Employees

We work very hard to maintain a culture where safety, achievement and diversity are celebrated and rewarded, every single day. Cultivating this mindset and attitude is what separates American from its competitors, and enhances the quality, performance and long-term competitiveness of our business.

Now in our 85th year of operation, we have a proud and distinguished history, and have always benefited from the dedication of our employees. In return, we have made concerted efforts over the years to provide the best possible compensation and career development experience for our workforce.

Restructuring For Long-Term Success

On November 29, 2011, AMR Corporation filed for Chapter 11 reorganization, an action that is the necessary and correct path for us to take to become a more efficient, financially stronger and more competitive airline. We believe that this decision will allow American Airlines and American Eagle to restructure so that we can emerge well-positioned to assure the company's long-term viability and its ability to compete effectively in the marketplace. It is the right decision for our company and its future.

Our very substantial cost disadvantage compared to our larger competitors, most of whom restructured their costs and debt through reorganization, has become increasingly untenable given the accelerating impact of global economic uncertainty and the resulting revenue instability, volatile and rising fuel prices and intensifying competitive challenges.

We must achieve competitiveness and flexibility associated with all of our employee-related costs. As part of our bold plan to restructure our company, we are seeking $1.25 billion in permanent annual cost reductions from all employee groups. This will require many changes in the way we do business and, regrettably, will result in job losses. But we must remember that failure to make the right changes puts all jobs at American at risk. We will continue to work for the best outcome for the greatest number of our people.

For more information, visit RestructuringAMR.com.

AMR (American & American Eagle)	Attrition Rates	Average Tenure (Years)
Labor Group	2011	2011
Management	7%	16
Staff Support/Other	11%	11
Agent/Planner	16%	15
Pilots	8%	17
Reservation Reps	12%	15
Flight Attendant	4%	21
TWU	6%	18
AMR - All Employee Groups	7%	18

Compensation And Benefits

Our industry is unique, combining the highly technical aspects of aviation and engineering with the many social nuances of customer service and hospitality. In this type of business environment, our employees benefit from broad, multidisciplinary training and career development options that prepare them for meaningful growth within our company and beyond. In financial terms, our employees receive health, life, disability and retirement benefits, and have access to a variety of medical plans, including dental and vision, as well as optional plans such as dependent day care and medical reimbursement accounts. American's benefits and many other employment privileges are extended to family members and domestic partners. American also offers deeply discounted travel options to employees and their families, and rewards strong employee performance with both financial and non-financial incentives.

Read more about our employee benefits.

Retirement Plans

In 2011, American Airlines carried through with its commitment to more than 133,000 participants in the company's defined benefit and defined contribution plans — with payments for the year totaling $525 million for defined benefit and $162 million for defined contribution plans. Since 2002, American has contributed nearly $3 billion to defined benefit pension plans and more than $1.7 billion to defined contribution plans. Additional payments totaling $144 million have been made to retirees eligible for medical benefits.

In February 2012, American announced plans to make changes to certain benefit programs, for all employees, which are necessary to reach our savings target and move us in line with other airlines and large companies. To implement one of these initiatives, American initially proposed to terminate its defined benefit pension plans. In March 2012, however, American reached an accommodation with the Unsecured Creditors Committee (UCC) and the Pension Benefit Guaranty Corporation (PBGC) to develop a plan that would allow American to pursue a freeze of our defined benefit pension plans for non-pilot employees instead of seeking termination.

Freezing the defined benefit pension plans would mean that employees would retain the full value of benefits accrued for service prior to the date the plan is frozen, and those benefits would not be reduced to PBGC guarantee levels in retirement. This action would also preserve for employees the ability to satisfy the requirements to obtain the frozen benefit under the early retirement options, which we know many employees value.

Although American must change various elements of the retirement benefits offered to ensure the needed cost savings are realized, the company remains committed to providing employees with some form of retirement benefits going forward, including replacing its defined benefit pension plans with defined contribution plans that include a company match.

More information on proposed changes to defined benefit pension and contribution plans is available at RestructuringAMR.com.

Labor Relations

In 2011, American Airlines continued collective bargaining negotiations in good faith, with our three primary labor unions:

• Allied Pilots Association (APA)
• Association of Professional Flight Attendants (APFA)
• Transport Workers Union (TWU)

Currently, 68.3 percent of American Airlines employees are represented by one of these three unions. In addition, 64.6 percent of American Eagle employees are represented by one of the following three unions:

• Air Line Pilots Association (ALPA)
• Association of Flight Attendants (AFA)
• Transport Workers Union (TWU)

A successful restructuring requires that American reduce employee costs by significantly more than what was discussed in previous negotiations with the unions. American will work within the Chapter 11 process to modify our current agreements to achieve the cost reductions necessary to compete more effectively.

Because we weren't able to make sufficient progress with the APA, APFA and TWU in almost two months of negotiations, the company filed a Section 1113 motion with the Court on March 23, 2012, asking the judge for authorization to reject American's current collective bargaining agreements. Doing so would allow the company to implement the changes necessary for the successful restructuring of the business if collective agreements cannot be reached.

As decisions are made about the future shape of our workforce, we will honor the notice provisions in existing union contracts. Outside of specific contractual obligations, American typically gives 14 days' notice, or pay in lieu of notice is provided. For more information, visit RestructuringAMR.com.

Building Mutual Trust

We recognize the importance of providing employees with a forum where they can voice the issues and concerns that are most important to them. To this end, we feel that face-to-face discussions provide the best medium for communication and the exchange of ideas.

In an effort to protect the interests of our independent employees who are not represented by a union, we have established distinct Advisory Boards for employee groups including Airport Agents, AAdvantage® Customer Service Agents, Premium Services Agents, Cargo Agents and Weight and Balance Agents.

Advisory Board meetings are held periodically, bringing together elected agent representatives and management representatives at the local, regional and system level. These meetings establish a system for independent employees to share information with their peers and provide input to management.