To: American Airlines Retirees From: Paul Mazzara, Chairman – AMRRC Board Subject: American Airlines Retirees Committee Off To Rapid Start Within a week of electing its Board of Directors and conducting our first conference call meeting, the American Airlines Retirees Committee (AMRRC) is off to a rapid start. We have obtained the services of a San Francisco attorney, Dean Gloster, a partner in Farella Braun and Martel LLP, who has extensive experience with representing retirees in corporate bankruptcy proceedings. He has worked with retirees from Delta Air Lines, Chrysler, General Motors, Delphi and many other groups of retirees from large corporations. He is already at work preparing the initial documents to file with the court presiding over the AMR bankruptcy. Bankruptcy attorneys work pro bono for retirees until 1114 committees are established and the court requires the debtor in possession to pay them. We have affiliated with the National Retiree Legislative Network (NRLN) and are already drawing on its 10 years of experience in dealing with Congress and federal agencies. Three other AMRRC Board Members and I will participate in the NRLN's Annual Leadership Conference on Monday and Tuesday in Washington, D.C. A primary purpose of the NRLN's meeting is for retiree association leaders to meet with members of Congress, their staffs and federal agency officials to lobby for legislation to protect the financial security of retirees. The NRLN has arranged for AMRRC leaders to meet with some of the top administrators of the Pension Benefits Guaranty Corporation (PBGC). The NRLN as given a list of our questions and concerns to the PBGC staff to allow them to prepare for our meeting on Monday afternoon. You may have seen the January 26 article in which the PBGC staff suggested that American Airlines is purposely downplaying the consequences of the possible cancellation of its pension plans, attempting to shift the responsibility to the PBGC. J. Jioni Palmer, PBGC's Director of Communications, stated that American's recent statements through its lead bankruptcy counsel, suggest that it is hoping to shift its retirement responsibilities to the PBGC. "American said nothing's been decided yet, but didn't even bother to pretend that it was trying to preserve its employees' pensions," Palmer said. American's in-house and outside lawyers have been clear – they want to take back our benefits. We will also have a meeting with the Staff Director of the Senate Judiciary Committee that has jurisdiction over corporate bankruptcy issues. We will use the NRLN's white papers on Bankruptcy and PBGC Reforms to identify to the Committee Staff Director the legislation and rule changes that need to be enacted to place retirees' pensions and benefits on a list of obligations that companies should be prevented from shedding in bankruptcy proceedings. Since most members of Congress and their staffs welcome visits from their constituents, we will have meetings on Capitol Hill in the offices of our elected representatives to impress upon them that American Airlines retirees need their support to protect our retirement security. Included among the retiree associations attending the NRLN's conference will be leaders of Delta Air Lines Pilots and Chrysler. We expect to learn a great deal from them about their experiences going through the bankruptcies of their companies. Also, leaders of the Kodak retirees association will be in attendance and we will find a lot in common since Kodak filed for Chapter 11 bankruptcy this month. The EKRA – Kodak Retirees organization has experienced significant membership growth during the past year and we want to hear about how the achieved their success.

After I return from Washington, D.C, I'll give you a report on our activities there. If you have visited the American Airline Retirees Association website at http://www.amrrc.org/ , you are aware that the AMRRC Board is comprised of seven American Airlines retirees with diverse careers in AA/TWA. Five board members were elected and two were selected to round out the Board Members' backgrounds representing union, non-union and management retirees as well as experience with pensions, health and life insurance and bankruptcy liabilities. If you read on the website about our mission, you know that AMRRC is dedicated to preserving the retiree benefits that are now in jeopardy through American Airlines bankruptcy filing. If you have not yet been to our website I urge to access it very soon. Learn about our organization's objective to be a strong voice for all American Airlines retirees. See the names of our Board Members and read our profiles. Most importantly, print out the membership form and send your membership dues so we can begin building the "war chest" to represent retirees' interests in the bankruptcy proceedings and have funds to communicate with you and recruit additional members. I and the other AMRRC Board Members believe that while American Airlines has a number of different groups in different organizations whose pensions and benefits are under different plans, we all have a common goal of protecting our retirement security to the greatest extent possible. The AMRRC is willing to work with any retiree groups so we can make the best of the difficult situation we are facing. Paul Mazzara, Chairman of the Board American Airlines Retirees Committee

AMRRC, INC,www.AMRRC.org

American Airlines Retirement CommitteeP. O. Box 1178

Bedford, TX 76095January 31 and February 1,2012

Honorable Senators, Members of the House of Representatives and Staffers,

All over the United States retirees in the public and private sector are losing promised benefits andwe believe this must be halted. We are in Washington as new members of the National RetireeLegislative Network (NRLN) to attend the Annual Leadership Conference as representatives ofAmerican Airlines Retirees. Thank you for taking the time to consider our issues.

AMR Corporation (AMR), the parent corporation of American Airlines (AA), entered Chapter 11

Bankruptcy on November 29,2011. Prior to that time, the management and employees of AA hadspent many years trying to avoid this outcome. Then CEO Gerard Arpey believed that bankruptcywas not an honorable choice. After the Board of Directors meeting that resulted in the bankruptcydecision, he retired rather than oversee this path. This retirement may seem like an unusual butinsignificant event in today's corporate behavior, but the history leading to his decision warrantsreview.

ln April 2003 AA experienced a "virtual" bankruptcy. Employees were challenged to identify andaccept concessions that would result in overall savings that AMR upper management had identifiedas necessary to avoid Chapter 11 and create a cost competitive work force. Each employee groupaccepted pay cuts. In addition, all groups were required to slash benefit costs.

Prior to 2003, all Non Pilot employees at AA were required to pay small monthly fees called 'Pre-Funding' which were put in a trust to guarantee retiree health coverage of $300,000 until age 65 then$50,000 after age 65 with Medicare as primary coverage. ln the 2003 concessionary bargaining,some of the groups opted out of the Pre-Funding program, received a refund of their payments, andagreed to pay monthly premiums after retirement for this coverage. Other employee groups, includingthe Transport Workers Union (TWU) and the Association of Professional Flight Attendants (APFA),took deeper wage cuts in order to continue Pre-Funding and the promise of premium free lifetimecoverage.

ln exchange for these concessions, AA management was to increase revenue and create a businessplan that allowed this now competitive workforce to work for a profitable company. The unsecuredcreditors committee has informed the court that AMR failed to meet its part of the bargain and has notsuccessfully generated the revenue necessary to become profitable.

Retirees now find themselves in an untenable position. Many workers retired prior to Medicare agewith confidence in the coverage that was promised. Because each group of employees crafted itsown health coverage, we went from 2003 fonruard with a number of different plans. AMR has alreadymade changes to promised benefits of non-union retirees over 65; they no longer have any companysubsidized health coverage.

ln 2005 and 2006, AA Management, non-management and representatives from the TWU, APFA andAllied Pilots Association (APA) visited Congress supporting the Pension Reform Act of 2006. ThenCEO Gerard Arpey was with us on the hill as we identified defined benefit pensions as deferredearnings accumulated over careers that had often spanned workers' entire adult life. These werecontracts between the employer and employee. We asked the support of our elected representativesto do the right thing and allow the airline businesses time to make up shortfalls to pay guaranteedbenefits. We were elated when this legislation passed.

Retirees on a fixed income are not in a position to compensate for the unexpected expenses in healthcoverage or reductions to their promised fixed income. The correct path is one in which each person

who retired with promised health coverage and an accrued pension should not suffer due tomanagement failure to craft a profitable business plan.

At the time of Chapter 11 filing, AMR had over 4 BILLION DOLLARS on hand. This was ample tomeet their current pension obligations but they chose to pay a reduced amount in January 2012. ThePension Benefit Guarantee Corporation (PBGC) and other members of the unsecured creditorscommittee have expressed outrage over this action.

ln a recent tetter to employees AMR Senior Mce President, Human Resources Jeff Brundage, statedthat "for those whose pension benefit has vested, if the pension plans are terminated, more than 90%of participants would see no reduction in their pension benefit accrued as of November 29,2011".This is disingenuous at best. We at AMRRC believe that the non-union salaried retirees aredefensetess and that AMR will attempt to dump the pension benefit to the PBGC and destroy healthcoverage for AMR's Agents, Specialists, Support and Officers in pension plan PN 002. The AMRRCintends to defend PN 002 non-union retirees and supports all retirees in AMR's three union plans andwe ask congress to intervene before retirees suffer the loss of earn benefits.

Many other retirees in the United States have experienced the loss of health coverage and seen theirpensions go to the PBGC. You have passed the Health Coverage Tax Credit program (HCTC) toassist them. We request that you support an amendment to HCTC that will allow continued reducedpaymdnts for dependents.

These are bi-partisan issues: Promises made, contracts negotiated, and 30- or 40-year commitmentsmust be honored! You, as representatives elected by the people of the United States, are chargedwith representing their welfare. lt is in everyone's interest that corporate America succeeds, but thisshould not come at the cost of the millions of workers who have bargained in good faith and met theirside of the contract.

It is the belief of the AMRRC and the PBGC that the pensions earned at AA should not become theresponsibility of the PBGC. Our health coverage was negotiated and guaranteed. We ask that youpass legislation which compels AMR and other corporations to meet their obligations to retirees ratherthan use the courts as a means of shedding them.

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\(/!-%_Paul MazzaraChairman of The Board of DirectorsAMRRC

AMRRC, INC, www.AMRRC.org 

AMRRC P. O. Box 1178 

Bedford, TX 76095   

February 3, 2012   Your AMR Retirement Committee Board has prepared to file for representation of all American Airlines retirees, including formerly represented retirees who may not be represented by our unions. We are equally concerned that the pension and benefits plans that apply to agents, support staff, professional personnel and other management positions at all levels are particularly vulnerable at this time and need to be protected.   The filing to seek 1114 Committee recognition with the bankruptcy court is an initial procedural step. We have been working hard over the past month to make sure that the appropriate steps are taken to ensure that we are in compliance with the laws and procedural steps have been executed by - forming the organization, applying to become a 501 C 5 organization, nominating board members to represent Retirees from all areas of the company, holding an election, forming the Board, electing officers of the Board, hiring a webmaster and filing all the documents necessary to be a functioning as a not for profit organization. While it has been an arduous process, these steps have been critical in establishing an organization that can serve American Retirees in the years ahead.   The AMRRC has retained Dean Gloster of the San Francisco law firm of Farella Braun + Martel LLP, who has represented official retiree committees, retiree organizations, trusts organized to provide subsidized medical care, and unionized and non-unionized employee and retiree groups in numerous large bankruptcies, including Delta Airlines, General Motors, Delphi Corporation, Metaldyne, Bethlehem Steel, and the city of Vallejo, California.

The AMRRC, a broadly representative organization of American Airlines retirees, will be filing a brief on or before February 22 and appearing through its lawyer at the upcoming February 29 hearing to seek appointment of a representative committee to preserve critical retiree health, prescription drug and insurance benefits protected under Bankruptcy Code section 1114. We need you to join the AMRRC immediately and provide the dues for the funding we will need to fight for the pensions and benefits that you earned through your years of labor at American Airlines. Now is the time to go to our website www.amrrc.org and become a part of our Action Team!   

Washington Report Building Allies in Washington, D.C.   Three of your AMRRC Board Members—Jill Frank Smoak, Stephen Granat and I—were in Washington, D.C. on Jan. 30 thru Feb. 1 and with support from the National Retiree Legislative Network (NRLN) met with officials at the Pension Benefits Guaranty Corporation headquarters as well as a number of meetings with senior members of Congressional Committees that have jurisdiction over corporate bankruptcy law, pensions and retirement benefits legislation.   More than one and a half hours were spent in a dialogue with a PBGC administrator, pension actuary and the PBGC's chief counsel. We outlined to them the financial sacrifices and concessions that have been made over the years by workers and retirees—both union and management—to try to make American Airlines competitive in our industry. In particular, we emphasized our contention that American Airlines has filed for Chapter 11 bankruptcy in order to try to be more competitive with other airlines that have gone through bankruptcy and not because it is in dire financial distress.   Although AMR is seeking to terminate its pension plans, we were given assurances by the PBGC officials that they would continue to pressure AMR to preserve our pension plans. In addition, through the 1114 Committee, AMRRC will defend your rights to your earned benefits.   The NRLN's President, Executive Director, Legislative Adviser and Communications Director, each of whom have had a number of meetings with top PBGC officials over the years to discuss fair treatment of retirees when it takes over a pension plan, advised us prior to the meeting and participated in the meeting with us. The NRLN's expertise was invaluable to us in representing your interests.   Walking the Halls of Congress   In addition to arranging our meeting with the PBGC, the NRLN scheduled appointments and accompanied us in our meetings with staff members who write many of the bills on retirement issues:   

• Senior Democratic Counsel for the House Education and Workforce Committee; • Texas Senator John Cornyn, who serves on the Senate Finance Committee and the

Senate Judiciary Committee; • Senior staff members—both Republican and Democratic—on the House Judiciary

Committee; • Senior Republican Counsel to the Senate Committee on Health, Education, Labor and

Pensions; • Staff Director for the Subcommittee on Administrative Oversight and the Courts, under

the Senate Judiciary Committee; • Senior Counsel to the Democratic Staff of the Senate Committee on Health, Education,

Labor and Pensions; 

• Although the AMRRC Board Members had to catch a Wednesday afternoon flight back home to return to Miami, Dallas and Kansas City, the NRLN President and Executive Director represented us in a 5:00 p.m. meeting with the senior staff members—both Republican and Democratic—for the Senate Finance Committee. 

  American Airlines' Bankruptcy Contemptible   In a number of our meetings, we were told that AMR’s "surprise" bankruptcy filing was considered to be contemptible by policymakers. Some went as far as saying their boss would support our request for sending a letter to AMR to express their outrage to AMR’s CEO. Some believe that American and other airlines were given a substantial break after 9/11 on pension plan funding regulations and that AMR’s bankruptcy filing is a slap in the face to members of Congress who supported the legislation and to workers and retirees. A number of lawmakers are also urging the PBGC to keep pressure on AMR to preserve its pension plans.     Congressmen Question PBGC Director   The NRLN staff attended a Thursday hearing by a subcommittee of the House Education and Workforce Committee. The Director of the PBGC was questioned on what his agency is doing to prevent AMR from terminating its pension plans. He explained that his staff would do everything in its power to avoid having to take over one or more of AMR’s four pension plans and noted the PBGC had filed liens against AMR assets outside of the bankruptcy in case the value of those assets were needed to help fund the AMR’s pension plans.   Time Well Spent Building Allies   AMRRC Board Members' time in Washington, D.C. was well spent in our efforts to line up allies for AMR retirees. We know that the unions will represent its members when the bankruptcy court approves an 1113 Committee to address pensions. AMRRC is working to have the bankruptcy court judge approve an 1114 Committee to address issues such as health care benefits and is making every effort to have a seat at the table when the 1114 Committee is formed.   AMRRC is at the beginning of a long journey that will require the support of both formerly represented retirees as well as management and support staff retirees that were not represented by a Union during their careers.. We need you to become an AMRRC member and volunteer to help us quickly grow our membership. Send an email to me at paul.mazzara@amrrcmail.org if you'd like to help us fight for your rights as an AMR retiree.   Paul Mazzara, Chairman of the Board of Directors AMRRC