fairly into American Airlines' 
workforce.
    The Allegheny-Mohawk provisions in their contracts 
guaranteed TWA pilots and flight attendants the option to have 
their integration into a purchaser's workforce decided by an 
independent neutral third party provided no agreement on 
integration could be reached between TWA's and the purchaser's 
unions. According to the provisions, this independent 
arbitration would be binding.
    These steps were taken with some risk to TWA and its 
employees, but in the interest of integrating the two airlines 
quickly and smoothly, the TWA pilots and flight attendants in 
good faith placed their trust in assurances made to them by 
American Airlines, its management and unions.
    It is precisely what was conveyed by those assurances, who 
made them, why they were needed, and what there substance was 
that is at the heart of the matter before us today. In 
particular, in a letter dated March 17, 2001, American Airlines 
assured the TWA pilots that it would ``use its reasonable best 
efforts with its labor organizations representing the airline 
pilots craft or class to secure a fair and equitable process 
for the integration of seniority.''
    Since then, and in the wake of the airline industry's slump 
following the 9/11 attacks, it is crystal clear that those best 
efforts were not good enough. The simple fact is that there was 
no significant integration of the seniority lists. The flight 
attendants and most pilots were simply stapled to the bottom of 
the senior lists, and when the cuts came, they came from the 
bottom up.
    The result--60 percent of all former TWA pilots were 
stapled to the bottom of the seniority list at American 
Airlines. Of the 40 percent of TWA pilots who were integrated, 
more than half of these pilots--about 400 flyers--were actually 
slated for mandatory retirement before the integration actually 
took place. And for those few TWA pilots who did make it, they 
were given seniority far below their counterparts of equal 
experience. For example, the senior-most former TWA captain, 
hired in 1963, was integrated into the same bracket as a 1985-
hire American captain.
    The result is that many former TWA pilots with much more 
flying experience and cockpit seniority actually have a lower 
seniority rank than the first officer sitting in the copilot 
seat next to the actual pilot. And ultimately, most of these 
former TWA pilots are now out of a job, including many of our 
friends here today.
    However, as poorly as the pilots were treated, it has been 
much worse for TWA's flight attendants. As of July 2, 2003, 100 
percent of all former TWA flight attendants will have been 
furloughed by American Airlines--nearly 4,200 employees. Let me 
repeat that--100 percent furloughed, 4,200 employees. Best 
efforts, indeed.
    Because of this, I and others attempted on numerous 
occasions to reinstate the concept of fair and equitable. On 
October 1, 2001, I introduced S. 1479, the Airline Workers' 
Fairness Act, with four of my colleagues in the Senate. The 
following day, my colleague from Missouri, Congresswoman Jo Ann 
Emerson, introduced the same legislation in the House. The 
House bill had 31 cosponsors.
    Late in October, I organized a marathon meeting between the 
APA and ALPA--the two unions representing the pilots--here in 
Washington. The meeting last for more than 36 hours, but a 
resolution to the integration issue was not achieved. Some of 
here in the room today participated in that meeting.
    In December of 2001, I offered the Airline Workers' 
Fairness Act as an amendment to the Department of Defense 
appropriations bill. The amendment was adopted in the Senate, 
but the provisions were removed in conference with the House.
    On January 31, 2002, I sent a letter to the chairman of the 
National Mediation Board, Frank Dugan, supporting the response 
filed with the board by the ALPA--that is the TWA pilots' 
union--in opposition to the determination that American and TWA 
had achieved single-carrier status.
    On February 14, I sent another letter to Chairman Dugan 
supporting the International Association of Machinists and 
Aerospace Workers on behalf of TWA's flight attendants and the 
board's determination of whether TWA and American had achieved 
single-carrier status.
    Again this year, Senator Talent and I have been exploring 
legislative options, including a revised version of S. 1479, 
and we continue our efforts in this area.
    It is clear to anyone who has watched this painful process 
over the past 2 years that lives have been disrupted and in 
some cases destroyed by what has transpired--jobs lost, 
promises not met, anger, disillusionment, and despair replacing 
the feelings of hope and sense of opportunity that the initial 
TWA-American announcement had been greeted with.
    Nothing we say or hear today can put the genie back into 
the bottle. We cannot repair the relationships or restore the 
trust, but we can lay out the facts and perhaps learn enough so 
that no other family or employee will face this travesty again.
    I thank all of you who have agreed to testify today. In 
some cases, your testimony may open old wounds that you wish to 
have left alone, but if we are to get to the facts, we must 
hear your personal stories and must have the opportunity to 
question those who are involved.
    I am disappointed that neither Don Carty nor Bill Comption 
are here today. I worked with both men extensively, developing 
admiration and respect for them. To be honest, I trusted them, 
as did their employees. We invited both. They were certainly 
integral to the agreements that created the acquisition, but 
their absence today does not lesson my interest or ability to 
get the full facts on the table.
    So again, I want to thank all of you who have agreed to be 
here. I give you my assurance that while we hope our 
questioning will be thorough and professional, it will be 
courteous and fair.
    With that, I will turn to my colleague from Missouri, 
Senator Talent, for his opening comments.

                  Opening Statement of Senator Talent

    Senator Talent. Thank you, Mr. Chairman.
    I want to thank you for your work on this issue which goes 
back several years. Also, I am grateful to Chairman Gregg and 
Senator Kennedy for allowing me to sit in today even though I 
am not a member of this committee; but I do have great interest 
in this issue, both as a Senator from Missouri and also as 
somebody who thinks this situation is quite unjust to a lot of 
people.
    I am not going to go over everything that Senator Bond did 
in summarizing the events that brought us to this hearing 
today. Just suffice it to say that American acquired TWA in 
March of 2001. We all thought that was a good thing. We still 
want it to be a good thing for everybody.
    At the time, American promised TWA and the TWA employees 
that they would be treated fairly as a result of the buyout, 
and that promise was one of the conditions of the Federal 
approval of the buyout. I do not think any of this is 
contested. Certainly the expectation was that when the 
representative employee groups merged, their seniority lists 
would be dovetailed in the normal fashion, that the years of 
service for TWA employees would count in the merged company and 
the years of service for former American Airlines employees 
would count in the merged company.
    And, for whatever reason, which is I guess what we are here 
to explore today, that did not happen, and nothing even close 
to it happened. The former TWA flight attendants were stapled 
to the bottom of the merged seniority list, and most of the TWA 
pilots were also stapled to the bottom of the merged seniority 
list.
    I do not mean any disrespect to anybody here who was 
involved in that, but in all my years in public office and in 
the years when I practiced labor law, I have never seen a 
merger that was a disadvantageous to one of the former employee 
groups as this one was.
    The effect is that employees who have been working for TWA 
for decades are placed behind on the seniority list employees 
who have only been working for American Airlines a year or two.
    I do not think I go on a flight when a flight attendant 
does not come up to me and tell me a story like, ``I have been 
flying for 25 years for TWA, and I am about to be laid off, and 
there are people who have been flying for only one or 2 years 
who are not going to be laid off.''
    But when you have layoffs and when you have a lot of 
layoffs, the situation is not easy for anybody. We all 
recognize that. I have spent 18 years in public life, and I try 
not to get involved in these kinds of situations except to be 
an honest broker where I can because I know it is difficult. 
However there are thousands of people here who are in a 
uniquely difficult situation because they have 10 or 15 or 20 
years of seniority with a company, and when you get seniority 
with a company like that, you believe reasonably--you develop a 
reasonable expectation--that you have some protection in the 
event of layoffs, and you order your life around that. You get 
mortgages; your kids go to school; and then, all of a sudden, 
when the rug is pulled out from under you, you have a reason to 
ask what happened.
    Thousands of people who worked for TWA for years and years 
and years are in that position, and it is especially bad 
because promises were made that would lead a reasonable person 
to believe that that was not going to happen, that the opposite 
of that was going to happen.
    It is just clear to me that for some reason--I do not know 
why--the people who were supposed to represent the interests of 
the TWA employees in this process--the management, the union, 
the NMB, for some reason did not, so they are now facing 
layoffs, contrary to what I think were very reasonable 
expectations, and I look forward to exploring these issues in a 
fair and impartial way, and I know Senator Bond feels the same 
way.
    Thank you, Mr. Chairman.
    Senator Bond. Thank you very much, Senator Talent.
    We have all of your full statements in the record, and we 
would ask you to try to summarize your statements in about 5 
minutes.
    I am reminded that while I promised that questions for the 
record would be submitted within a week, the hearing record 
will actually be left open for 2 weeks.
    The first panel includes Mr. Ted Case, who is married and a 
father of two and a graduate of Georgia State University. He 
became a commercial pilot and started flying passenger jets in 
1985 joined TWA as a commercial pilot in 1990. He served as a 
union representative for TWA pilots in multiple capacities, 
most recently as secretary-treasurer of the TWA Master 
Executive Council, the TWA branch of ALPA, and was one of the 
representatives on a TWA panel that directed and supervised the 
pilots' merger committee discussions with American Airlines.
    Our next witness is Ms. Sherry Cooper, a 27-year seniority 
flight attendant hired by TWA in 1975. During her career, she 
served as president of the Independent Federation of Flight 
Attendants, president of the local lodge. She was a labor 
director serving on the TWA board of directors from 1998 to 
2001 and directly participated in the negotiations leading up 
to American Airlines' acquisition of TWA.
    Ms. Karen Schooling, a former TWA flight attendant, was 
initially hired by Ozark Airlines in 1975. She has 28 years of 
seniority. She and her sister were both former Ozark flight 
attendants and were given full-seniority credit when Ozark was 
acquired by TWO. Ms. Schooling is a widow--her husband passed 
away 3\1/2\ years ago--and she has a son with great medical 
challenges that I will let her describe.
    These three witnesses all have one unfortunate thing in 
common. They either will be furloughed on July 1, 2003 or have 
already been furloughed.
    Before we begin I have a statement from Senator Kennedy.
    [The prepared statement of Senator Kennedy follows:]

                 Prepared Statement of Senator Kennedy

    I welcome this hearing on the effects on employees of 
American Airlines' purchase of TWA assets in 2001.
    The employees of TWA hoped to continue their careers with 
American. But 9/11 and the severe downturn in the economy had 
an especially serious effect on the airline industry, and many 
of the former TWA employees lost their jobs, as have many other 
workers in other parts of the economy.
    The economy continues to be troubled, and millions of 
unemployed Americans are paying the price. The unemployment 
rate is the highest in 9 years. Despite all the tax cuts that 
the President says will produce jobs and growth, the fact is 
that today nine million Americans are out of work, and one in 
five of those Americans has been out of work for more than six 
months.
    The airline industry has been hard-hit. Since 9/11, over 
200,000 workers in the airline and related industries have lost 
their jobs. American Airlines hopes to stave off bankruptcy, 
and has recently insisted on concessions in wages and benefits 
from its workers. As part of these concessions, thousands of 
workers will be laid off. Over 7,500 American flight attendants 
and 3,000 pilots will soon be out of work.
    TWA employees were in an especially difficult situation. In 
early 2001, the airline was in bankruptcy. Liquidation seemed 
likely, and the TWA employees would have lost their jobs and 
many other benefits. In these circumstances, when American 
Airlines offered to purchase the TWA assets, the TWA employees 
voluntarily and specifically waived their right to any 
arbitration of their seniority.
    The seniority rule applied by American was negotiated in 
arm's-length collective bargaining with the Allied Pilots 
Association and the Association of Professional Flight 
Attendants. The National Mediation Board determined that TWA 
had become fully integrated into American Airlines as a single 
carrier, and the TWA employees became subject to the seniority 
rule that had been negotiated to address the issue.
    Unfortunately, some former TWA employees believe that 
American promised them a different seniority result. Others say 
that the TWA and American Airlines unions had a duty to achieve 
a different result. The employees have raised their claims in 
federal court, and next Monday, the federal district court in 
New York will hold a hearing on the flight attendants' request 
for an injunction to stop lay-offs based on the current 
seniority rule. Lawsuits have also been filed in St. Louis, 
Chicago, and New Jersey, so the courts are clearly well 
underway in considering these fact-intensive issues.
    I'm concerned about Congress rushing in when the courts are 
already well underway in considering these issues, and when the 
controlling agreement was achieved through arm's-length 
collective bargaining. It's particularly difficult for Congress 
to step in when the employees themselves have waived their 
right to arbitration. In the past, Senator Bond has proposed 
legislation to reopen the seniority issue and send it to third-
party arbitration. We all wish that all the TWA employees and 
all the American employees could keep their jobs. But Congress 
should not try to tilt the balance, when our action would only 
jeopardize more American Airlines employees' jobs, and ignore 
decisions already made by the former TWA employees.
    Senator Bond. With that introduction, I would invite Mr. 
Case to begin his testimony.

    STATEMENTS OF THEODORE A. CASE, SNELLVILLE, GA, FORMER 
  SECRETARY-TREASURER, TWA MASTER EXECUTIVE COUNCIL, AIRLINE 
  PILOTS ASSOCIATION; SHERRY COOPER, JUPITER, FL, FORMER IAM 
  GENERAL CHAIRPERSON, TWA FLIGHT ATTENDANTS UNION AND FORMER 
MEMBER, TWA BOARD OF DIRECTORS; KAREN SCHOOLING, INDEPENDENCE, 
                    MO, TWA FLIGHT ATTENDANT

    Mr. Case. Chairman Bond and members of the committee and 
guests, I sincerely appreciate the opportunity to appear before 
you today. On behalf of my fellow pilots who were formerly 
employed by Trans World Airlines, we welcome the opportunity to 
testify on the record about the whole story, the real story 
behind the most shamefully flawed seniority integration in 
United States airline history.
    Many of you are already familiar with some of the facts of 
this crisis. To date, thousands of ex-TWA workers, including 
ground workers, flight attendants and their families, have 
suffered as a result of layoffs. The great State of Missouri 
and the entire St. Louis region has felt a sharp economic shock 
and emotional trauma caused by these massive job cuts.
    The uniform hat that you see here today symbolizes 
thousands of men and women who built TWA over more than 75 
years and who now have seen American Airlines' promises 
disappear.
    I believe, like so many of my colleagues, that we became 
pilots to serve the flying public, safely and responsibly, to 
the best of our ability. I am honored to have been selected by 
my fellow pilots to speak on their behalf today.
    I am a married father of two, a graduate of Georgia State 
University and have served as a representative of the TWA 
pilots in multiple capacities. My interest in flying began as a 
young boy watching my father fly as a pilot for Eastern 
Airlines. I began flying when I was 20 years old and became a 
commercial pilot in 1983, began flying for TWA in 1990. I loved 
my job; I respected my employer; and above all, I believed in 
my customer service mission for the past 13 years.
    My world, and the lives of all of my former TWA colleagues, 
dramatically changed in April 2001 when American Airlines 
acquired TWA. As part of the acquisition, American offered 
virtually all former TWA pilots employment. Quoting from 
portions of the Bankruptcy Asset Purchase Agreement: 
``Purchaser officers to offer employment benefits and 
postretirement benefits to all employees actually hired by 
Purchaser at levels substantially no less favorable than those 
benefits provided to Purchaser's similarly-situated 
employees.''
    TWA employees took that promise to heart. When the 
transaction was announced, I was a 10-year Boeing 767 
international first officer. My American counterpart was also a 
10-year Boeing 767 international first officer. Just last week, 
I received a furlough notice, while my similarly-situated 
American counterpart enjoys his or her continued employment.
    To put this in a personal perspective, a good friend of 
mine, Sally Young, a single mother of two and a 14-year veteran 
and former TWA captain, will lose her job on July 2. I too will 
lose my job on July 2 after 16 years as a career jet airline 
pilot with over 13 years of seniority and experience with TWA 
and American Airlines.
    On April 9, 2001, the day before the transaction closed, 
American hired Mr. B.D. White. Today, Mr. White, who has 2 
years and 2 months of American Airlines experience and 
seniority, continues to fly while Ms. Young, myself, and 
hundreds more former TWA pilots like us are being furloughed.
    Touching on Senator Bond's earlier comments, in February 
2001, many of you heard Don Carty, former AMR CEO, State before 
the U.S. Senate Committee on Commerce, Science, and 
Transportation his commitment to ``adding TWA's 20,000 
employees to the American Airlines family,'' a willing 
commitment ``to the 20,000 TWA employees and their families 
that no one else would make.''
    Obviously, Mr. Carty said what the Senate Committee and the 
bankruptcy court needed to hear to approve the deal, with no 
intention whatsoever of living up to those commitments.
    Unknown to us at the time American made those promises to 
TWA employees, Congress, and the bankruptcy court, they were 
also making promises to their unions. American's promises to 
their unions empowered them to hijack the experience and 
seniority of the TWA pilots and employees. It is now clear that 
American's promise of employment was a hollow one designed only 
to quell Congress' concerns and clear regulatory hurdles to 
close the transaction.
    American Airlines walked away with billions of dollars' 
worth of TWA assets and market share. Once this was 
accomplished, and the deal was no longer news, or under the 
watchful eye of legislators, American callously discarded the 
TWA employees.
    Although American pilots claim to be ``sharing the pain'' 
of the airline's troubles, more than 87 percent of the pre-
transaction American pilots will retain their employment while 
only 23 percent of the former TWA pilots will remain employed 
by May 2004, as this chart indicates.
    Members of the committee, we are not here seeking sympathy 
or pity. We are here in the name of justice and fairness. We 
are here in hopes that Congress can rectify this atrocity and 
act so this tragedy can never again be repeated in another 
workplace to the detriment of another working man or woman. We 
ask only that our all-important seniority rights be handled 
fairly and equitably as promised--no more, no less.
    I hope that you and the American people can now clearly see 
that our seniority was handled unfairly and inequitably by an 
airline that can now only be called ``un-American Airlines.''
    I thank you for the opportunity to speak before this 
committee today, and I am happy to answer any questions.
    Senator Bond. Thank you very much, Mr. Case.
    Ms. Cooper?
    [The prepared statement of Mr. Case may be found in 
additional material.]
    Ms. Cooper. Thank you, Senator Bond.
    First of all, I am very honored to be here to speak to you 
since I know how important this issue is to both you and 
Senator Talent. This affects not only the lives and futures of 
the TWA employees but the City of St. Louis and the State of 
Missouri. I thank both of you for being here today to listen to 
our comments.
    On May 3, 2003, I received my 28th anniversary service 
announcement; that very same day, I also received my furlough 
notice as an American Airlines flight attendant.
    Perhaps more than anyone else here today, I served in a 
unique position at TWA. Not am I a soon-to-be-furloughed TWA 
flight attendant, but I also sat on the TWA board of directors.
    In January of 2001, I received a telephone call from Mr. 
Bill Compton, former president of TWA. He told me there was a 
``great deal'' for the TWA employees. First of all, he advised 
me that all TWA employees would be protected, all retirees 
would be protected, that the unionized employees would receive 
greater job security and guaranteed jobs. We were told that all 
TWA employees would receive greater pay and greater benefits--
in summary, that TWA employees would be better-off through the 
agreement that he had reached with American Airlines.
    There was only one catch. Even though American and TWA had 
struggled very mightily to come up with a straight merger 
transaction, there was a stumbling block. That stumbling was 
Carl Icahn and his Karabu ticket agreement. The only way that 
American could see fit to do the deal was to take Karabu out 
for bankruptcy. Thus begins the biggest myth of all--that 
American Airlines saved TWA from bankruptcy. I want to make it 
perfectly clear to everyone--at the time of the agreement, TWA 
was not in bankruptcy.
    The asset purchase agreement guaranteed that all unionized 
employees would be employed by American Airlines. Mr. Carty, 
then CEO of American Airlines, promised that TWA employees 
would receive the same benefits that the American Airlines 
employees received. Our union contracts would need to be 
modified in order to mirror those of the American employees.
    Importantly, American Airlines agreed and insisted that all 
seniority integration matters be worked out between the unions. 
American agreed that there would be a fair and equitable 
procedure and that it would adopt whatever process came out 
between the facilitated talks of the two unions. For the flight 
attendants, there simply were no talks.
    The merger of a relatively small of senior flight 
attendants from TWA would have had very little impact on the 
overall picture, because most flew out of St. Louis, MO, a non-
American Airlines base. Unlike other carriers who went out of 
business, the TWA employees were coming to the acquisition with 
planes, routes, airport slots, reservation and maintenance 
facilities, and the prized St. Louis hub. It was for all 
intents and purposes our ``dowry.''
    It is well-chronicled that American Airlines and Don Carty 
touted the TWA purchase as a great acquisition. In his own 
words, Mr. Carty stated, and I quote: ``American gains many 
great assets from TWA but none as important as its talented 
team of employees.''
    American Airlines broke its written agreement with TWA 
flight attendants by engaging in secret talks with APFA, the 
American Airlines union. It negotiated an agreement that 
stapled to the bottom of the APFA seniority list all TWA flight 
attendants.
    At the same time, APFA had agreed that it would allow those 
former TWA flight attendants based in New York and St. Louis 
some job protection. They would maintain that job protection as 
long as we remained in our two hubs.
    By contrast, when TWA purchased Ozark, all former Ozark 
flight attendants received full seniority. Even APFA, when 
American Airlines acquired both Air Cal and Trans-Caribbean, 
agreed that those flight attendants would retain credit for 
their years of service at those carriers. Ironically, even 
American Airlines voluntarily provided full credit for 
seniority to TWA nonunion and management personnel.
    Following the aftermath of September 11, American Airlines 
decided to shut down the New York TWA operation. It transferred 
the former TWA flight attendants to St. Louis and took the 
former TWA flights and gave them to more junior American flight 
attendants. The New York flight attendants had two options--
transfer to St. Louis or be sent to the streets without a 
paycheck.
    Many of our former New York flight attendants did in fact 
transfer and move to St. Louis. We began operating on the TWA 
flights because we would retain our job security at St. Louis 
as long as we flew on TWA LLC aircraft. Apparently, we were 
wrong.
    They have now determined that all remaining TWA LLC flight 
attendants, ranging from senior of 27 years to 49 years of 
seniority, will be furloughed effective July 2. Eighteen 
hundred flight attendants with more than 50,000 years of 
service to their communities will be losing their jobs. They 
will be joining the other 2,400 TWA flight attendants on the 
streets. At the same time, American flight attendants with less 
than 3 years of seniority will be flying on TWA LLC aircraft 
out of St. Louis.
    To add insult to injury, for the first time in American 
Airlines history, TWA flight attendants will be sent to the 
streets without furlough pay. What makes it even worse is that 
for the first time in American Airlines history, employees will 
be losing 60 days of medical benefits.
    For the most part, our group to be furloughed are women, 50 
and over, who are primary caretakers for their children, for 
their parents, and even for their grandchildren. We are facing 
an uncertain future with one thing for certain--we have certain 
personal and financial ruin. At the same time, American 
Airlines admitted that it was funding pensions for more than 45 
of its top executives.
    It should be clear to everyone in this room that when 
American Airlines promised ``two great airlines--one great 
future,'' it was a lie. It undertook a pattern of activity 
designed to solely eliminate the former TWA employees that it 
once called TWA's greatest asset.
    When American Airlines came to Congress asking for 
financial aid after September 11, it received financial 
assistance based in large part upon the TWA route structure. 
When it sought reimbursement for security costs, it received 
its reimbursement due in large part based on the TWA operation. 
At the same time, it has taken our routes, our jobs, our 
planes, our St. Louis hub and has handed us a pink slip.
    I am a taxpayer who has paid taxes for more than 35 years. 
Like all Americans, I have gone to work on a daily basis and 
performed a meaningful job for a fair day's pay. I expected 
fair wages. I have watched my tax dollars be spent to help 
American Airlines survive this troubled industry. I have asked 
for nothing in return but fairness. Both are tragically and 
horribly missing in the TWA integration. There has been no 
integration.
    It has been reported that there is nothing this committee 
can do, and my question is simple: Why not? We travel halfway 
around the world to save the rest of the world for freedom. At 
the same time, we are witnesses to an incredible injustice in 
our own back yard. We are the greatest Nation on Earth. What 
makes us so great is that we place our highest value on human 
life. It realizes that the valuable citizen is what keeps us 
strong. We are best-known for how we treat our most vulnerable 
citizen, not our most powerful.
    On behalf of the 20,000 TWA employees, I want more than 
your sympathy. There would be no reason to be here today if 
American Airlines had honored its commitment. We are asking 
Congress to honor all that is right about America. We are 
asking you to intercede on our behalf and restore the agreement 
to a fair and equitable seniority integration.
    Thank you.
    Senator Bond. Thank you, Ms. Cooper.
    [The prepared statement of Ms. Cooper may be found in 
additional material.]
    Senator Bond. I will indicate that a vote has started, and 
we want to hear Ms. Schooling's testimony. Senator Talent and I 
will have to go and vote, so we will ask that the committee 
stand in recess, and we will come back for questions.
    Ms. Schooling, we want to give you full time for your 
statement, if you could make it 5 minutes, before we go vote.
    Ms. Schooling?
    Ms. Schooling. First of all, I want to thank you for taking 
time to listen to my story. While mine may be an extreme case 
of the hardship that the former TWA flight attendants are 
facing, it nonetheless represents the hardship that all of us 
will be facing on July 2, 2003.
    I began my career in 1975 when I was 19 years old. I am 
from Missouri, and the natural choice was to begin flying for 
Ozark Airlines. When TWA acquired my airline in 1987, I had 
been flying for 12 years. Instead of being stapled to the 
bottom of the seniority list, I was given my full seniority. It 
made all the difference in the world.
    My younger sister, Maureen Short, also flew for Ozark and 
became a TWA flight attendant. With her 25 years of combined 
seniority, Maureen has already been furloughed to the street in 
May.
    I am a single mother of a son who has a rare condition 
causing him to be profoundly disabled, both mentally and 
physically. My son is 17 years old; he weights 32 pounds; he is 
fed through a feeding tube and is in diapers and requires 
constant care. My husband died 3 years ago of cancer. Many of 
you would look at me and tell me how sorry you are for what has 
happened to me in my personal life with my husband and my 
child, but I see it as a challenge. Perhaps it is because of my 
upbringing, and perhaps it is because of growing up in the 
Midwest in the great State of Missouri, but I do not question 
why God has given me this life. I love my child, and I love my 
career.
    What I do not understand is why both American Airlines and 
the union that represents me have chosen to eliminate my 
career. When American Airlines announced the TWA acquisition, 
it promised ``two great airlines--one great career.'' It has 
broken its promise to every TWA employee and spun a web of 
deception that has broad social as well as safety issues.
    I am scheduled to be furloughed on July 2, 2003. I will 
lose my health insurance coverage for myself and my son. 
Instead of providing 90 days of medical coverage, which it did 
for all other furloughed employees prior to June 2003, it has 
now determined that it will only provide 30 days' worth of 
coverage. On top of that, both the company and the union agreed 
that I would not receive any severance pay. Every other 
employee prior to June 2003 received severance pay to help 
defray the costs of a job loss.
    I am facing total and complete financial devastation. 
Because I took leave to care for my son, I will not even 
receive full unemployment benefits to cover Ryan's care, let 
alone household expenses. For most flight attendants, the 
maximum we can receive weekly is $250. I can tolerate financial 
downturn, and I can tolerate economic hardship. What I cannot 
tolerate is the fact that American Airlines has broken its 
commitment to all former TWA employees when it promised a 
``fair and equitable'' process to determine seniority 
integration.
    I will not sit idle and tolerate the life-threatening 
hardship that it will cause my son Ryan.
    We are asking for your support to right the wrong. If I 
have learned anything from what I have experienced personally, 
it is that everyone deserves to be treated fairly and with 
respect.
    Thank you.
    Senator Bond. Thank you very much, Ms. Schooling.
    We will now declare a recess in the hearing in order for us 
to go over and cast our votes. We will be back as quickly as we 
can, which will probably take about 10 minutes, and we will 
resume at the call of the chair.
    We stand in recess.
    [Recess.]
    Senator Bond. The hearing will come to order, and we thank 
you all for your patience and indulgence.
    We will go back and forth with 5 minutes of questions and 
probably go for two rounds, so we can get on to the second 
panel as well this afternoon.
    Mr. Case, in the written statement that has been presented 
to us by Mr. White, he says on the supplemental CC that ``the 
methodology drew considerably on the thinking and proposals of 
the TWA pilots' own representatives and expressed in 
approximately 25 negotiation sessions. Their thinking and 
concerns went into both the construction of the seniority list 
itself and also into the conditions and restrictions applied to 
give added protection to the TWA pilots. There are only minor 
differences between the two sides' positions.''
    You were there, weren't you?
    Mr. Case. Yes, sir, I was there in the background, coaching 
or assisting our merger committee.
    Senator Bond. Was that the case?
    Mr. Case. No, sir, absolutely not. If they were minor 
differences, I do not think the current employment situation 
would be what it is. There were miles between the two parties. 
There was never an agreement reached between the two parties. 
As a matter of fact, American Airlines' vice president of 
employee relations, when asked, replied that ``This is not a 
fair deal.''
    Senator Bond. Would that be Mr. Brundage?
    Mr. Case. That would be Mr. Brundage.
    Senator Bond. Did the TWA MEC Branch of ALPA ever agree to 
any integration plan with American Airlines pilots' union, APA?
    Mr. Case. No, sir. There were multiple offers and counter-
offers that went back and forth across the table, and as a 
matter of fact, through fax machines, city-to-city, and there 
was never an agreement reached.
    Senator Bond. All right. Let me go to Ms. Cooper. Would you 
please tell the committee the assurances you received of 
American that you would not be stapled to the end of the 
seniority list?
    Ms. Cooper. Well, first of all, it is important to 
understand that no union group at TWA gave American Airlines a 
blank check. They made written assurances to us in exchange for 
our board votes. They promised that there would be a process. 
They promised that, first of all, they would stay out of the 
process. They promised that we would have benefits that 
mirrored those of American Airlines flight attendants. And they 
promised that only after the two unions met and reached an 
agreement would they adopt whatever agreement came out of those 
talks. In our case, there were no talks.
    We repeatedly demanded that American Airlines honor its 
commitment to us that we be allowed to attend talks. They 
instead chose to hold secret talks in which they stapled us. So 
they in fact broke the agreement.
    Senator Bond. Let me follow up on that. Secret talks--
obviously, they were kept secret--how did you find out about 
them, and what information do you have on those talks?
    Ms. Cooper. How I found out was that after the fact, there 
was an announcement that an agreement had been reached, and 2 
days after that, I confronted Mr. Brundage in person demanding 
to know what talks had in fact taken place, when they had met, 
how often they had met, what times they had met. And he 
indicated that the talks had gone on, and he admitted that 
despite the letters that were sent to him demanding our right 
to attend the meetings, they ignored those demands and chose to 
meet in secret. So that is how I found out, was through a press 
release.
    Senator Bond. Could you by any chance supply a copy of the 
press release to the committee?
    Ms. Cooper. I certainly can.
    Senator Bond. Thank you.
    [Document follows:]
    
    
    Senator Bond. What negotiations did you participate in with 
your counterpart American flight attendants?
    Ms. Cooper. Zero, none, nada. There were no talks.
    Senator Bond. Did American Airlines in any way attempt to 
facilitate any such meetings?
    Ms. Cooper. To the best of my knowledge, no. We repeatedly 
asked American Airlines to set up the talks, and that is when 
we discovered after the fact that talks had taken place without 
us, and the only way we found out that there were talks was 
through the press release that I stated earlier.
    Senator Bond. Thank you.
    Very quickly, Ms. Schooling, you were at Ozark, and you 
were part of the acquisition by TWA. How was that acquisition 
handled with respect to seniority rights?
    Ms. Schooling. We got our full seniority at TWA.
    Senator Bond. So you were given credit for the time you 
spent at Ozark.
    Ms. Schooling. Every year that we flew, yes.
    Senator Bond. I assume you believe that that would be the 
same process followed by the acquirer in this instance?
    Ms. Schooling. That would be the best scenario. I just 
think that being stapled to the bottom is totally unfair and 
unacceptable.
    Senator Bond. Thank you, Ms. Schooling.
    I will now turn to Senator Talent for his questions.
    Senator Talent. Thank you, Mr. Chairman.
    I want to go a little bit into the whole issue of the 
status of TWA at the time that this filing occurred, and I am 
going to read from Mr. White's statement.
    ``Let us keep in mind the following: In light of the fact 
that TWA was teetering on the verge of collapse and dissolution 
at the time of the asset purchase''--is that true? Is that an 
accurate description of the situation in our view? I will ask 
Ms. Cooper and Mr. Case.
    Ms. Cooper. That is not correct. In fact, at the time, in 
December 2000, the unions had reached agreements with various 
lessors to restructure the financial debt of TWA. In fact, I 
was a direct participant in a search committee that had 
selected a new president to take over TWA.
    We also had an agreement with the unions to roll back 
certain of our contracts--we had all hit our target amount. We 
had hired someone to take over the company, and we were looking 
to going forward. Mr. Compton would have been replaced in this 
scenario, and we found out at the end of December that he in 
fact was engaged in other talks, and it was only after I had 
seen CNN that he reported to me as a member of the board of 
directors that he had negotiated another deal.
    Senator Talent. And in fact, American described TWA at the 
time as a ``valuable asset,'' an important acquisition. They 
did not treat it as a company about to go out of business that 
they were going to----
    Ms. Cooper. In fact, if I could follow up, I had been given 
a copy of a powerpoint presentation that I believe American 
presented to its own board of directors, claiming what a great 
deal it was, how they had gotten TWA for less than its real 
value, and that they believed that this was a great transaction 
for them because they were, among other things, becoming the 
world's largest airline and were acquiring the all-important 
St. Louis hub. So they said it was a good deal, and they said 
they got it for less than what it was truly worth.
    Senator Talent. If you have a copy of that, I would like it 
for the record--if that is all right, Mr. Chairman.
    Senator Bond. We will accept it without objection.
    Ms. Cooper. I will send that.
    [Document follows:]

    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Senator Talent. Mr. Case, ALPA gave up in the course of 
this its Allegheny-Mohawk protections, isn't that right?
    Mr. Case. I would not directly say they gave up. Basically 
what happened was that all the labor-protective positions in 
our contract were required to be amended by American Airlines. 
That was part of the purchase agreement. And as a matter of 
fact--and I think this has escaped a lot of people--TWA was not 
in bankruptcy. Bankruptcy was a requirement of the asset 
purchase.
    Senator Talent. Right. Even if TWA had gone back into 
bankruptcy, that does not mean it was going to cease to 
operate. It could have been restructured and come out, as in 
fact it did.
    Mr. Case. Absolutely not. TWA had proven to be a very 
resilient airline, as a matter of fact, surfacing after two 
previous bankruptcies, and a lot of that resilience was based 
on the fact that the employees were very dedicated to making 
sure that the airline continued to fly. It was in my opinion in 
no way, shape, or form going out of business. And the 
bankruptcy was simply a design of the sale.
    Senator Talent. And what I was getting at was that even in 
the back of your mind, there was a concern that without the 
buyout, TWA might not be able to continue operating 
indefinitely--and let us face it--that concern had been with 
you guys for years and years; it was not an airline that was in 
great shape financially. Nevertheless, you gave up or 
sacrificed your employee protections, and I guess what I want 
to ask is would you have done that if you had known that this 
was going to be the result?
    Mr. Case. Absolutely not, and as a matter of fact, through 
that resilience, the employees had built an ability to have 
labor directors on the board of directors with transaction-
blocking votes. There is absolutely no way that the employees 
at TWA would have allowed the transaction to go through had we 
known where we would be today.
    Senator Talent. Yes, because from your perspective, it 
could not have ended up worse than it did.
    Mr. Case. Absolutely not, and as a matter of fact, in 
exchange for our cooperation, for our amending our contract, 
what we exchanged those provisions for was promises from 
American of fairness and equity. And when their vice president 
of employee relations does not see this as a fair integration, 
how did they stand by and continue to sign it? They did not 
have to sign the integration agreements with their labor 
unions; they could have held that as a caveat to ensure a fair 
seniority list integration.
    Senator Talent. There are a couple more points I want to 
bring up, and then I am done, Mr. Chairman, and I appreciate 
your indulgence.
    Mr. Case, in your longer written statement, you indicated 
that American actually, just before the effective date of the 
combination of the companies, did not just hire--you mentioned 
one pilot that they hired who is going to keep flying when you 
are not--but actually, they hired more than one, didn't they? 
How many did they hire?
    Mr. Case. Yes. There were hundreds who had been hired, and 
as a matter of fact, on the specific date that you are talking 
about, there was what they called, paraphrasing, a ``furlough 
exchange program.'' What happened was that some of the American 
pilots had been furloughed who had hire dates prior to April 
10, 2001. There were 208 American pilots on furlough status 
that were all hired prior to April 10, 2001. With the 
implementation of Supplement CC, which was the integration 
imposed upon us, 1,240-plus TWA pilots received a hire date of 
April 10, 2001, so American was obligated to bring those 208 
American pilots back and exchange them for some of staple-ees.
    So around the May time frame, after a single carrier was 
determined, they exchanged 208 American pilots; they brought 
back Mr. B.D. White's group, and in exchange for that, they 
placed TWA pilots on furlough in their place.
    Senator Talent. Thank you.
    One more thing, Ms. Cooper. In your exchange with Senator 
Bond, you talked about talks that were never held. I think it 
is important for the record if you could just set forth who was 
representing whom. In the case of the flight attendants, who 
represented each of the employee groups, and which of the 
representatives had talks with American and which did not. 
Everybody who knows the background knows that, but I do not 
know how clear that was for the record.
    Ms. Cooper. The International Association of Machinists and 
Aerospace Workers represented the TWA flight attendants, and as 
general chair for the flight attendants, I sent notices and 
requests to American Airlines to hold the facilitated talks. 
APFA, the Association of Professional Flight Attendants, 
represented American flight attendants. We asked for those 
talks to commence with the facilitator. American apparently 
held talk with APFA; they held no talks with us. We attempted 
as a follow-up to hold talks with TWA LLC because we were still 
the bargaining representative. American showed up and refused 
to discuss it with us and did not allow even TWA 
representatives to meet with us over seniority.
    Senator Talent. Did you talk with the APFA people at all?
    Ms. Cooper. In talks about seniority--absolutely not. There 
were no talks that ever took place on that issue.
    Senator Talent. Thank you.
    Thank you, Mr. Chairman.
    Senator Bond. Thank you, Senator Talent.
    Ms. Cooper, we asked Mr. Case a similar question. Is it 
your belief that the American management could have refused to 
accept the so-called integration agreement allegedly between 
the employees of the two companies?
    Ms. Cooper. Absolutely--and you do not have to take my word 
for it. Mr. Baker, who was then a senior vice president of 
American Airlines, clearly indicated that they had no 
obligation to reach any agreement with APFA. In fact, he stated 
that any agreements that would be reached would have to come 
from the unions. In that powerpoint presentation that I 
discussed earlier, it even points that out to the American 
Airlines board of directors.
    What he indicated would happen if there were no agreement 
between the unions was the natural process of a national 
mediation board, and once there would have been a single-
carrier determination, there would have been no conflict 
between the unions, and APFA would have necessarily owed an 
obligation to the TWA LLC flight attendants.
    So American by its actions interfered. American by its 
actions we believe committed fraud. American by its actions 
broke its written agreement with us.
    Senator Bond. Ms. Schooling, you are being furloughed July 
2. How soon does your health care coverage expire?
    Ms. Schooling. We are covered for 30 days from the time of 
furlough.
    Senator Bond. Do you have any employment lined up?
    Ms. Schooling. No. I have not given it much thought at this 
point.
    Senator Bond. Thank you.
    Mr. Case, did American Airlines ever bargain collectively 
with you over seniority?
    Mr. Case. No, sir, they did not. As a matter of fact, they 
specifically said that they had no duty to bargain with us over 
seniority and that it was specifically left between the two 
unions; however, there were some actions that they took that 
did not indicate that. Once again, if it was just simply 
between the two unions, they did not have to sign off on 
something that was not agreed to; they could have signed off 
after something was agreed to or ensure that there was a fair 
integration.
    Senator Bond. Were there some provisions of American's 
contracts with its union, APA and APFA, that were modified by 
agreement between American Airlines and the unions before or 
during the asset acquisition of TWA?
    Mr. Case. Yes, sir, as a matter of fact, there were. The 
APA contract, like many major airline contracts, requires that 
all flying be done by the corporation's pilots. As such, the 
APA had to amend their collective bargaining agreement or waive 
a provision of their agreement to even allow TWA LLC to operate 
with TWA LLC pilots.
    Senator Bond. So in fact the company did achieve a change 
in the labor agreement.
    Mr. Case. Yes, sir. As a matter of fact, they achieved that 
change by basically exchanging promises and guarantees with the 
APA--in other words, it is the ``alter ego airline'' fear. Most 
pilot groups and most flight attendant groups do not want to 
see management start up an alter ego airline and operate a low-
cost or a separate carrier under the guise of a wholly-owned 
subsidiary. So they put protective provisions in the contract 
to make sure that that does not happen.
    Senator Bond. Mr. Case, why didn't your national union, 
ALPA help you? You were dues-paying members of ALPA, weren't 
you?
    Mr. Case. Yes, sir, we were. And as a matter of fact, on 
the face of things, they appeared to be helping. Unfortunately, 
there were multiple conflicts within the national union that 
prevented a lot of their participation and assistance with us.
    Senator Bond. Senator Talent, do you have any further 
questions?
    Senator Talent. One real quick one, Mr. Chairman.
    Ms. Schooling, you say that you are getting 30 days of 
health care?
    Ms. Schooling. Yes.
    Senator Talent. Is that what is typical for American 
employees, or is that less?
    Ms. Schooling. That went into effect in June 2003 with the 
agreement that our union made with the company on the 
concession package that we only get 30 days. It was 90 days' 
paid medical coverage, and then it went to 30 days.
    Senator Talent. Thank you.
    Mr. Case. Senator, might I add just one point that I left 
out a minute ago?
    Senator Bond. Yes.
    Mr. Case. Without getting too vulgar, this integration was 
classified by American's vice president of employee relations 
as ``a shit sandwich.''
    Senator Bond. Well, I was going to ask if there was 
anything else we need to add, but I think I will not ask that 
question. [Laughter.]
    To be serious, you understand that the record will be open 
so that additional questions may be asked of each of you for 
the record, and we would ask that you respond to those 
questions in a full and timely manner.
    Do you agree to accommodate that request?
    Mr. Case. Yes.
    Ms. Cooper. We will.
    Ms. Schooling. Yes.
    Senator Bond. Thank you very much. We very much appreciate 
your testimony, and we will now hear from the second panel.
    Mr. Case. Thank you.
    Ms. Schooling. Thank you.
    Ms. Cooper. Thank you.
    Senator Bond. Mr. Brundage, is there anything we can get 
for you to make that leg more comfortable?
    Mr. Brundage. No, thank you, Senator.
    Senator Bond. Having just gone through a similar 
experience, I understand that this is not an easy thing for you 
to do.
    The second panel includes Mr. Jeffrey Brundage, vice 
president of employee relations, appointed by American Airlines 
in 2001, overseeing employee relations matters with all union-
represented employee groups. Previously, he served as managing 
director of employee relations for flights since December 1999, 
and for 7 years prior to joining American, Mr. Brundage worked 
for the Airline Pilots Association International, most recently 
as senior collective bargaining coordinator. He began his 
aviation career as a pilot for Pocono Airlines before serving 
in the same capacity for Atlantic Coast Airlines. He resides in 
Cooleyville, TX.
    Our second witness on this panel is Captain Edwin C. White, 
an airline pilot employed by American Airlines since December 
1977, a captain since 1987, currently a Boeing 777 captain 
based in Dallas-Fort Worth. Prior to that, he served in the 
United States Air Force, the DC. Air National Guard, and the 
Air Force Reserves. He is a member of the Allied Pilots 
Association Collective Bargaining Representative, currently 
chairman of the APA Negotiating Committee. In 2001 he was 
chairman of the APA's Mergers and Acquisitions Committee; on 
behalf of the committee, he participated in extended 
negotiations.
    Gentlemen, we welcome you, and I would like to call on Mr. 
Brundage first for his testimony. We will accept your full 
testimony for the record, and if you could summarize in 5 
minutes or so, we would appreciate it. Unfortunately, we have 
gotten notice that there is going to be another vote coming up 
before long, so we will try to get this in as quickly as we 
can.
    Mr. Brundage?

 STATEMENTS OF JEFF BRUNDAGE, FORT WORTH, TX, VICE PRESIDENT, 
EMPLOYEE RELATIONS, AMERICAN AIRLINES; AND EDWIN C. WHITE, JR., 
           FORT WORTH, TX, ALLIED PILOTS ASSOCIATION

    Mr. Brundage. Senator Bond, Senator Talent, thank you very 
much for your invitation to speak on behalf of American 
Airlines.
    I am Jeff Brundage, vice president of employee relations. I 
joined American Airlines in December 1999 after a career as a 
pilot and a union leader. At American, I was actively involved 
in the labor integration plan when the company acquired the 
assets of TWA in the spring of 2001.
    As you know, these are extraordinarily difficult time in 
the U.S. airline industry. Since the events of September 11, 
2001, the industry has lost more than 100,000 jobs and has 
suffered perhaps more than any other industry from the economic 
downturn, the effects of war and the threat of terrorism on 
travel. So we certainly understand and appreciate your concerns 
and Senator Talent's concerns about the jobs lost and the 
effect on the people and the communities that you both 
represent.
    Today I want to use my time to offer you a little 
background on American's acquisition of TWA's assets during the 
early part of 2001 and our efforts to provide jobs to the 
20,000 TWA employees who would have otherwise been facing the 
liquidation of their company.
    It was always our intent to provide jobs to the TWA workers 
until their retirement, and we did everything we could to put 
our newest employees on par with all other American employees. 
In fact, we provided pay and benefits that represent one of the 
most generous employee packages in the history of corporate 
acquisitions.
    Before TWA filed bankruptcy in January of 2001, it 
approached the other major U.S. airlines about entering into 
some kind of transaction whereby TWA could have continued to 
operate. Only American was willing to make a comprehensive 
proposal that saved the jobs of many TWA employees.
    Under the asset purchase agreement, American voluntarily 
agreed to provide employment to all unionized TWA employees. 
The bankruptcy court found American's offer to be the only 
qualifying offer and approved the asset purchase agreement. The 
alternative was liquidation, and the immediate unemployment of 
20,000 TWA workers.
    Our goal was to successfully integrate the two airlines. We 
knew that we would not be successful unless we had the good 
will of the TWA employees. From the very beginning, we offered 
TWA employees compensation and benefits that rewarded them as 
if they had worked their entire career at American.
    TWA employees were not brought on as new hires and lost no 
pay, benefits, accrued vacation time, or sick leave. We gave 
TWA employees full credit for their longevity for these 
purposes.
    As of January 2002, we put all TWA employees on American's 
pay scale. Because TWA pay rates had been significantly lower 
than those at American, the majority received a substantial pay 
increase.
    It is important to note that this was not a merger. As we 
began the asset acquisition process, we had longstanding 
obligations to the existing workforce at American of more than 
100,000 employees and to the contracts negotiated with their 
unions.
    But the challenge of integrating two workforces goes beyond 
matters of benefits and pay. It is the right and the 
responsibility of the labor unions that represent our employees 
to negotiate on their memberships' behalf on a wide range of 
other contract provisions, including seniority and job 
protection, and they are at issue today.
    This, as you can imagine, was a difficult situation for all 
involved. We had competing unions with competing interests, and 
ultimately, these matters were resolved as internal union 
matters. The company's role in the process was to use our best 
efforts to facilitate the seniority integration process, and as 
one independent arbitrator ruled, we did just that.
    Even though the seniority integrations varied with each 
work group--pilots, flight attendants and ground workers--
American met its commitment to provide former TWA employees 
full credit for their years of service at TWA for all pay and 
benefit purposes.
    At the time of this asset acquisition, no one foresaw the 
industry's impending financial crisis--a financial crisis that 
regrettably has led to the furloughing of so many employees 
throughout the industry, including at American.
    The ultimate consequences for the TWA employees were not 
the result of the integration plan, but rather an economic 
downturn that forced layoffs and cutbacks throughout the 
industry. The pain has been spread far and wide.
    I appreciate the efforts of this Congress to provide aid to 
the airline industry and assistance to the tens of thousands of 
workers who have lost their jobs. I hope that we can all soon 
anticipate better times for the U.S. airline industry and begin 
to turn our focus toward recall our fellow workers.
    Thank you for your attention, and I would be happy to 
address your questions.
    Senator Bond. Thank you very much, Mr. Brundage.
    Captain White?
    [The prepared statement of Mr. Brundage may be found in 
additional material.]
    Mr. White. Thank you all for giving us this opportunity 
today.
    My name is Edwin White. I have been an airline pilot since 
1977 at American Airlines and a captain since 1987. During my 
tenure at American, I have been a member of the Allied Pilots 
Association, the union representing the pilots at American, and 
have served in a variety of official positions at the APA. Most 
pertinent to your purposes here, I served as chairman of the 
APA Mergers and Acquisitions Committee, and in that position 
negotiated the agreement known as Supplement CC that governed 
the seniority integration of TWA pilots into American after 
American purchased most of the TWA assets in a bankruptcy 
proceeding in 2001. I am here to address that seniority 
integration.
    It is my understanding that a group of former TWA pilots 
has charged that the pilot seniority integration established in 
Supplement CC is unfair to them. I can tell you, Senators, that 
I have heard that same charge from some incumbent American 
pilots, namely, that the integration was unfair to the 
incumbent pilot group. Complaints of this sort are standard in 
any major seniority integration in the airline industry.
    I take issue with those charges from both sides of the 
house. What we sought to achieve in Supplement CC and what I 
believe we did achieve, was an extremely fair expression of the 
legitimate and realistic career expectations of both pilot 
groups. The former TWA pilots were fully credited with what 
they brought to the combined carrier--that is, aircraft and 
sustainable jobs--and so were the American pilots. That to my 
mind is the essence of fairness in a matter like this.
    In my written statement to the committee, I have gone into 
considerable detail on the significant research and thought 
that went into Supplement CC and how it was based on virtual 
mathematical projections of the career paths of every former 
TWA pilot and every American Airlines pilot as of the date 
American purchased TWA assets. That methodology drew 
considerably on the thinking and proposals of the TWA pilots' 
own representatives as expressed in approximately 25 
negotiating sessions.
    Their thinking and concerns went into both the construction 
of the seniority list itself and also into the conditions and 
restrictions applied to give added protection to the TWA 
pilots.
    Although you would hardly know it through the public 
statements of some of the former TWA pilots, at the end of 
those negotiations, there were only minor differences between 
the two sides' positions. And as the TWA pilots informed us at 
the time, they were willing to sign off on the final product of 
those negotiations if American were willing to agree to certain 
conditions that went beyond our capacity as employee 
representatives to deliver.
    Much of the unhappiness with Supplement CC of course 
derives from the fact that the entire airline industry has been 
in a tailspin since 9/11, resulting in massive furloughs 
throughout the industry. I personally find any furlough 
regrettable. No doubt the former TWA pilots have suffered 
significantly due to furloughs. But before we find something 
wrongful in that, let us keep in mind the following: In light 
of the fact that TWA was teetering on the verge of collapse and 
dissolution at the time of the asset purchase, the career 
expectations of the TWA pilots were infused with a much higher 
probability of furlough or, even worse, permanent unemployment, 
than the American pilots.
    Moreover, the APA had succeeded in negotiating furlough 
protection for American pilots while the former TWA pilots' 
representatives were unsuccessful in doing so. As a matter of 
fundamental fairness, this aspect of the former TWA pilots' 
career expectations also had to get factored into the 
integration process.
    Finally, although the TWA pilots knowingly and voluntarily 
gave up whatever right they may have had to arbitrate 
integration issues in order to save their jobs, the TWA pilots 
did not in any way give up their absolute right to challenge 
what they now call the defects of Supplement CC in the Federal 
courts.
    Indeed, they are exercising that right right now in the 
Federal district court of New Jersey. As the courts have always 
done in this area, the court will determine what is just and 
proper in this situation, and it will do so not on the basis of 
emotion but on the considerable body of law that has been 
developed in scores of seniority integration cases. In short, 
if the former TWA pilots have not been accorded their due--and 
I sincerely believe they have--the court will provide the 
appropriate remedy.
    Finally, their court case is significantly advanced. 
Motions to determine the claims of the former TWA pilots have 
been fully briefed, and the court should render a decision in 
the near future. With all due respect, I do not believe that 
Congress should intrude into that orderly legal process.
    Thank you.
    Senator Bond. Gentlemen, unfortunately, we have started 
another vote, but we will see how quickly we can go with the 
questioning. Actually, Senator Talent, do you want to go ahead 
and vote and come back?
    Senator Talent. I think it would be better.
    Senator Bond. All right. Why don't you go ahead----
    Senator Talent. Oh--if you are going to stay, I will stay.
    Senator Bond. All right.
    Mr. Brundage, we have had an opportunity to work with you 
and have great respect for your confidence and your dedication 
and intellect. I was looking at page 3 of the summary of your 
written testimony, and it says: ``The fact is that the unions 
negotiated and agreed to an integration plan that attempted to 
balance competing interests and preserve jobs.''
    Based on what we have heard, I do not see that there was 
any kind of agreement between the two sides on this most 
important issue of the seniority plan. Would you care to 
correct that statement based on what we have heard?
    Mr. Brundage. Senator, the comment that I was credited with 
at the end of the last testimony was made in a private meeting 
with the TWA MEC, where I was attempting to encourage the MEC--
and I was invited into that meeting by myself, with a group and 
their advisors, and this was at the conclusion of that 36-hour 
stint that you asked us to participate in over at the Mayflower 
Hotel. And the point that I was making was that under the 
agreement that American had with the APA, our only option would 
have been to have treated the TWA pilots as new hires. The 
company has the right to choose whom we hire, but our union 
contract dictates how they are placed on the seniority list.
    The point I was making to the MEC was that however they 
viewed the deal that had been discussed at the Mayflower, it 
was clearly better than the alternative that American had 
available to it in terms of how we put these people on the 
list. And they then, after hours of deliberation and another 
day, sent a letter by fax to me at American Airlines and to the 
APA where they accepted the APA's integration agreement as it 
was discussed at the Mayflower Hotel, but they also added to 
that letter a number of conditions that they wanted to impose 
upon American, some significantly burdensome economic 
conditions in terms of how pay would be adjusted and those 
types of things. So had I signed that letter when I received 
it, had it not included those new conditions we had never 
discussed, those economically burdensome conditions, and if the 
APA had signed that letter--and I cannot attest to whether they 
would have or not--as a result of the meetings you 
commissioned, we would have had a voluntary agreement between 
the two parties.
    Senator Bond. Excuse me, Mr. Brundage, but when you make an 
offer to one party and they come back with a counter-offer, if 
you like some terms of the counter-offer and do not like some 
other terms and you do not accept it, that is not an agreement. 
I would like to see where they agreed to this proposition. The 
fact that they say, OK, we will take this if you will do this 
does not mean that you can say, Well, okay, they agreed to take 
this, and we just decided we were not going to consider it----
    Mr. Brundage. Senator, I must have misunderstood your 
question. I thought your question was whether or not they have 
agreed to the APA's proposal as to how to integrate seniority.
    Senator Bond. I asked whether they had come to an agreement 
on that proposal. Apparently, their somewhat positive response 
was conditioned on other items which you and/or they or 
somebody found unacceptable. That is not an agreement.
    Mr. Brundage. I agree, but they were not items that were 
related to how the seniority would be integrated. They were 
items related to, for instance, pay.
    Senator Bond. Yes, well, there was no agreement. You can--I 
apologize. I am not going to get into an argument with you, but 
that is not an agreement.
    I would like to know from you gentlemen whose idea it was 
to eliminate the protections. Here is the Allegheny-Mohawk 
protection in the TWA contract.
    Mr. Brundage. It was mine.
    Senator Bond. It was yours.
    Mr. Brundage. Yes.
    Senator Bond. And why did you say you had to have it taken 
out?
    Mr. Brundage. Months prior to the acquisition that resulted 
in American's purchase, American had been discussing with TWA 
opportunities to potentially have a different commercial 
arrangement. I was asked at that time to review the TWA 
contracts and determine as to whether or not there were 
inconsistencies or frictions between the two agreements, 
because as you know, in the airline industry, that is one of 
the most difficult issues.
    I reported back to the people that I work for that based on 
the agreements that we had with our employees at American, we 
would have created a friction or a tension which was 
unresolvable had we simply accepted the agreement to purchase 
TWA with those Allegheny-Mohawk provisions in their agreement.
    Senator Bond. But your pilots have Allegheny-Mohawk-type 
protections, do they not?
    Mr. Brundage. There are protections in the pilot agreement, 
and I can refer to Mr. White, who is an expert on this area, 
but their protections are in the event that American was 
purchased, and if a purchaser conditioned the purchase of 
American on the removal of those conditions, it would have been 
up to the pilots to determine whether or not they were going to 
stand by those provisions or modify those provisions. And in 
the testimony provided by Mr. Case, that is the exact decision 
that the TWA pilot group was faced with. They recognized that 
we had said to them that there was no circumstance under which 
we would make this asset acquisition if in fact those 
Allegheny-Mohawk provisions were named because of the very 
tension they would have created with our own employees. They 
made that decision. They made that decision with full knowledge 
of the commitments that we made.
    Senator Bond. And the commitments that you made that we 
have heard discussed here today were these employees, the crown 
jewel, the St. Louis hub, and that you were going to see that 
there was a fair integration. And did you know at the time that 
there was going to be no effort whatsoever at resolving the 
integration on something resembling an equal seniority time-
and-service basis?
    Mr. Brundage. Richard Bloch, who is a pretty respected 
arbitrator in the aviation industry, was asked to decide an 
arbitration case brought forward by the Airline Pilots 
Association, and the Airline Pilots Association claimed that 
American had not lived up to its commitment to work toward a 
process that was fair and equitable.
    There are thousands of pages, or at least a thousand or 
more pages, of testimony in that case where Arbitrator Bloch 
confirmed that in his opinion, American did in fact meet the 
commitments that it agreed to in the agreement with the Airline 
Pilots Association, so----
    Senator Bond. By providing a facilitator.
    Mr. Brundage. By providing a facilitator, which is exactly 
what we signed up for.
    Now, sir, the Allegheny-Mohawk provisions and the term 
``fair and equitable'' is clearly a legal distinction. I mean, 
it results from the CAB and the old labor-protective 
provisions. If in fact we had intended to provide those 
Allegheny-Mohawk provisions, why would we have ever conditioned 
our purchase of the assets at TWA on the removal of those 
positions? To me, that is the inconsistency in the discussion 
that I personally have a hard time resolving.
    We specifically took the provisions that you are addressing 
and told the employees of TWA: If you would like us to offer 
you employment--and remembering this was not a merger; it was 
an asset acquisition--if you would like us to offer you 
employment, you have to understand that those provisions 
prevent a tension, a conflict, with our existing agreements, 
and we cannot accept them.
    So the commitment we made was significantly different than 
the ``fair and equitable'' commitment that exists in the 
Allegheny-Mohawk LPPs. The commitment we made was simply to 
facilitate a process, and when that process failed with the 
pilots, at your request, we entered the fray and participated 
in the Mayflower meetings.
    Senator Bond. And it went nowhere, and that is the problem. 
It was not a negotiation. You wound up--let me turn quickly to 
Senator Talent.
    Senator Talent. Mr. Brundage, as I look at this thing, the 
question that comes to mind is what happened--I mean, what 
happened?
    Mr. Brundage. That is a great question.
    Senator Talent. You are in labor relations. I do not 
pretend to be an expert on labor relations and transportation, 
but I know that in a typical industrial-type setting, this 
could not happen. Right now, they are evaluating this in 
Federal court. How did this happen?
    Mr. Brundage. Well, first, you are correct. This is being 
evaluated in court as we speak. But our promise was to hire the 
TWA employees. And I said earlier--and it may seem to be a fine 
point, but it is an important point--this was not a merger. And 
you may refer in context to some of the things you have said in 
the context of a merger, but this was not, and it was made 
clear.
    We also at the time we employed the TWA----
    Senator Talent. Let me enter for just a second here. When I 
have been around here for a couple years, I will remember to 
push the button so the microphone works.
    Yes, it was a buyout rather than a merger, so one of the 
themes of your testimony and Mr. White's and the company's 
position now is that basically, we were doing TWA a big favor. 
Nobody else would take over this crippled airline. There is 
sort of this underlying note. And yet the truth of the matter 
is you guys did not do this out of charity. You thought this 
was going to be a good deal for American Airlines. That is 
correct, isn't it?
    Mr. Brundage. Absolutely.
    Senator Talent. So let us get that on the record. You would 
have violated your duty to your shareholders if you did this 
just as a matter of charity for TWA. And TWA did bring a lot to 
the table that you do not always get in buyouts--they had 
planes, they had maintenance facilities, a lot of expert 
employees and all that, right?
    Mr. Brundage. Yes.
    Senator Talent. So this was going to be good for both 
parties--that was the basis of it.
    Mr. Brundage. Absolutely.
    Senator Talent. And that was the expectation, that you 
would emerge with a stronger airline which, Mr. White, would be 
better for everybody's employees if that happened, or you would 
not have made the deal.
    Mr. Brundage. [Nodding.]
    Senator Talent. OK. So, go ahead. I just wanted to get that 
on the record.
    Mr. Brundage. The commitment we made was to hire the TWA 
employees, and we did that. We also agreed to provide full 
longevity, which frequently is not done even in merger 
situations, but for their service at TWA, we gave them full 
credit for pay purposes and the pay scales and steps.
    We also agreed to the facilitation of a fair seniority 
integration process. We have talked about the legal 
distinctions of ``fair and equitable.''
    Let me put it in context if I can. We spent a considerable 
amount of time in advance of that April transaction out at 
employee meetings. I personally travelled with the senior 
executives of the company to every base in the American 
Airlines system and made a commitment to 100,000 employees in 
person that we would not--we would not--attempt to subject them 
to any seniority process that they were not agreeable to. We 
were not going to make this transaction on the backs of the 
American employees.
    As you well know, prior to my arrival at American, there 
was a very difficult occurrence in another acquisition by 
American, and we had learned our lessons. We had learned our 
lessons very clearly, and we were going out of our way to 
inform our employees that we understood what their contract 
said. Now, we also said that we were willing to accept whatever 
process they were willing to accept as well, and in the case of 
the IAM and the TWU, they used an arbitrated process.
    Senator Talent. OK. So as I understand what you are saying, 
and based on the comment that you made to the MEC--and I am not 
going to repeat that, and I do think that that was language 
that you used in a private meeting in a labor-management-type 
situation, and let us face it, it is not like the elders at a 
church getting together and discussing the future; so we all 
need to understand that, and we have all heard language worse 
than that in that kind of meeting--but basically, what you were 
saying was, look, we know this is not very good for you--in 
fact, this is lousy for you, this is ``bleep'' for you--but we 
are buying you out, and it is what our current union wants.
    That is really what you are telling us, that you were under 
pressure from the American Airlines unions, and this was all 
that you could give the TWA people.
    Mr. Brundage. Actually, I was suggesting that what the TWA 
people had gotten in the pilot case was actually better than I 
had expected and that there were certain protections there, and 
in fact at that meeting, American--one of the reasons American 
came to that meeting was to try to bring some additional things 
to the table.
    Senator Talent. So you had no choice given what your 
current employee workforce felt and had represented to you 
through their union leaders.
    Mr. Brundage. Who were living by the contracts that we had.
    Senator Talent. OK. You had no choice.
    Now, you did not make it worse, did you? You did not 
intervene in this process to make it worse for the TWA people?
    Mr. Brundage. The only way we could have made it worse was 
by not attempting to help this facilitation process, because 
our only alternative then would have been to have offered this 
employment as brand, new hires, without anything other than a 
promise of job, no seniority, no longevity, no benefits, none 
of those things.
    Senator Talent. So the point is that however bad it was, 
that was what your current unions wanted; you did not make it 
any worse?
    Mr. Brundage. We tried to make it better, sir.
    Senator Talent. OK.
    Are we going to interrupt now? I have some more.
    Senator Bond. Yes. We are going to have to recess this 
hearing, and we will get back as quickly as possible.
    Thank you.
    [Recess.]
    Senator Bond. We will resume the hearing and ask Senator 
Talent to continue the line of questioning he was pursuing.
    Senator Talent. Thank you, Mr. Chairman.
    Mr. Brundage, we were just at the point where you had 
testified that--I am going to paraphrase--while your evaluation 
of the agreement to the MEC was in one sense substantially 
correct, that it was a ``bleep'' deal--it was not a very good 
deal for them--that nevertheless, you--``you'' meaning American 
Airlines--had tried to make it better and certainly did not try 
to make it worse.
    Mr. Brundage. Correct.
    Senator Talent. Since you have tried to make it better in 
the past, and you agree it is a uniquely bad deal, would you be 
willing to sit down if the union were willing to and talk about 
making it better now?
    Mr. Brundage. Sir, we could not have been clearer about the 
conditions of this agreement. And we have heard some testimony 
today that quite frankly is news to me, that the TWA employees 
had a number of options at the time that this transaction 
closed.
    I am a believer that you need to simply State the facts up 
front; everybody has got to be clear about what the game field 
looks like and what the rules are and move forward.
    I believe that American went out of its way to make sure 
that our commitment to hire the TWA employees was clear. Our 
expectations for what would happen was clear. And I think that 
we need to be cognizant here of what a decision like the one 
that you just suggested could reap in the future for airlines 
or for other industries who may not be in the best condition 
and whether there would ever be a suitor who would consider 
coming in and taking that company and trying to integrate that 
company and hire its employees, because if you agree to 
purchase something, and you make what you are willing to do 
absolutely clear and, in my opinion, you live up to the 
agreement that was made at that time----
    Senator Talent. Wait a minute. Hold on a second, because 
you were willing to do more. You just said you wanted to make 
it better, but you could not in light of what your current 
unions wanted, which is frankly what I suspected from the 
beginning when I looked at this. So you wanted to make it 
better, so why not now? If the union were willing to do it, why 
can't you sit down and readjust this seniority agreement before 
the next round of layoffs go into place to make it more 
equitable in light of what we both know the typical tradition 
and practices in labor-management relations are?
    I will let you finish.
    Mr. Brundage. Maybe I have not been as clear as I would 
like to be. American made it absolutely clear at the onset that 
the issue of how seniority would be integrated would be an 
issue to be solved by the unions. Seniority was not within the 
purview of American, and we made that clear at the time of the 
transaction.
    We made a commitment to employ people. We made a commitment 
to facilitate a process. That process was never defined, and it 
was intentionally not defined. We agreed to an arbitrated 
process in the case of the IAM and the TWU. We hired and paid 
for a facilitator for both the flight attendants and for the 
pilots. We encouraged at every opportunity the American unions 
to use the facilities of that facilitator. But at the end of 
the day, the game field said that seniority would be determined 
by a decision of the unions.
    Senator Talent. What I contest there, Mr. Brundage, in 
light of the statements that Senator Bond has read regarding 
the public statements of American Airlines officials as well as 
private statements or statements that were made to him, I know, 
and to other people is your statement that you made it 
absolutely clear. Don't you think that if you had said to the 
TWA pilots and to Ms. Cooper--with whom you did not even have 
talks--``Look, you guys need to understand that all you are 
going to get is what our current unions are willing to give 
you. We are basically out of this game. We are going to hire a 
facilitator but that is it''--do you think that they would have 
given up Allegheny-Mohawk? Do you think they would have agreed 
and supported the buyout as they did--because I don't know how 
they could possibly have ended up worse.
    Mr. Brundage. Well, as I said in my opening, I was an 
employee of ALPA for some time, and I had very high regard for 
the ALPA union, and I also had high regard for the IAM. They 
have been around this business for a long time, and they are 
very smart people.
    I think it is important to note that those very smart 
people, who probably understand Allegheny-Mohawk as well as you 
or I do----
    Senator Talent. Probably better than I do.
    Mr. Brundage. [continuing]. Fully understood what they were 
removing from those agreements to allow that asset acquisition 
to take place and to provide for the opportunity to be hired by 
American. So beyond that, I would be speculating on what they 
were thinking, but my respect for those unions would indicate 
they knew exactly what they were doing, and there was no 
surprise.
    Senator Talent. Can I have just one line of questions for 
Mr. White, Mr. Chairman, rather than waiting? I know I am over 
my 5 minutes.
    Senator Bond. Go ahead.
    Senator Talent. Mr. White, I have a letter dated April 18 
from you to Captain Mike Day, who was chairman of the TWA 
Merger Committee, the first sentence of which is: ``Attached is 
the APA Mergers and Acquisitions Committee's reviewed seniority 
integration proposal.'' And attached to that is, as part of 
1(a), the statement: ``Seniority list merge date shall be on 
the date on which American Airlines was declared the successful 
winner of the auction for the assets of TWA 12 March 2001.''
    I do not know if you are familiar with this letter or if 
you remember it. And I am holding on by my fingernails to 
understand what all this means, but as I understand it, that 
meant that you had come to an agreement, at least on a 
preliminary basis, with the TWA Mergers Committee that the 
seniority list integration date would be 12 March 2001. Is that 
what that means?
    Mr. White. Yes, sir.
    Senator Talent. Now, that is not the merge date that was 
subsequently adopted by American, is it?
    Mr. White. That is correct.
    Senator Talent. And what was the merge date that they 
subsequently adopted?
    Mr. White. I believe it is April 10.
    Senator Talent. Now, as I understand it, one of the 
significant aspects of this is that had the merge date been 12 
March 2001, so that the lists would have merged about a month 
before the final buyout date, then the furlough protections of 
the contract would have attached to the TWA employees. Is that 
your understanding?
    Mr. White. Yes, sir.
    Senator Talent. So because the merge date was moved forward 
to April 10, the TWA employees did not get the furlough 
protections.
    Mr. White. A portion of them did not.
    Senator Talent. OK. How did we go from 12 March 2001 in 
this letter dated April 18, 2001 to April 10? What happened?
    Mr. White. What happened is when American Airlines 
announced the purchase of the assets of TWA, I had not been 
doing union work for a while--I had gotten out of it--and I was 
asked to chair the merger committee, and we had a negotiating 
committee that was relatively new, so we had myself and one 
other member attached to the negotiating committee, and we were 
attached to negotiate with that negotiating committee with 
American Airlines on the transition agreement, which was the 
``exception of scope'' clause that you asked about earlier.
    The purpose of attaching us to that committee and then 
having a couple members of the negotiating committee attached 
to the merger committee in our discussions for the TWA pilots 
was to make sure that we were keeping everything lined up.
    Well, when we reached an agreement with American Airlines 
on the transition agreement, and the contractual language 
started writing, I did not end up getting involved in the 
contractual language-writing of that process, and the 
negotiating committee unbeknownst to me negotiated with 
American Airlines for furlough protection for the pilots of 
American Airlines because of the risk that was associated with 
buying the assets of TWA, and that furlough protection was 
going to go to pilots, absolute protection to the pilots as of 
April 10 and then a soft furlough protection for pilots hired 
after that.
    Well, after the facilitation process was over, I had gone 
on vacation and got a call, and they said that under the 
auspices of Senator Bond's office, they wanted to have 
discussions. So we came in to Washington, DC., and Jeff 
Brundage became aware that we had talked to them about April 
10, and he said they had negotiated for furlough protection and 
were not successful in achieving furlough protection for their 
pilots and that the corporation was going to stand by that 
unwillingness to provide any furlough protection for the TWA 
pilots.
    So I explained that we had a problem in that we had reached 
an agreement with the TWA pilots that we would use March 12, 
and the negotiating committee was standing on one side, saying, 
``We cannot back the date up,'' and we had American Airlines on 
the other side saying I cannot give all the pilots furlough 
protection. So I had gotten myself into a little bit of hot 
water there.
    So we sat down in discussions during that period of time 
and discussed the three-party situation, and Jeff Brundage 
offered to provide the furlough protection for the 1,095 
pilots--not quite half of their seniority list that was going 
to go on the integration--and that was something that American 
Airlines was able to what I call ``pot-sweeten'' or bring to 
the table that we could not offer.
    So that is how that date got changed to April 10.
    Senator Talent. I was getting at that. So it was American 
Airlines that contacted you and wanted the date changed or 
wanted some adjustment in that agreement?
    Mr. White. I would not say so much as they contacted us; 
they were sitting at the table when we were going over these 
items, and when he heard that date, he sat upright and said, 
``Wait a minute. We need to talk about this.''
    Senator Talent. OK. Now, Mr. Brundage, I understood you to 
say that you tried to make it better.
    Mr. Brundage. Yes.
    Senator Talent. This made it worse, didn't it?
    Mr. Brundage. Sir, the pilots represented by ALPA, while 
still at TWA, Incorporated, attempted to negotiate furlough 
protection as part of the agreement--as a quid--for the 
agreement to eliminate the Allegheny-Mohawk provisions of their 
agreement.
    At that time, it was made absolutely clear from American to 
TWA that in light of the inherent risks of this commercial 
transaction, there were no circumstances under which American 
Airlines could proceed with the transaction if in fact it 
included a commitment to provide furlough protection for the 
employees we did not yet even have on our property.
    Senator Bond. But, Mr. Brundage, you did get in and change 
the agreed-upon date of March 12. Here, we have been hearing, 
Boy, Mr. Carty told me this is strictly up to the unions. You 
changed the date that the unions agreed upon. You accepted an 
agreement with the flight attendants that the flight attendants 
never made. You took a counter-offer from the TWA pilots and 
said because part of the counter-offer was that they would 
accept it on this condition, that that was an agreement.
    It seems to me that you were all over the middle of these 
negotiations and had a significant say in how they would come 
out. And I find it hard to square that actuality with the 
assurances that TWA employees got and, frankly, that I got in 
my conversations with your top executives--who regrettably 
cannot be here, so we cannot talk about their discussions. But 
that was their understanding, it was my understanding, and 
clearly, you had a major role in the terms that the unions 
discussed--the one thing they agreed on you changed.
    Senator Talent. I think I will yield back to you, Mr. 
Chairman. [Laughter.]
    Senator Bond. No--I just had a thought there, Senator.
    Senator Talent. That was my last question, anyway. I may 
have a few more. I assume you have a few, obviously.
    Senator Bond. I have one or two that I wanted to bring up. 
Mr. Brundage, about that time, there was a proposal that United 
and American divide up USAIR. Weren't those discussions going 
on?
    Mr. Brundage. American was working with United to purchase 
a portion of USAIR to potentially satisfy the Justice 
Department requirements in that transaction, and yes, that is 
correct.
    Senator Bond. I had heard that American would agree to 
accept the Mohawk-Allegheny provisions in the USAIR contract. 
Is that accurate?
    Mr. Brundage. No, sir. It is inaccurate. What we said to 
the APA pilots was--and again, this was an ALPA/APA issue 
because ALPA represented the USAIR pilots--we said to the 
pilots at APA that the only way that the transaction could take 
place--and I may not have the right aircraft type, but I 
believe there were a number of 757s involved here--the only way 
we would be able to acquire those 757s was if the pilots came 
with those airplanes. We went to the APA and said to the APA 
the only way the pilots will come with those airplanes is if 
they get Allegheny-Mohawk 3 and 13 protection.
    So essentially, we gave the APA veto power over whether or 
not that portion of the transaction would ever occur based on 
the exact same understanding that we used to ask the TWA pilots 
to expunge that portion of their agreement.
    So it was never offered by American. We told the APA: If 
you guys think these airplanes are a good deal for American, 
then you are going to have to help us in this transaction, and 
you are going to have to step up to the plate on this portion. 
And quite frankly, we do not believe we ever brought that to 
conclusion because the deal fell apart, and I have no idea what 
their answer would or would not have been.
    Senator Bond. But the American Airlines management did not 
get involved in negotiations between unions. You were the ones 
who brought up, and you said that you were the ones who 
required ALPA and the flight attendants to give up--ALPA to 
give up its Mohawk-Allegheny rights.
    Mr. Brundage. What we said was, to be accurate, we told 
TWA, Incorporated that we would not conclude, we would not 
finish, the asset acquisition process, that we would not 
purchase the assets or offer the jobs if these provisions 
remained in the TWA contracts. That was a condition to TWA, 
Inc. It was their job to go and resolve those issues with their 
unions. And in fact, at one point, it appeared that TWA was not 
going to be successful and actually began to prepare what is 
called an 1113 petition in their bankruptcy process to ask a 
court to not simply change that provision but to in fact reject 
the entire agreement.
    That was something that, it is correct, it was American's 
condition, but it was a condition put on TWA, Incorporated if 
they wanted this transaction to be concluded.
    Senator Bond. But by the same token, you were actively 
engaged in modifying--the American management was modifying the 
union's agreements. You had to go back and modify the agreement 
with the APA, did you not, to bring the TWA ALPA employees on 
board?
    Mr. Brundage. We did not even need to speak to the APA if 
we chose to simply hire them as new hires. That is within the 
company's purview to do. We went to the APA and said: Look, we 
think it makes sense to do more than that and to do it 
differently, and there are provisions of your agreement that 
control that relationship, so we would like to talk to you 
about modifying that agreement in a way to improve our ability 
to bring the TWA employees on the property. And that is the 
transition agreement that Mr. White referred to.
    Senator Bond. In order to get TWA to accept the offer and 
not to pursue an option in bankruptcy, which they had done at 
least twice previously, representations were made to them about 
the fair and equitable treatment. You represented to them that 
they had to give up their Mohawk-Allegheny protection, and at 
the same time you were telling the TWA employees who were 
actually members of management of TWA and those of us who had 
an interest in it that they would be treated fairly and 
equitably. you really were laying the groundwork to make sure 
that they would not have to be integrated fairly into the 
system. That is what came out, is it not?
    Mr. Brundage. Oh, I disagree respectfully, sir. I believe 
that our commitment was to hire those employees and to provide 
them with credit for longevity for pay purposes and to work to 
create a facilitated process that was fair and equitable. And 
as I said earlier, that was put to the test of an arbitration 
and to an arbitrator in the case of the pilots, and the 
arbitrator clearly ruled that American had met the exact duty 
that you are describing.
    So I guess my opinion of it is maybe less important than 
Arbitrator Bloch's opinion of it.
    Senator Bond. And what about the promise to fence off St. 
Louis, since the management of American made the representation 
that the St. Louis hub, the airplanes, the personnel who 
operated them, the traffic that they generated there, the 
reputation that they had as the crown jewel, and that would be 
protected? Whatever became of that promise?
    Mr. Brundage. Senator, if I can transport myself back to 
the days that we were in the process of trying to acquire those 
assets, I can tell you that in my mind, I saw nothing but an 
extraordinarily bright future, especially in light of the fact 
that American at the time was constrained at Chicago and 
constrained at Dallas.
    As you know, the Congress was dealing with an airspace 
system that was congested. There was no room at airports. We 
had all the problems, and clearly, that was a wonderful 
opportunity for American.
    Fast-forward--two airplanes into the World Trade Center, 
the Pentagon, and a field in Pennsylvania; business travel that 
shrunk up to almost zero; overcapacity in the system. There is 
no way that we could have predicted when we looked at the 
network of American Airlines in 2001 that we would be sitting 
here facing the kinds of trials and tribulations that the 
airline industry faces today.
    I can only talk to my perception and my good fait, and it 
was exactly as you described it, and that is exactly what we 
had intended. And I can only write off what has happened today 
to a much larger circumstance than the integration of American 
and TWA. As you well know, airline workers across the entire 
country have been devastated by this, and there are way too 
many stories like the stories we heard here earlier, and the 
empathy for those folks is unbelievable----
    Senator Bond. What do you say to Ms. Schooling?
    Mr. Brundage. I say to Ms. Schooling that it deeply, deeply 
hurts me. I never, never expected when I signed up to be vice 
president of employee relations at American Airlines that 
shortly after I took that position, I would be in the process 
of laying off more than 20,000 people. It is one of the hardest 
things I have ever done in my life. But, Senator, if we do not 
focus on our turnaround plan, if we do not make a stable 
economic foundation for American Airlines, we will not have 
jeopardized 20,000 jobs across the country, we will have 
jeopardized 100,000 jobs across the country.
    Senator Bond. Well, I think we said at the beginning that 
nobody in the spring of 2001 had any idea of the tragedy. What 
we were concerned about was establishing a policy, a procedure, 
that would be fair and equitable in operation should some 
unforeseen, even catastrophic, occurrence arrive. But at the 
time--and I remember this rather well, I think--seniority 
protection was promised inside the fence. Now, when we were 
told that the TWA employees will be unable to operate out of 
St. Louis, that was, as I understood it, an area where the 
fence was providing a separate seniority list for the TWA 
employees who flew in and out of St. Louis and made that such 
an important hub. That representation was made, and this was 
not an expression, as I understood it, of intent or desire or 
``we would like to''--this was, as I understood it, a ``we 
will, and we are committed to it.''
    Mr. Brundage. Senator, in the first month after the 
transaction, actually, the IAM and ALPA continued to represent 
the former TWA employees who are now employees of TWA LLC. At 
the point in time that the NMB ruled that for labor relations 
purposes, American and LLC were a single carrier, the 
integrated lists for the first time became, for lack of a 
better term, operative, and those integrated lists did contain 
provisions to allow the TWA employees to use their seniority 
for certain purposes at TWA in an exclusive matter--or ``super-
seniority,'' for lack of a better term.
    But again, back to the representations we made at the time 
of the transaction. The seniority issues would be worked out, 
and American would abide by those seniority lists, and the 
contracts only provide one way to reduce force, and that is in 
reverse seniority order. That is the only option that we have 
in terms of reduction in force.
    There is no question that the former TWA folks have been 
severely impacted by these reductions as have all the employees 
who were American employees prior to the transaction. All of 
the American family has been severely impacted, as have all of 
the other airlines in the industry.
    So I too share your concern about the devastation that has 
been caused by all of this, but my focus and the company's 
focus is to return the company to profitability, and these 
folks today who have been furloughed have recall rights. And 
obviously, we need to be very concerned about these folks 
because they are still our employees, and they will be the 
employees, if we are successful, that we call back to work.
    Senator Bond. We certainly wish and hope that the airline 
industry will recover and that they will be hired back, but we 
are very much concerned about where they are.
    Captain White, I would just ask you this. You have 
Allegheny-Mohawk protections. Should, heaven forbid, something 
go wrong, or go even further wrong, with American, and it is 
put in the position where it must be acquired, what would you 
do if you were asked to give up your Allegheny-Mohawk 
protections?
    Mr. White. I would give it up. The short answer--if it is a 
question of hitting the street or going into negotiations, my 
belief is--and I have been a negotiator for quite a while--that 
arbitration shows a failure to negotiate in good faith. And I 
am a believer that you can negotiate.
    I would be happy to take this integration model that we 
have here with the career path progression and use that for any 
integration that I would be subjected to.
    Senator Bond. Captain White, I think that is stunning. 
[Laughter.] I mean, seriously, as far as--at least you all sat 
in a room for 36 hours with ALPA, but as far as I could tell, 
nothing happened. But in terms of the flight attendants--and I 
know you were not responsible for the flight attendants--they 
did not even get in the room, and that really bothers me, and I 
am sorry, I guess we just do not understand, but it does not 
strike me as something that any representative of employees 
would be willing to accept, to get into a situation like this.
    Mr. White. But that was the alternative, sir. A reporter 
asked me--and I feel kind of foolish, because when we did the 
seniority integration--I am a big believer that pilots should 
talk to pilots about seniority list integration--and in fact we 
had some argument about whether or not lawyers should be in the 
room, because my view is that lawyers in the room means 
litigation. And in the facilitation process that the company 
brought forth, we sat down, and we talked to the lawyers, and 
we decided to do the facilitation process, and the mistake I 
made was that I agreed that it would be off the record. So we 
had 2 weeks' worth of negotiations, which I thought were very 
fruitful and in which talking off the record as a negotiator is 
good because it allows you to air ideas without consequences 
down the road and be quoted, etc, or be locked in.
    The ALPA people brought in Dr. Tanin, who I found very 
fascinating to work with, and he has been used before by ALPA 
and is a very intelligent man, and he came up with this career 
path model. In those 2 weeks, we were able to advance the 
methodologies which I thought were good, and I thought that the 
TWA pilots on that merger committee--Mr. Case, I have never met 
before and have never seen him; he said he was involved in the 
process, but I have never seen him before--but the committee 
people that we worked with were very good in advancing their 
case about their concerns about seniority list integration, 
about working conditions as a result of that, and we 
accommodated a lot of those suggestions in our seniority list 
integration. The problem is that it was all off the record.
    So I would say in good faith, I can sit here and say that 
those negotiations did prove fruitful; they did prove to bring 
a lot of the things that the TWA pilots suggested. For example, 
you were asking Jeff Brundage about minimum size. One of the 
last things that we did--and it was after the meetings that you 
involved us in--is we went back to the company and said, 
``Look, it makes sense to us. The pilots have a legitimate 
complaint. What happens if we offer them all the seniority in 
St. Louis, and St. Louis shrinks to zero? It made sense to us, 
brought up by their pilots.''
    So what did I do? I went to the company and said, Give me a 
minimum percentage. And the company said, We intend to keep it 
there, and I said, Put your money where your mouth is. And that 
is how we have the 30 percent rule in there now.
    So the short answer is that American Airlines has to keep 
that St. Louis hub contractually in relation to Dallas and 
Chicago, so in Missouri, you have those protections because I 
put it in the contract. I did not have to, but it was a 
suggestion that they did. And that is the kind of negotiating 
that I tried to do, and those are the things that we put in to 
try to protect the interests of the TWA pilots.
    Senator Bond. Well, that part we appreciate, no question 
about that, because that is important.
    Mr. White. Yes, sir.
    Senator Bond. Senator Talent, you have a couple more 
questions.
    Senator Talent. Yes, briefly.
    Mr. White, I am going to ask you the same thing I asked Mr. 
Brundage. Would you be willing to sit down and talk with the 
company about how this might be made more equitable for the 
former TWA employees?
    Mr. White. No, sir, I would not. I have a duty of fair 
representation to all pilots, and I would be subject to a lot 
larger group lawsuit--plus the fact that we feel that the 
integration that we did is an equitable solution based on the 
career path model developments that we did based on Dr. Tanin's 
ideology. So we think that we will hold up on that.
    Senator Talent. OK. I am going to say that I appreciate 
this hearing, and I appreciate you two coming here. I know it 
has not been easy.
    I am going to tell you what I think happened, and you guys 
tell me if you agree with me, and if not, why I am wrong. I 
think the company's officials anyway say this as a really good 
deal. You said that a little while ago, Mr. Brundage--now, you 
did not anticipate September 11, and that certainly upset all 
of our expectations. I do not think you saw this as a rescue so 
much as an opportunity to really enhance American Airlines' 
prospects.
    You both said, Well, we did not have to accept the TWA 
employees--you could have traded them as new hires--and as a 
matter of raw economic power, I do not know whether that is 
true or not, but I think what is also true is that had you made 
it clear that that is how you were going to treat them, as new 
hires, or in fact had you made clear that they were going to 
end up where the ended up on the seniority list, whatever the 
economic power you may have had to do that, you would have had 
very strong opposition to the buyout on those terms from the 
Missouri and New York congressional delegations--of which I was 
not a part at the time, so I am sort of free to speculate on 
it.
    So what happened was that promises were made, perhaps vague 
promises, but promises were made that would have led a 
reasonable person to believe that more would be done for these 
people than was done. I mean, when you make a statement, ``For 
its part, American Airlines agrees to use its reasonable best 
efforts with its labor organizations representing the airline 
pilots and flight engineers crafts or classes to secure a fair 
and equitable process for the integration of seniority,'' and 
the company then not only does not do that, does not 
aggressively do that, but then pushes changes that makes their 
protections worse--and I understand what you said about why you 
did it, Mr. Brundage, but if I am reading that language, I am 
thinking they are really going to make an effort to do this 
notwithstanding whatever raw economic power they have, and then 
afterward, we find out that the people are being treated this 
way. That is my view of it, and if that is wrong, I would sure 
like you all to set the record straight--and I am going to let 
you do that. I am not going to cut this off.
    Mr. White. I will take the first shot at that, sir, if you 
do not mind. I was elected chairman of the merger committee 
toward the end of January, and we arranged our first meeting 
with the TWA pilots somewhere around February 7, 8, or 9, 
somewhere in that time frame. We asked for 3 days, and I think 
we got one.
    At that very first meeting, I said very clearly: We will 
not do date of hire--will not do it, will not consider it, will 
not be there. And I also said very clearly that we will not do 
Allegheny-Mohawk, and we will not do arbitration. That was in 
February, sir, before they waived their Allegheny-Mohawk 
provisions.
    At the end of February, we had scheduled three different 
bargaining sessions of 3 days each, most of which were 
canceled, but on March 1, we gave them our initial proposal 
which proposed to put somewhere in the neighborhood of 700 or 
800 pilots on our seniority list.
    I was very clearly with them, sir, very clear, and that was 
before they waived their Allegheny-Mohawk.
    So I would like to say that I was very straightforward and 
honest with them up front about where APA was. Now, I think 
that in discussions with them and the methodology that Dr. 
Tanin put forward, we changed it because we had looked at other 
mergers where they had put 767 captains behind 767 captains, 
and that was our first proposal. And we ended up putting 767 
captains behind our 777 captains. And that was because of Dr. 
Tanin's methodology, and we took a look at that, and we agreed 
with that. But we were very straightforward and honest with 
them up front.
    So I understand what you are saying, but they had an 
opportunity to meet with us several times before they waived 
it. They had no doubt in their minds that we were not going to 
do date of hire--no doubt. I was as straightforward with them 
as I am with you now, sir. That is how I like to deal.
    Mr. Brundage. Senator, I will just refer back to the fact 
that the RLA has a dispute resolution process, and it is pretty 
well-respected and is a prerequisite to even being able to get 
a matter into the courts.
    The commitment that we made was a written commitment. The 
actions that we took were well-documented. I have spent a 
considerable amount of time testifying in an arbitration 
process as to the details of what took place surrounding that 
commitment to use our best efforts.
    I will not offer my opinion. I will stand by the opinion of 
an independent neutral arbitrator who listened very carefully 
to all of the testimony--all of the testimony, both from the 
ALPA committee, from the company, who read the documents, who 
had access to all the factual information--and I will be happy 
to submit to you the arbitrator's award on point.
    Senator Bond. Mr. Brundage, Ms. Cooper said that you had 
first come to an agreement with the American Airlines flight 
attendants' organization, announced it before you ever talked 
with her or any of the other flight attendants. Is that 
accurate?
    Mr. Brundage. Sir, we negotiated separately with the TWA 
LLC flight attendants because the representation was different. 
The TWA flight attendants at the time were represented by the 
IAM, and this all occurred prior to the NMB single-carrier 
ruling.
    So as a result, yes, the TWA LLC labor folks were dealing 
with the TWA LLC employees represented by the IAM, and the 
American labor folks, a completely separate group, were working 
with the American flight attendants, represented by the APFA.
    Now, I do not know that this was a negotiation. I do know, 
because I have spoken to this about him personally, that Robert 
Roach, who is the general vice president of the IAM, actually 
attended a meeting of the APFA board of directors for the very 
purpose of discussing seniority integration between IAM and 
APFA.
    I also know that I hired Richard Casher, another respected 
arbitrator and facilitator, and Mr. Casher was employed for the 
purpose of attempting to facilitate those discussions between 
the IAM and the APFA.
    Now, Senator, I was never----
    Senator Bond. Was there any discussion between the two?
    Mr. Brundage. I honestly cannot answer that question. I was 
never party to a discussion. I do know that Mr. Casher showed a 
great degree of frustration in his ability to get the parties 
together. I also know that during that period of time, I do not 
believe that either of the parties, the IAM or the APFA, ever 
moved from their opening position.
    So if my assumption is correct that neither of them ever 
moved from their opening position, I think it is fair to assume 
there was probably not much negotiation.
    Senator Bond. So it was enough for American Airlines under 
the fair and equitable undertaking to pay several hundred 
bucks, maybe a grand, to a facilitator and say, ``Good luck, 
that is it''?
    Mr. Brundage. Well, I can tell you that my efforts were 
significantly greater than that, personally, in trying to 
encourage the APFA to meet with the IAM representatives.
    Senator Bond. What about the ticket agents, passenger 
agents--how were they integrated.
    Mr. Brundage. I think, as you know, they were represented 
by the IAM at TWA and at American, they were not represented, 
and as a result, the certification was extinguished at the 
point that we became a single carrier for labor representation 
purposes, and we created a ``protected cell,'' for lack of a 
better term, at St. Louis for those employees. There were some 
American employees, a small number of American employees, who 
had the first seniority slots, but then the balance of the 
former TWA employees had access to all of the jobs in St. 
Louis, both at St. Louis and those who were not in St. Louis, 
and the ones not in St. Louis were put on a list so that they 
had priority ahead of any American employee to bid back into 
St. Louis. There was also Colorado Springs and a reservation 
office that had that same protected cell. But they were given 
the 4-10 hire date, and they were provided, again, full credit 
for their longevity at TWA--and I think we have skimmed over 
that a couple of times, but that is a pretty significant 
economic commitment, and I agree with the Senator, this was not 
something that we took lightly, and it was not just purely an 
economic issue or an issue to simply get through the process in 
the Congress.
    American clearly recognized that we needed to try to do 
things to have a workforce that was going to be behind us, and 
we were not going to be successful unless that occurred, so we 
provided full credit for that longevity for those employees.
    Senator Bond. Mr. Brundage, Captain White, we appreciate 
the testimony and the time that you and all the other witnesses 
have put in today. As I stated earlier, you understand that the 
record will be open so that additional questions may be asked 
for the record. A number of our colleagues are following this 
and may have questions, and we would expect that you could 
respond to those questions in a full and timely manner. Is that 
agreeable with you, gentlemen?
    Mr. White. Yes, sir.
    Mr. Brundage. Yes.
    Senator Bond. Both of you agree.
    Again, this is a very important subject, and we obviously 
have not come to agreement, but I express my thanks to all the 
parties who have participated and presented their views.
    If there is no further business to come before this 
committee, the committee stands in adjournment.
    [Additional material follows.]

                          ADDITIONAL MATERIAL

                 Prepared Statement of Theodore A. Case

    Mr. Chairman, and Members of the Committee: Chairman Bond and 
Members of the committee, I sincerely appreciate the opportunity to 
appear before you today. On behalf of my fellow pilots who were 
formerly employed by Trans World Airlines (TWA), we welcome the 
opportunity to testify on the record and under oath about the whole 
story, the real story behind the most shamefully flawed seniority 
integration in United States airline history.
    Many of you are already familiar with some of the facts of this 
crisis: to date thousands of ex-TWA workers--including ground workers 
and flight attendants--and their families have suffered as a result of 
layoffs; the great state of Missouri, and the entire St. Louis region 
has felt a sharp economic shock and emotional trauma caused by these 
massive job cuts. The flying public--already reeling post 9/11--has 
been faced with drastic schedule and service reductions due to these 
cuts.
    I believe, like so many of my colleagues, that we became pilots to 
serve the flying public--safely and responsibly--to the best of our 
ability. I am honored to have been selected by my fellow pilots to 
speak on their behalf today.
    I am a married father of two, a graduate of Georgia State 
University and have served as a union representative of the TWA pilots 
in multiple capacities.
    My interest in flying began as a young boy watching my father fly 
as a pilot for Eastern Airlines. I began flying when I was 20, I became 
a commercial pilot in 1983, and began flying for TWA in 1990. I loved 
my job; I respected my employer; and above all, I believed in my 
customer service mission.
    My world--and the lives of all of my former TWA colleagues--
dramatically changed in April 2001. That is when American Airlines 
acquired TWA. As part of the acquisition, American offered me and 
nearly all former TWA pilots' employment, promising to: ``provide 
employment benefits and post-retirement benefits to all employees 
actually hired by American, at levels substantially no less favorable 
than hose benefits provided to American's similarly situated 
employees.'' (From the ``Asset Purchased Agreement''--Article X--
EMPLOYEE MATTERS 10.1 Hiring Obligations. Upon the occurrence of the 
Closing, Purchaser shall (i) offer all of Sellers' union employees (all 
of whom are listed on Schedule 10.1(a)) (other than personnel who (A) 
have previously been terminated by Purchaser or an entity controlled by 
Purchaser or (B) would not be qualified for employment under 
Purchaser's general hiring policies as in effect at Closing) employment 
by Purchaser or one or more entities controlled by Purchaser at 
compensation levels substantially equivalent to those currently enjoyed 
by similarly situated employees of Purchaser or such controlled entity, 
(ii) offer employment to certain members of TWA's executive management 
and those non-union employees listed on Schedule 10.1 (b) on a case-by-
case basis at Purchaser's sole discretion and (iii) provide employment 
benefits and postretirement benefits to all employees actually hired by 
Purchaser pursuant to (i) and (ii) above at levels substantially no 
less favorable than those benefits provided to Purchaser's similarly 
situated employees. Any Seller employees to be hired by Purchaser or an 
entity controlled by Purchaser in accordance with this Section 10.1 
will be hired in accordance with terms and conditions established by 
Purchaser or such entity (and, where applicable, in accordance with and 
pursuant to collective bargaining agreements relating to employees of 
Purchaser or such controlled entity).
    10.2 Union Matters. All offers of employment made by Purchaser in 
accordance with Section 10.1(i) above and all benefits to be provided 
pursuant to Section 10.1(iii) above will be conditioned on acceptance 
by all such employees of Purchaser's work rules then in effect and in 
effect after the Closing Date from time to time that are generally 
applicable to similarly situated employees of Purchaser. Purchaser and 
Sellers agree to encourage their respective unions to negotiate in good 
faith to resolve fair and equitable seniority integration. Prior to 
Closing, TWA shall amend all existing Collective Bargaining Agreements 
relating to any present or former employee of TWA to provide that (i) 
scope, successorship, and benefits provisions of the Collective 
Bargaining Agreements are not applicable to or being assumed by 
Purchaser as part of or as the result of the transactions contemplated 
by this Agreement, and (ii) consummation of the transactions 
contemplated by this Article X will not violate or breach in any manner 
any provision of any Collective Bargaining Agreement (collectively, the 
``CBA Amendments''). The sale closed and we all became employees of a 
newly-fashioned entity--not an airline--but a shell corporation called 
TWA, LLC, a wholly-owned subsidiary of American.)
    Our seniority story is quite atypical, when considering other major 
airline seniority integrations. In the vast majority of previous major 
airline mergers pilot seniority integration was based upon a date of 
hire (DOH) basis or some type of DOH ratio with conditions and 
restrictions to protect the pre-merger career expectations of both 
pilot groups
    Despite my more than 13 years of TWA seniority, I was given a new 
seniority date with American of April 10, 2001, the day the transaction 
closed--all of my years of earned service up to that date were 
obliterated from my record. I am now facing a July 2 layoff. Adding 
insult to injury is the fact that American hired pilots off the street 
on April 9, 2001 (one day before the acquisition closed), and these new 
hires continue to fly today. Indeed, from the date the acquisition was 
announced until the date the sale closed, American hired over 300 new 
pilots, all of whom were given more seniority than the vastly more 
experienced TWA pilots. Today there are more than 1200 TWA pilots 
scheduled for furlough or unemployed and on the street. All of this 
because of the way our seniority was handled, or mishandled.
    Why do we care so much about our seniority? Seniority is the 
bedrock of employment benefits with any career. Seniority is the 
American dream for the American worker. In the airline industry 
seniority is everything, determining: where you live, where you fly; 
what you fly; whether you fly as captain or first officer, pay rates, 
and of course, the order in which you lose your job, should a layoff 
occur.
    I wear an American Airlines' uniform, I am covered under American's 
health and retirement benefit plans, and fly American aircraft on 
American Airlines flights. Despite those facts, my fellow TWA employees 
and I have been treated as nothing more than ``furlough fodder'' to 
protect the jobs of the employees hired at American prior to April, 
2001. Why this inconsistency? It was all part of the ruse, the 
conspiracy between the world's largest airline and two powerful pilot 
unions to crush the ex-TWA employees, and take their jobs. Those two 
unions were attempting to merge into one, and the TWA pilots stood in 
their way. They had no interest in representing or protecting USE 
pilots.
    By all accounts, the cost-cutting, experience--downsizing, 
seniority--busting scheme is working. By July 2nd, fewer than 900 of 
the original 2349 TWA pilots will remain American Airlines employees. 
Meanwhile, every single one of the approximate 11,000 pilots who were 
on American's payroll as of April 9, 2001, has kept their jobs. This 
integration is much more akin to a process of segregation and 
discharge, rather than an efficient and seamless combination of 
employee groups. No reasonable person could say this integration was 
fair and equitable. It was a travesty. Indeed, Jeff Brundage, VP 
Employee Relations for American, stated in October 2001 to the TWA 
pilots, that the seniority cram down was a ``s----t sandwich'' that the 
TWA pilots had to eat.
    And this is only the tip of the iceberg.
    Just last week American Airlines released ``The Master Reshuffle 
Bid', an announcement of American's pilot staffing for the next 12 
months. Without getting too technical, this document (which I offer 
into the record) shows that by May 2004--in less than one year--only 
27% or approximately 630 of the original 2,349 TWA pilots will remain 
with American. The TWA pilots slated to lose their jobs by then include 
large numbers of TWA Captains, with 15 plus years of experience at TWA 
and American. These massive staffing reductions mean, that not only 
will the St. Louis hub dramatically shrink to a fraction of its present 
size (not to mention its size prior to American's acquisition of TWA), 
but hundreds more TWA pilots will lose their jobs.
    The fact is that over 1,200 TWA pilots were ``stapled'' to the 
bottom of the seniority list. That is, TWA pilots, including TWA 
Captains hired as early as March, 1989 were stripped of every bit of 
their seniority, and given a seniority date of April 10, 2001. Captain 
Mike McFarland, the most senior TWA Captain, was stripped of 21 years 
of seniority. Captain McFarland was hired in 1964, but he was 
integrated with the 1985 hire pilots of American Airlines!
    At the same time this is happening to the former TWA pilots, the 
more junior American Airlines pilots will invade the shrinking TWA St. 
Louis domicile, further displacing the jobs of former TWA pilots and 
encroaching on what can no longer be classified as a ``hub'' in St. 
Louis.
    Although American pilots claim to be ``sharing the pain'', more 
than 87% of pre-transaction American pilots will retain their 
employment while only 23% of the former TWA pilots will remain employed 
by May 2004.
    It is an accepted fact among airline industry experts that one of 
the most important aspects of airline mergers is the seniority 
integration of the merged work forces. This issue has been contentious 
in many mergers, however in the vast majority of previous combinations, 
agreements were reached or arbitrations settled the disagreements.
    The TWA-American integration is a textbook example of what happens 
when the process spins wildly out of control. I previously outlined the 
outrageous inequity in the way seniority was handled. But you also must 
understand the impact this is having on employee morale and cooperation 
in a business where teamwork means everything. Just last week an 
American Airlines pilot (whose name I will withhold publicly but gladly 
provide to the committee upon request), apparently incensed over this 
very hearing, posted an email threatening to poison the food of former 
TWA pilots. I offer a copy of this email to be placed into the record. 
It is an excellent example why seniority integrations, to be 
successful, must be done fairly and equitably.
    It is crucial to know that when American started courting TWA, it 
was insistent on two preconditions to acquisition: 1) American required 
that TWA declare bankruptcy; and 2) TWA's unionized workers amend 
certain provisions contained in their collective bargaining agreements. 
Those provisions, known as Allegheny/Mohawk LPP's, would have allowed 
us to mediate and arbitrate our seniority integration should the 
parties not agree to a fair integration.
    Allegheny/Mohawk provisions had been around for many years and 
although the Civil Aeronautics Board and its requirement to apply LPP's 
in seniority integrations became part of a bygone era with 
deregulation, airline managements and unions continue to abide by these 
``LPP's'' generally writing them into their collective bargaining 
agreements; until, of course the largest airline combination in 
history.
    While the TWA unions contemplated American's demands to amend our 
contracts, American Airlines directed TWA Inc. to file a motion under 
Sec. 1113 of the bankruptcy code to strip us of those provisions. This 
drastic assault was a result of demands made by American's own unions. 
In our case, American's pilots' union, the APA, demanded that it alone 
control the seniority integration for all pilots. American agreed to 
give APA unfettered control over the integration and structured their 
purchase offer to solidify that control.
    In effect American empowered their unions to treat the TWA 
employees unfairly, by requiring these amendments to our protective 
provisions. American and its unions held a gun to the heads of the TWA 
employees. Not coincidentally, own union, ALPA, was engaged in merger 
talks with the APA at the very time our jobs were on the line. In 
exchange for our acquiescence to American's coercive demands, the 
Carty-led American Airlines promised to use its ``reasonable best 
efforts'' to help us work out our integration with the APA. We believed 
federal law offered some insulation from mistreatment because 
American's promise became a substitute for those exchanged LPP's. And 
given those assurances, the TWA pilots attempted to negotiate with our 
American Airlines counterparts, unaware of the wholesale slaughter 
ahead.
    We now know we were duped. American considered its global promise 
of ``reasonable best efforts'' to mean simply one thing--writing the 
check for a ``facilitator''. The APA dictated the facilitation's terms 
and conditions down to the last detail. Those restrictive conditions 
stripped the facilitator of all of his authority, and any meaningful 
ability to bring the parties to consensus. TWA pilot representatives 
met with the APA on multiple occasions, including meetings in the 
presence of the facilitator in the summer of 2001, but the discussions 
went nowhere. This is not surprising because we now know American and 
APA had already cut their own deal, which not only protected every 
American pilot from furlough, but which guaranteed the American pilots 
the ability to cannibalize the jobs of the TWA pilots for literally 
decades to come! The APA had no reason to negotiate in good faith, or 
to deal fairly with the TWA pilots because they rigged every aspect of 
the game in advance. No agreement was reached and the discussions 
failed. During and after this period, we asked to bargain directly with 
our employer, American, over our seniority. American told us that it 
was not our employer, and that we had to talk to--you guessed it--the 
wholly owned subsidiary shell corporation, TWA LLC. At other times 
American stated that the seniority discussions were out of their 
control, and were to be entirely the purview of the employee groups 
involved. We went to TWA LLC, and were told that only American could 
talk about our seniority. Neither company would talk to us regarding 
seniority. We believed then, and we believe now that American and TWA 
LLC were one and the same; they were ``alter egos'' of the same 
company. The sham has now been exposed: American created this wholly 
owned subsidiary in part to avoid its bargaining obligations to us; 
creating a ``shell game'' forcing us to dance around in circles, while 
enabling their employee groups to cherry pick our seniority, and our 
jobs.
    There are numerous sidebars and footnotes to this integration 
atrocity. For example, the imposed integration, known as Supplement CC 
to APA's contract, eviscerated our seniority. An important fact tying 
the seniority deal to the corporate subterfuge is that Supp. CC was 
announced on November 8, 2001. The very next day APA filed with the 
National Mediation Board to declare TWA LLC and American a single, 
integrated carrier. APA waited until it had cut its final deal on 
seniority with American, and then made its move to implement that deal.
    At that same time, American closed every TWA pilot domicile with 
the exception of St. Louis. Pilots who previously lived and flew on the 
East and West Coasts for decades were forced to displace to St. Louis.
    Please remember these key words--fair and equitable--in considering 
this evolving picture. Seniority has been wiped out. American forced 
all of the TWA pilots out of our jobs in the cities where TWA had 
operations, ordered us to fly exclusively from St. Louis, and gave our 
jobs in those cities to the American Airlines pilots. Once in St. 
Louis, the TWA pilots were stripped of our international routes, and 
many of our higher paying positions. Meanwhile, much less experienced 
American pilots continue living in their city of choice and enjoying 
schedules, captaincies and our routes overseas, as if no merger ever 
occurred.
    To put this in a personal perspective, a good friend of mine, Sally 
Young, a single mother of two and a 14 year-veteran former TWA Captain, 
will lose her job on July 2. I too, will lose my job on July 2 after 16 
years as a career jet airline pilot, with over 13 years of seniority 
with TWA and American Airlines. American gave me a seniority date of 
April 10, 2001. On April 9, 2001, American hired Mr. B.D. White. Today 
Mr. White, who now has 2 years and 2 months of American Airlines 
experience and seniority, continues to fly while Ms. Young, myself and 
hundreds more former TWA pilots like us are being furloughed.
    In February 2001 many of you heard Don Carty, former AMR CEO state 
before the U.S. Senate Committee on Commerce, Science, and 
Transportation, his commitment to ``adding TWA's 20,000 employees to 
the American Airlines family.'' A willing commitment ``to the 20,000 
TWA employees and their families that no one else would make.''
    Obviously Mr. Carty said what the Senate Committee and the 
Bankruptcy Court needed to hear to approve the deal, with no intention 
whatsoever of living up to those commitments.
    Members of the committee, we are not here seeking sympathy or pity. 
We are here in the name of justice and fairness. We are here in hope 
that Congress can rectify this atrocity and act so this tragedy can 
never again be repeated in another workplace to the detriment of 
another working man or woman.
    We ask only that our all important seniority rights be handled 
``fairly, and equitably,'' as promised. No more and no less. I hope you 
and the American people can now clearly see that our seniority was 
handled unfairly and inequitably by an airline that can only now be 
called Un-American Airlines.
    Thank you for the opportunity to speak before this committee today. 
I am happy to answer any questions.

                  Prepared Statement of Sherry Cooper

    Senator Gregg, thank you for allowing me to testify before the 
Senate Subcommittee on Health, Education, Labor and Pensions concerning 
the TWA/American Airlines Workforce Integration. Senator Bond, thank 
you for chairing the hearing on this all-too-important issue. To be 
perfectly candid with you, there was no integration. In fact, what 
American and the Association of Professional Flight Attendants have 
done is to arbitrarily discriminate against former TWA employees and 
segregate them to the bottom of the seniority list. There has been no 
integration.
    On May 3, 2003, I celebrated a milestone in my flying career. I 
began my 28th year as a Flight Attendant. That same day, instead of 
receiving recognition from American Airlines, I received a furlough 
notice. My career in the airline industry was over.
    Perhaps more than anyone else here today, I held a unique position 
at TWA. Apart from the fact that I am a TWA line Flight Attendant, I 
also served on the TWA Board of Directors from 1998 to 2001 as a Labor 
Director, representing the International Association of Machinists and 
TWA Flight Attendants. I directly participated in the approval of the 
sale of TWA to American Airlines.
    On January 9, 2001, I received a telephone call from Mr. Bill 
Compton, former President of TWA to tell me about the ``great deal'' 
that was waiting for the TWA employees. During that conversation, Mr. 
Compton stated the following: (1) That all TWA retirees would be 
protected; (2) That TWA unionized employees would be guaranteed jobs 
and greater job security; and (3) That TWA employees would receive 
greater pay and benefits.
    In summary, the TWA employees would be better off through the 
agreement he had reached with American Airlines. There was only ``one'' 
catch. Even though American and TWA had struggled mightily to come up 
with a straight merger transaction, we would have to file for 
bankruptcy for one reason--and one reason only. The reason was Carl 
Icahn. As many of you may recall, Carl Icahn had been prior owner of 
Trans World Airlines. In negotiating his departure in 1994, TWA had 
been required to enter into a series of ticket arrangements under which 
Mr. Icahn had been allowed to sell deeply discounted TWA tickets 
through a corporation he owned known as ``Karabu.'' Mr. Compton advised 
me that the only way that American could see fit to do the deal was to 
take Karabu ``out'' through bankruptcy. And so, the TWA Board of 
Directors met the following week to hammer out the terms of the deal 
with American Airlines. Thus begins the biggest myth of all--that 
American Airlines saved TWA in bankruptcy.
    I want to make this perfectly clear. At the time of the agreement, 
TWA was NOT in bankruptcy. As a member of the Board of Directors, we 
agreed to file for bankruptcy in order to eliminate the Karabu ticket 
agreement.
    Quite honestly, as a Labor Director, I wanted some assurances that 
TWA employees would receive protection. The Asset Purchase Agreement 
guaranteed that all unionized employees would be employed by American 
Airlines. Because of the well known problems that had surfaced with the 
Reno acquisition, American Airlines announced that it would take its 
time to ensure a smooth and orderly transition. Mr. Carty, then CEO of 
American Airlines, promised that the TWA employees would receive the 
same ``benefits'' that the American Airlines employees received. Our 
union contracts would need to be modified to ``mirror'' those contracts 
of the American employees. Because American flight attendants did not 
have Allegheny-Mohawk Labor Protective Provisions, our contract would 
have to be modified to match theirs. Importantly, both American 
Airlines and TWA management insisted that all seniority integration 
issues would necessarily be worked out between the Unions. It was 
agreed that the Unions to ultimately work out how the seniority would 
be integrated. American Airlines agreed to hire an independent 
facilitator to arrange meetings between the Unions and use it best 
efforts on behalf of the TWA employees. It promised that there would be 
a ``fair and equitable'' process and that it would adopt the 
``process'' that came out -of the facilitated talks.
    The American Flight Attendants numbered in excess of 22,000 
employees. By contrast, TWA Flight Attendants totaled approximately 
4,200 individuals. The merger of a small group of senior Flight 
Attendants would have relatively little impact on the overall picture 
because most flew out of St. Louis, MO--a non American Airlines base. 
The balance flew out of New York. Unlike other carriers who went out of 
business whose employees then sought employment at other airlines, this 
would be an orderly transaction because the TWA employees were coming 
to the acquisition with planes, routes, airport slots, reservation and 
maintenance facilities, and the prized St. Louis hub. It was--for all 
intents and purposes--our dowry.
    It is well chronicled that Don Carty and American Airlines touted 
the TWA purchase as a great acquisition. In a powerpoint presentation 
to its own Board of . Directors, American management happily noted that 
it acquired TWA for far less than it was worth. In his own words, Mr. 
Carty stated that ``American gains many great assets from TWA, but none 
as important as its talented team of employees.'' Quite clearly, the 
team of employees were highly trained and experienced professionals. He 
threw a barbecue for the TWA employees. Little did we realize at the 
time--but the TWA employees were the entree at the barbecue.
    Instead of holding talks for the two Unions--the Association of 
Professional Flight Attendants and the IAM--American Airlines engaged 
in secret talks with APFA--it negotiated an agreement with APFA that 
all TWA Flight Attendants would be stapled to the bottom of the APFA 
seniority list. American broke its written agreement with the TWA 
Flight Attendants. At the same time, APFA had agreed that it would 
allow those former TWA Flight Attendants based in New York and in St. 
Louis that they would receive some job protection in the form of a 
fence. In other words, we would retain our combined TWA and AA 
seniority as long as we remained in our two (2) hubs. We would be 
allowed some sort of job protection in those bases. By contrast, when 
TWA purchased Ozark, all former Ozark Flight Attendants received full 
seniority. Even APFA, when American Airlines acquired both Air Cal and 
Trans Caribbean, agreed that those Flight Attendants retain credit for 
their years of service at those carriers. Ironically, even American 
Airlines voluntarily provided full credit for seniority to TWA non-
union and management personnel.
    Following the aftermath of September 11, American Airlines decided 
to shut down the New York TWA operation. It transferred the former TWA 
New York flights to more junior AA Flight Attendants. American Airlines 
gave New York Flight Attendants two (2) options: They could be 
furloughed to the streets without a paycheck or accept a transfer to 
the remaining TWA base in St. Louis. Many of our former New York Flight 
Attendants elected to transfer to St. Louis. After all, we would retain 
job security as long as TWA, LLC flights continued to operate out of 
St. Louis. We were wrong. American and APFA first violated its own 
agreement by transferring St. Louis International flights to more 
junior American Flight Attendants. They have now determined that all 
remaining TWA, LLC Flight Attendants--all with more than 27 years of 
seniority--will be furloughed effective July 2, 2003. Eighteen hundred 
(1800) Flight Attendants with seniority totaling more than fifty 
thousand (50,000) years of service to the airline industry will lose 
their jobs. They will be joining 2,400 other TWA Flight Attendants. At 
the same time, American Flight Attendants with less than three (3) 
years seniority will be flying on TWA, LLC aircraft out of St. Louis.
    To add insult to injury, both American Airlines and APFA agreed as 
part of their recent concessionary agreement that the scheduled July 2 
furloughees will hit the streams with no severance pay. For the first 
time in the history of American Airlines, Flight Attendants will lose 
their jobs without any cushion of severance pay. What makes it even 
worse is that for the first time in American Airlines history, 
employees losing their jobs will lose Company-paid medical benefits. 
Instead of providing 90 days of medical coverage, American Airlines 
will only be providing 30 days of coverage. For the most part, the 
group about to be furloughed are women--fifty and over--who are primary 
caretakers for their parents, children, and grandchildren. They will be 
facing an uncertain future with one thing for certain--personal and 
financial ruin. At the same time, American admitted that it was funding 
pension plans for 45 of its top executives. It had also approved 
``retention'' bonuses for its senior executives--however--due to the 
public outcry, it has abandoned the retention bonus program. Recently, 
the American Airlines Board of Directors expelled Don Carty. By 
anyone's definition, he left in disgrace due to his failure to be 
honest with employees about senior executive pay packages and 
incentives.
    American Airlines has asked you to believe that all that has 
transpired with TWA has been above board and in the open. Can you 
honestly believe a corporation in light of its most recent 
shortcomings? I would hope not. American has told you that the no one 
anticipated the tragic events of September 11. It is one thing to make 
financial decisions to recover from our greatest tragedy. It is quite 
another to capitalize on that event at the expense of former TWA 
employees.
    Needless to say, we have filed lawsuits against both American and 
APFA. Among other grounds, we are suing American Airlines for fraud. 
The most recent filing--submitted this week--concerns their concerted 
effort to eliminate all former TWA Flight Attendants based in St. 
Louis.
    It should be clear to everyone in this room that when American 
Airlines promised ``two great airlines--one great future''--it was a 
lie. Instead, it undertook a pattern of activity designed solely to 
eliminate the former TWA employees that it, once called TWA's greatest 
asset.
    When American Airlines came to Congress. asking for economic help 
following the aftermath of September 11, you stood up and gave 
financial assistance to the carrier. The assistance American received 
was based--in part--on the TWA route structure. When American Airlines 
sought reimbursement for security expenses at airports, the money it 
will be receiving will be based--in part--on the TWA, LLC operation. At 
the same time, American has sought--and received--financial assistance 
from you--based on what I and my fellow employees ``brought to the 
table,'' it has thrown us aside arguing that ``we should be grateful 
that we have a job.'' We have no job. American has taken our jobs--our 
routes--our planes--our St. Louis Hub--and has handed us a pink slip.
    I am a taxpayer having paid taxes for more than thirty-five (35) 
years. Like almost all Americans, I have gone to work on a daily basis 
and performed a meaningful job for my employer. I. have expected a fair 
wage for a fair day's worth of work. I have watched my tax dollars be 
spent on both social programs and weapons. I have watched my tax 
dollars be used to assist troubled corporations and rightfully help the 
family farmer. I have asked for nothing in return but that I be: 
treated with decency and fairness. Both of those- are tragically--
horribly--missing in the TWA American Airlines workforce integration. 
It has been reported that there is nothing that this Committee can do 
to help right this wrong. My question is simpler Why not? We travel 
halfway around the world to fight for freedom At the same time, we are 
witness to an incredible injustice in our own backyard only to be told 
that it is beyond our control. America is the greatest nation on earth. 
What makes it so great is that it has long-championed the rights of 
individuals. It has placed its highest value on human life. It realizes 
that a nation is best known for how it treats its most vulnerable 
citizen not its most powerful. A country prospers because of the 
everyday citizen--not because of its CEO's, Union Presidents, or--
even--U.S. Senators. On behalf of the more than 20,000 former TWA 
employees, I want more than just your sympathy. I want--and demand--
that you honor all that is right about America. Intercede on our behalf 
and restore the process to a fair and equitable seniority integration.

                  Prepared Statement of Jeff Brundage

    Mr. Chairman and Members of the Committee: Thank you for your 
invitation to speak on behalf of American Airlines. I am Jeff Brundage, 
Vice President of Employee Relations. I joined American Airlines in 
December 1999 after a career as a pilot and union leader. At American I 
was actively involved in the labor integration plan when the company 
acquired the assets of TWA in the spring of 2001.
    As you know, these are extraordinarily difficult times in the U.S. 
airline industry. Since the events of September 11, 2001, the industry 
has lost more than 100,000 jobs and has suffered perhaps more than any 
other industry from the economic downturn, the effects of war and the 
threat of terrorism on travel.
    So we certainly understand and appreciate your concern about the 
jobs lost and the effect on the people and the communities you 
represent.
    Today, I want to use my time before you to offer a little 
background on American's acquisition of TWA's assets during the early 
part of 2001 and our efforts to provide jobs to 20,000 TWA employees 
who would have otherwise been facing the liquidation of their company.
    It was always our intent to provide jobs to the TWA workers until 
their retirement, and we did everything we could to put our newest 
employees on par with all other American employees. In fact, we 
provided pay and benefits.that represent one of the most generous 
employee packages in the history of corporate acquisitions.
    Before TWA filed bankruptcy in January of 2001, it approached other 
major U.S. airlines about entering into some kind of transaction 
whereby TWA could continue to operate. Only American was willing to 
make a comprehensive proposal that saved the jobs of many TWA 
employees.
    Under the asset purchase agreement, American voluntarily agreed to 
provide employment to all unionized TWA employees.
    The Bankruptcy Court found American's offer to be the only 
qualifying offer and approved the asset purchase agreement. The 
alternative was liquidation and the immediate unemployment of 20,000 
TWA workers.
    This is clearly and thoroughly documented in the written testimony 
of the Allied Pilots Association. As they point out, every court that 
has reviewed those transactions has agreed that there simply were no 
alternatives available to TWA workers.
    Our goal was to successfully integrate the two airlines' workforces 
and combine our forces to build the largest, most successful airline in 
the world.
    And we knew that we would not be successful unless we had the 
goodwill of the TWA employees. Indeed, from the very beginning, we 
offered TWA employees compensation and benefits that rewarded them as 
if they had worked their entire career at American.
    TWA employees were not brought on as new hires, and lost no pay, 
benefits, accrued vacation time or sick leave. We gave TWA employees 
full credit for their services for these purposes.
    As of January 2002, we put all TWA employees on American's pay 
scale. Indeed, because TWA pay rates had been significantly lower than 
those at American, the majority received a substantial pay increase.
    TWA employees hired by American also received the same travel 
privileges, pension benefits and retiree benefits we offer all American 
employees.
    Finally, although we were under no obligation to do so, we agreed 
to assume $515 million in accrued liability on the books of TWA for 
retiree medical, providing medical coverage to both existing retirees 
of TWA as of April 9, 2001, who may otherwise have had no coverage, and 
future retirees among the employees who came to American.
    It is important to note again that this was not a merger. As we 
began the asset acquisition process, we had long-standing obligations 
to our existing workforce of more than 100,000 employees, and to the 
contracts negotiated with their unions. And as I just outlined, we did 
everything we could within the terms of those contracts to provide 
20,000 TWA employees with the same pay and benefits we offered our 
existing employees.
    But the challenge of integrating two workforces goes beyond matters 
of benefit's and pay. It is the right and responsibility of the labor 
unions that represent our employees to negotiate on their memberships' 
behalf on a wide range of other contract provisions, including 
seniority and job protection that are at issue today.
    This, as you can imagine, was a difficult situation for all 
involved. We had competing unions with competing interests. And 
ultimately, these matters were resolved as internal union matters. The 
company's role in the process was to use our best efforts to facilitate 
the seniority integration process. We did that. In fact, an independent 
arbitrator found that we met our best efforts commitment in the pilot 
integration.
    Even though the seniority integrations varied with each work 
group--pilots, flight attendants and ground workers--American met its 
commitment to provide former TWA employees full credit for their years 
of service at TWA for all pay and benefit purposes.
    At the time of this asset acquisition, no one foresaw the 
industry's impending financial crisis--a financial crisis that 
regrettably has led to the furloughing of so many employees throughout 
the industry, including at American.
    Once again, no one could have predicted the events of 9/11, or the 
devastating financial fallout that followed. But the fact is that the 
unions negotiated and agreed to an integration plan that attempted to 
balance competing interests and preserve jobs. Therefore, the ultimate 
consequences for the TWA employees were not the result of the 
integration plan, but rather an economic downturn that forced layoffs 
and cutbacks throughout the industry. The pain has been spread far and 
deep.
    I appreciate the efforts of this Congress to provide aid to the 
airline industry and assistance to the tens of thousands of workers who 
have lost their jobs. I hope that we can all soon anticipate better 
times for U.S. airlines and their employees.
    Thank you for your kind attention, and I will be happy to address 
your questions.

    Whereupon, at 4:45 p.m., the committee was adjourned.]