American Airlines 2008 Annual Report Download - page 10

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Environmental Matters The Company is subject to various laws and government regulations concerning
environmental matters and employee safety and health in the U.S. and other countries. U.S. federal laws that
have a particular impact on the Company include the Airport Noise and Capacity Act of 1990 (ANCA), the Clean
Air Act, the Resource Conservation and Recovery Act, the Clean Water Act, the Safe Drinking Water Act, and the
Comprehensive Environmental Response, Compensation and Liability Act (CERCLA or the Superfund
Act). Certain operations of the Company are also subject to the oversight of the Occupational Safety and Health
Administration (OSHA) concerning employee safety and health matters. The U.S. Environmental Protection
Agency (EPA), OSHA, and other federal agencies have been authorized to promulgate regulations that have an
impact on the Company's operations. In addition to these federal activities, various states have been delegated
certain authorities under the aforementioned federal statutes. Many state and local governments have adopted
environmental and employee safety and health laws and regulations, some of which are similar to or stricter than
federal requirements.
The ANCA recognizes the rights of airport operators with noise problems to implement local noise abatement
programs so long as they do not interfere unreasonably with interstate or foreign commerce or the national air
transportation system. Authorities in several cities have promulgated aircraft noise reduction programs, including
the imposition of nighttime curfews. The ANCA generally requires FAA approval of local noise restrictions on
aircraft. While the Company has had sufficient scheduling flexibility to accommodate local noise restrictions
imposed to date, the Company’s operations could be adversely affected if locally-imposed regulations become
more restrictive or widespread.
Many aspects of the Company’s operations are subject to increasingly stringent environmental regulations.
Concerns about climate change and greenhouse gas emissions, in particular, may result in the imposition of
additional legislation or regulation. For example, the EU recently approved measures that impose emissions limits
on airlines with operations to, from or within the EU as part of an emissions trading system beginning in 2012. The
Company is currently assessing the potential costs of the EU measures. Such legislative or regulatory action by
the U.S. or foreign governments currently or in the future may adversely affect the Company’s business and
financial results.
The environmental laws to which the Company is subject include those related to responsibility for potential soil
and groundwater contamination. The Company is conducting investigation and remediation activities to address
soil and groundwater conditions at several sites, including airports and maintenance bases. The Company
anticipates that the ongoing costs of such activities will be immaterial. The Company has also been named as a
potentially responsible party (PRP) at certain Superfund sites. The Company’s alleged volumetric contributions at
such sites are small in comparison to total contributions of all PRPs and the Company expects that any future
payments of its share of costs at such sites will be immaterial.
Labor
The airline business is labor intensive. Wages, salaries and benefits represented approximately 26 percent of the
Company’s consolidated operating expenses for the year ended December 31, 2008. The average full-time
equivalent number of employees of the Company’s subsidiaries for the year ended December 31, 2008 was
84,100.
The majority of these employees are represented by labor unions and covered by collective bargaining
agreements. Relations with such labor organizations are governed by the Railway Labor Act (RLA). Under this
act, the collective bargaining agreements among the Company’s subsidiaries and these organizations generally do
not expire but instead become amendable as of a stated date. If either party wishes to modify the terms of any
such agreement, it must notify the other party in the manner agreed to by the parties. Under the RLA, after receipt
of such notice, the parties must meet for direct negotiations, and if no agreement is reached, either party may
request the National Mediation Board (NMB) to appoint a federal mediator. The RLA prescribes no set timetable
for the direct negotiation and mediation process. It is not unusual for those processes to last for many months,
and even for several years. If no agreement is reached in mediation, the NMB in its discretion may declare at
some time that an impasse exists, and if an impasse is declared, the NMB proffers binding arbitration to the
parties. Either party may decline to submit to arbitration. If arbitration is rejected by either party, a 30-day “cooling
off” period commences. During that period (or after), a Presidential Emergency Board (PEB) may be established,
which examines the parties’ positions and recommends a solution. The PEB process lasts for 30 days and is
followed by another “cooling off” period of 30 days. At the end of a “cooling off” period, unless an agreement is
reached or action is taken by Congress, the labor organization may exercise “self-help,” such as a strike, and the
airline may resort to its own “self-help,” including the imposition of any or all of its proposed amendments and the
hiring of new employees to replace any striking workers.