In the Matter of the

Application of the

ALLIED PILOTS ASSOCIATION

alleging a representation dispute pursuant to Section 2, Ninth, of the Railway Labor Act as amended

involving employees of

AMERICAN AIRLINES, INC.

TWA AIRLINES, LLC.

29 NMB No. 36

CASE NO. R-6867

(File No. CR-6736)

FINDINGS UPON

INVESTIGATION

March 5, 2002

This determination addresses an application filed by the Allied Pilots Association (APA or Organization). APA requests the National Mediation Board (Board) to investigate whether American Airlines, Inc. (American), and TWA Airlines, LLC.(TWA- LLC),1 are operating as a single transportation system.

The weight of the evidence establishes that American and TWA-LLC constitute a single transportation system.

PROCEDURAL BACKGROUND

On November 9, 2001, APA filed an application alleging a representation dispute involving the Flight Deck Crew Members of American. APA asserted that American and TWA-LLC constitute a single transportation system. The application was assigned NMB File No. CR-6736.

The Board assigned Eileen Hennessey to investigate.

On November 13, 2001, the Board requested that American and TWA-LLC provide information. American and TWA-LLC jointly responded on December 5, 2001. APA filed a response on January 10, 2002, and supplemented its response on January 11, 2002. The Airline Pilots Association International (ALPA) filed a response on January 10, 2002, and supplemented its submission on February 11, 2002.2

ISSUES

Are American and TWA-LLC a single transportation system? If so, what are the representation consequences?

CONTENTIONS

APA

APA contends as follows:

American and TWA-LLC became a single transportation system on December 2, 2001, when American significantly integrated TWA-LLC's operations into American's. Through the integration, American removed TWA-LLC's separate identity and, to the traveling public, TWA-LLC ceased to exist as a separate carrier.

The Board does not require total operational integration to find a single transportation system. Neither the existence of separate flight operations nor seniority integration are prerequisites for a single carrier finding. The Board should not delay its investigation pending the outcome of the contractual dispute over seniority integration between APA and ALPA. Furthermore, the Board lacks jurisdiction over the collective bargaining aspects of a merger, therefore, ALPA's effort to involve the Board in seniority integration issues should be rejected.

ALPA

ALPA argues that APA's application should be rejected or, in the alternative, that the Board should hold a hearing to investigate the extent of integration between the Carriers. ALPA contends as follows:

American and TWA-LLC are not sufficiently integrated to be a single transportation system under the Railway Labor Act (RLA). Pursuant to an agreement between American and APA, the operations of TWA-LLC will be separate from the operations of American for the foreseeable future. Pilots for TWA-LLC and American will continue to fly separate aircraft, on separate routes, from separate domiciles, with separate management. The public similarities between American and TWA-LLC are no greater than the similarities between any major airline and its code sharing partners.

ALPA, TWA-LLC, and American are parties to a labor protection agreement which states that American will use its "reasonable best efforts" with APA to "secure a fair and equitable process for the integration of seniority." American agreed to the "best efforts" language in exchange for ALPA's waiver of the portions of its collective bargaining agreement addressing seniority integration. ALPA filed a claim against American alleging violation of the labor protection agreement. A hearing took place before a system board of adjustment which has not yet ruled on the claim. ALPA seeks an order directing American not to implement the APA-American Seniority Integration Agreement. The Seniority Integration Agreement will become effective when the Board makes its single system determination. Once implemented, the Seniority Integration Agreement's effects could become difficult to reverse. For this reason, the Board should exercise its judgment and postpone a determination on the system issue until the seniority integration claim is resolved.

APA's application is motivated by a desire to shift the burden of recent furloughs from American pilots to TWA-LLC pilots. Prior to the furloughs, APA and American agreed that TWA-LLC and American would not be a single transportation system until July 1, 2002.

American and TWA-LLC

It is American and TWA-LLC's position that a single transportation system existed as of December 2, 2001.

FINDINGS OF LAW

Determination of the issues in this case is governed by the RLA, as amended, 45 U.S.C. §§ 151-188. Accordingly, the Board finds as follows:

I.

American and TWA-LLC are common carriers as defined in 45 U.S.C. § 181.

II.

APA and ALPA are labor organizations as provided by 45 U.S.C. § 152, Ninth.

III.

45 U.S.C. § 152, Fourth, gives employees subject to its provisions, "the right to organize and bargain collectively through representatives of their own choosing. The majority of any craft or class of employees shall have the right to determine who shall be the representative of the craft or class for the purposes of this chapter."

IV.

45 U.S.C. § 152, Ninth, provides that the Board has the

duty to investigate representation disputes and to designate who may participate as eligible voters in the event an election is required. In determining the choice of the majority of employees, the Board is "authorized to take a secret ballot of the employees involved, or to utilize any other appropriate method of ascertaining the names of their duly designated and authorized representatives . . . by the employees without interference, influence, or coercion exercised by the carrier."

STATEMENTS OF FACT

Corporate Transactions and Representation

On April 9, 2001, American acquired certain assets of TWA Inc. Simultaneous with the purchase of these assets, American transferred the assets to a newly created subsidiary known as TWA-LLC. TWA-LLC is a wholly-owned subsidiary of American Airlines and is certified by the Federal Aviation Administration (FAA) and Department of Transportation (DOT) as a Part 121 direct air carrier pursuant to 14 C.F.R. Part 119. TWA-LLC agreed to recognize ALPA as the representative of Flight Deck Crew Members at TWA-LLC after the assets were transferred.

APA represents Pilots on American pursuant to Board certification in Case No. R-3619 (1963). AAL Flight Engineers International Association (FEIA) was certified as the representative of Flight Engineers on American in Case No. R-
2933 (1955). ALPA is the voluntarily recognized representative of Pilots on TWA Inc. ALPA was certified as the representative of Flight Engineers at TWA Inc. in Case No. R-3982 (1968).

American employs 11,329 employees covered by this application. TWA-LLC employs 2,243 Flight Deck Crew Members.

Operations

American and TWA-LLC operate under separate FAA Air Carrier Certificates. TWA-LLC's Flight Dispatch, Flight Safety and Maintenance & Engineering's Quality Assurance and Quality Surveillance functions are controlled by TWA-LLC.

The FAA requires that aircraft registered to a certificate holder be operated in accordance with the certificate holder's specific procedures, by pilots who have received training in those procedures. 14 C.F.R. §121.133; 14 C.F. R. §121.400.

According to a declaration submitted by Mike Leone, Deputy Chairman of the APA National Safety and Training Committee, on December 2, 2001, all TWA-LLC pilots converted their sign-in and flight release procedures to American's procedures. All flight releases for both American and TWA-LLC pilots are generated by American's dispatchers. At American, there are two principal pilot manuals which are revised on an ongoing basis. American is in the process of standardizing the manuals between the two pilot groups and as the manuals are revised, the same "new iterations" are sent to both pilot groups.

In November 2001, American and APA signed a Seniority Integration Agreement and a Transition Agreement relevant to the integration of the Flight Deck Crew Members at American and TWA-LLC.

The Seniority Integration Agreement creates an "operational fence" which provides separate pilot operational procedures at American and TWA-LLC. According to this Agreement, while the "operational fence" is in effect, all TWA-LLC pilots will be based in the St. Louis domicile. Seniority Integration Agreement Section IV.A.2. The Seniority Integration Agreement includes a combined seniority list that will become applicable upon a single system finding by the Board.

The Transition Agreement between APA and American states that "the TWA-LLC operation will terminate no later than January 1, 2006, with the sole exception that aircraft maintained under the TWA-LLC maintenance certificate may continue to operate beyond this date." American/APA Transition Agreement Section 4 (A)(i). In a separate letter of agreement dated July 10, 2001, containing the reference line "Agreement Prohibiting the Leveraging of TWA-LLC Against the APA," APA and American agreed that "on July 1, 2002, the Company will execute and deliver to the APA a stipulation that TWA-LLC is a single employer for representation purposes with American. The APA will subsequently file to represent the TWA-LLC pilots pursuant to a single employer determination from the [Board]."

According to the Transition Agreement between American and APA, any differences in terms and conditions of employment and pay between American and TWA-LLC were eliminated on January 1, 2002.

TWA-LLC pilots use the American call sign when identifying their flights to air traffic control. According to the SABRE Cutover Flight Operations Handout, effective December 2, 2001, when requesting a "phone patch" to Maintenance or Dispatch, TWA-LLC pilots must use the American call sign and then specify "TWA Maintenance, Kansas City" or "TWA Dispatch, St. Louis".

Management and Labor Relations

As of January 1, 2002, the following functions at TWA-LLC are managed and operated by American Airlines: Legal, Advertising, Marketing, Passenger Service, Flight Service, certain sections of Maintenance and Engineering, Labor/Employee Relations, Human Resources, Finance, Revenue Management, Scheduling, Government Affairs, Corporate Communications and Cargo.

FAA regulations require that Flight Dispatch, Flight Safety

and Maintenance & Engineering's Quality Assurance and Quality Surveillance functions remain under TWA-LLC's control until it surrenders its certificate. TWA-LLC retains a separate Director of Operations, Chief Inspector, Director of Maintenance, Chief Pilot, Director of Safety. TWA-LLC's Chief Pilot serves as TWA-
LLC's representative for adjustment of grievances under the collective bargaining agreement between TWA-LLC and ALPA.

Since approximately October 2001, labor relations on both American and TWA-LLC have been the responsibility of Jeff Brundage, Vice President, Employee Relations, American Airlines. Brundage reports to Sue Oliver, Sr. Vice President of Human Resources, American Airlines.

TWA-LLC, American, and ALPA are parties to an agreement which states that American will use its "reasonable best efforts" with APA "to secure a fair and equitable process for the integration of seniority." ALPA claims that American violated this agreement. This matter is pending before a system board of adjustment. As a remedy, ALPA seeks an order directing American not to implement the American/APA Seniority Integration Agreement which becomes effective when the Board determines that American and TWA-LLC are a single transportation system.

TWA-LLC's Managers are analogous to members of a board of directors. All of TWA-LLC's Managers are also officers of American. William F. Compton, President, TWA-LLC, reports to Robert Baker, who serves as both CEO of TWA-LLC and Vice Chairman of American.

Routes and Schedules

American's Scheduling Department schedules the combined American TWA-LLC route network. As of December 2, 2001, American's designator code "AA" replaced TWA-LLC's designator code on all reservation systems in the Official Airline Guide and on printed schedules and tickets for former TWA-LLC flights.

Marketing and Advertising

American took over TWA-LLC marketing on April 9, 2001. All "TWA Aviators'" members are now part of American's "AAdvantage Miles" program. American is creating AAdvantage accounts for every TWA Aviators' member. TWA frequent flyer account balances will be rolled over and converted into the American system until November 30, 2002.

On November 3, 2001, TWA-LLC began the process of removing from all airline booking sources TWA-LLC flights departing on or after December 2, 2001. Concurrently, American replaced these flights with American-marketed flights using the "AA" designator code and flight number. All previously booked TWA-LLC reservations and e-tickets were moved from the TWA-
LLC flight to the corresponding American-marketed flight. Customers traveling on TWA-LLC flights after December 2, 2001, call American reservations or book only American marketed flights with their travel agent. DOT regulations require that American disclose to ticket purchasers and passengers that the flight is operated by TWA-LLC.

In November 2001, American registered the name "American Airlines" with the FAA and DOT to be used in connection with TWA-LLC's operations. Effective December 2, 2001, American's trade name and logo replaced TWA-LLC's on advertising, printed schedules, ticket stock and jackets, stationary and name tags.

American and TWA-LLC passengers are processed at American ticket counters, and fly from American gates. TWA Inc.'s website, www.twa.com directs users to the American website. American's in-flight magazine is used on TWA-LLC flights.

Signs, Logos, and Uniforms

American developed a transitional livery for TWA-LLC incorporating both the TWA and American Airlines insignia. Prior to December 2, 2001, 48 of the 166 TWA-LLC aircraft were painted in the transitional livery.

All TWA and TWA-LLC corporate insignia and logos were replaced by American corporate insignia and logos as of December 2, 2001. The Carriers state that by May 2002, all TWA aircraft will be converted to full American livery and carry a small placard to the right of the cabin entry door identifying it as "TWA an American Airlines company operated by TWA Airlines LLC".

The Carriers state that TWA-LLC's pilots and airport employees (passenger agents and representatives) began wearing American uniforms in January 2002. TWA-LLC pilots are required to wear TWA identification badges that have been validated through 2002.

DISCUSSION

I.

The Board's Authority

45 U.S.C. § 152, Ninth, authorizes the Board to investigate disputes arising among a carrier's employees over representation and to certify the duly authorized representative of such employees. The Board has exclusive jurisdiction over representation questions under the RLA. Switchmen's Union v. National Mediation Board, 320 U.S. 297 (1943); General Committee of Adjustment v. M.K.T. Railroad, 320 U.S. 323 (1943). In Air Line Pilots Association, Int'l v. Texas Int'l Airlines, 656 F.2d 16, 22 (2d Cir. 1981), the court stated, "the NMB is empowered to . . . decide representation disputes arising out of corporate restructurings."

II.

Single Transportation System

In Trans World Airlines/Ozark Airlines, the Board cited the following indicia of a single transportation system:

[W]hether a combined schedule is published; how the carrier advertises its services; whether reservation systems are combined; whether tickets are issued on one carrier's stock; if signs, logos and other publicly visible indicia have been changed to indicate only one carrier's existence; whether personnel with public contact were held out as employees of one carrier; and whether the process of repainting planes and other equipment, to eliminate indications of separate existence, has been progressed.

Other factors investigated by the Board seek to determine if the carriers have combined their operations from a managerial and labor relations perspective. Here the Board investigates whether labor relations and personnel functions are handled by one carrier; whether there are a common management, common corporate officers and interlocking Boards of Directors; whether there is a combined workforce; and whether separate identities are maintained for corporate and other purposes.

14 NMB 218, 236 (1987).

The Board finds a single transportation system only when there is substantial integration of operations, financial control, and labor and personnel functions. American Airlines and Reno Air, 26 NMB 467 (1999); AirTran Airways and AirTran Airlines, 25 NMB 429 (1998). The Board has noted that a substantial degree

of overlapping ownership, senior management, and boards of directors is critical to finding a single transportation system. Precision Valley Aviation, Inc., d/b/a Precision Airlines/Valley Flying Service, Inc., d/b/a Northeast Express Regional Airlines, 20 NMB 619 (1993).

The Board's substantial integration of operations criteria does not require total integration of operations. Nor, do the existence of "fence" agreements preclude the Board from finding a single transportation system exists. Mountain Air Express/Air Wisconsin Airlines Corporation, 26 NMB 185 (1999); Continental Airlines/Continental Express, 20 NMB 326 (1993); USAir, Inc./Shuttle, Inc. d/b/a USAir Shuttle, 19 NMB 388 (1992); British Airways/British Caledonian Airways, 16 NMB 17 (1988).

ALPA requests that the Board delay its determination until the issue of seniority integration is resolved either by the system board of adjustment or the parties. It is well established Board precedent that contractual issues arising from a single transportation system determination are outside of the Board's jurisdiction. The Board finds that to delay its findings in this case would be contrary to the RLA's purpose of promoting labor stability. See British Airways/British Caledonian Airways, above; Delta Airlines, Inc., and Western Airlines, Inc., 14 NMB 291 (1987).

Based upon the application of the principles cited above to the facts established by the investigation, the Board finds that American and TWA-LLC operate as a single transportation system.

CONCLUSION

The Board finds that American and TWA-LLC are operating as a single transportation system for representation purposes under the RLA. Accordingly, the APA's application in File No. CR-
6736 is converted to NMB Case No. R-6867. Pursuant to the Board's Representation Manual (Manual) Section 19.6, the investigation will proceed to address the representation of the proper craft or class. APA filed its application with a seniority list of the pilots represented by APA dated July 1, 2001. ALPA has 30 days from the date of this determination to file an application supported by a showing of interest of at least 35 percent of the single transportation system or to supplement the showing of interest in accordance with Manual Section 19.601. The participants are reminded that existing certifications remain in effect until the Board issues a new certification or dismissal. Manual Section 19.602.

By direction of the NATIONAL MEDIATION BOARD.

Benetta M. Mansfield

Deputy Chief of Staff

Copies to:

Harry A. Rissetto, Esq.

Sheldon M. Kline, Esq.

Richard A. Malahowski

Jonathan A. Cohen, Esq.

Clay Warner, Esq.

Roland P. Wilder, Esq.

Edgar N. James, Esq.

Marie Chopra, Esq.

John Ward

Robert Roach

David Rosen, Esq.