It’s been nearly two months since I last wrote about American here. Maybe it’s that they haven’t had much news or maybe it’s just that they don’t really reach out to bloggers very often. Either way, I thought it would be good to check in on them. One of the biggest issues they’ve had lately is the threat of labor disruptions, but that appeared to ease recently when a few tentative agreements were put out. It now appears that at least one of those is a sham.
American had been riding high with labor after narrowly averting bankruptcy post-9/11. The airline was sharing more information with the unions and the relationships seemed to be in pretty good shape. Then, it all fell apart. The biggest sticking point was when senior management accepted large bonuses based on stock price appreciation while the front line suffered. This boneheaded move cemented what has now been a contentious relationship for a few years.
While the pilots and flight attendants seem to be heading toward a strike, the Transport Workers Union (TWU)-represented groups have been knocking out tentative agreements in rapid succession this month. First, it was the mechanics on May 5 (pdf), then the “Material Logistics Specialists” on May 7 (pdf). The Maintenance Control Technicians followed on May 8 (pdf). Then, on the 28th, the Fleet and Ground Service (aka rampers, cleaners) came to an agreement (pdf).
That’s some serious progress, though it remains to be seen if the union members will actually approve these contracts or not. When it comes to the rampers, it seems certain to go down to defeat. In a statement, the TWU’s Tim Gillespie said this:
It became clear during our meetings with the National Mediation Board that our union would not be granted release from mediation unless the members of the union are first permitted to vote on the company’s offer. Members will have to carefully look at the state of the economy, look at what they gave up in 2003 and think about what this contract delivers before voting in July.
Ah, I see. In order to strike in this wacky industry, the National Mediation Board (NMB) has to declare that both sides are at an impasse and then release them from negotiations. Then a 30 day cooling-off period begins. When that’s over, the union is allowed to strike, unless the President decides to get involved. So the goal of any union that can’t get what it thinks is fair is to get to that cooling-off period. That helps ratchet up the pressure on management.
It seems clear here that the union doesn’t approve of the offer, but the NMB basically told them that unless the membership was allowed to vote on it, they weren’t going to release them into the cooling-off period. So here we are. The lack of support is very clear here.
In short, every employee group at American wants to go back to where they were before they gave up major concessions in 2003. Unfortunately for them, they are already paid better than their counterparts at competitors so they’re unlikely to get even close to what they gave up. That won’t keep them from fighting. This tentative agreement appears to be simply another step in the march toward a strike as opposed to an actual resolution.
Ah airline strikes, another reason to have the traveling public hate your company.
The airline industry must be the only business that goes to grant lengths to get their customers to hate them.
@David SFEastbay – yeah, pretty much… Maybe together with cable and phone companies (or is it Judy me who hates Comcast and AT&T but doesn’t have a good alternative?)
I know many people that bitch bitch bitch about X airline, yet fly them every chance they get, even paying a premium sometimes, just for the “miles” or convenience. Similar goes for cell phones. Know many people that complain about Verizon or AT&T, but would never switch from one to the other. Me thinks that these companies know the loyalty of their customers and take that into account with how they treat them.
For me, this is a timely story.
Yesterday morning, I was on a crowded hotel shuttle at LAX and, by happenstance, sat near a Delta pilot and a group of American flight attendants (all in uniform). One of the American flight attendants was griping in her LOUDEST voice to the Delta pilot about how they were NOT the highest paid in the industry and that management is treating the AA crews “like we’re stupid” and that a strike was a very real possibility.
I thought it was horrible for a uniformed American Airlines employee to represent her company. It was dumb public relations, too– particularly since the bus was packed with members of the general public, including some who had specified to the shuttle driver that they were American Airlines customers!
I know that labor vs. management issues do arise, but come on! Are customers incidental here? The whole episode left me feeling queasy.
JM when are you on a hotel shuttle with flight crews that you don’t hear them complaining about something…..lol
I go into grocery stores, drug stores, big box stores, etc and I never here/see groups of workers standing around complaining about the company. But get anywhere near a airline flight crew and that’s all you hear.
I guess you’re right, David, but wow! That noise really hurt my eardrums– and it was totally meant for the consumption of all of the “civilians” on that shuttle, not just the Delta pilot. She wanted everyone on the bus to hear!
There has to be some way to hitch managment and labor’s pay to the same set of metrics. Perhaps the most important metric: is your airline still flying and does it pay your paycheck.
It’d also be interesteing to see an airline work with their unions to have the payscale top out pretty quickly say 5 years. This would make switching companies much less tramautic than it is currently.
Were it not for the greedy shareholders, the ungrateful and lying management, the ever-complaining employees, those iimperial government regulators and of course, those impossible customers, insisting on getting that lowest of low fare, what a wonderful industry this would be!
Makes you wonder what would happen if airlines went back to the old days of one or two fares per cabin. Fares that paid the bills and not ones that didn’t.
Well if one airline did it, they’d be out of business, because the other airlines could easily undercut them.
If all the airlines did it they’d have to sell a bunch of planes, routes and employees, because those prices wouldn’t support the current level of services.
I believe that “boneheaded move” regarding the stock bonuses was done with the total knowledge and acceptance of labor. They wanted pay-for-performance–for management of course, not for labor god forbid, and it actually paid out, and paid out big, much to their chagrin. Was it a bad PR move? Probably. But I’m not sure it’s much worse than demanding 2003 pay with 2010 costs and 2010 fares.
It’s not quite that simple, unfortunately. It was a big scandal down here in Dallas when the bonuses came out. Don Carty did sort of go behind the unions’ backs when setting up the executive bonus plan. When the cat was finally let out of the bag, it cost him his job, but it’s also guaranteed poisoned labor relations to this day.
I have 3mm miles on Delta, 500k each on American and United, plus a bunch of Southwest trips.
I don’t want to hear a damn word from these clowns. As the Governor of New Jersey told the teachers, “if you don’t like your job, go somewhere else”. The airline doesn’t owe them a job, and I sure as hell am tired of the bitching and moaning from cabin and flight crew while we’re flying. I don’t hear this from Delta crews…
Get another job if you don’t like yours.
So management took advantage of 911 to win temporary concessions in pay and benefits to keep companies afloat. Now they refuse to correct that and the point at the wage scales of other airlines that also made 911 concessions (or modeled their pay after those same companies in the case of new companies like Jetblue and Virgin America). The Railway Labor Act in the US drags out contract negotiations purposefully for years to employees detriment. That is done to protect the traveling public and to encourage commerce. That is not free market at all though – employees negotiating and striking if necessary is a natural free market correction to compensation. The law is set up so you can be assured if there ever is a strike years of negotiations were made in good faith and you should support the employees! If the public interest must be protected by the Railway Labor Act a decent level of compensation for the job should also be protected. The great recession has forced more people into lower paying wages and many people are losing years of investment into their home to foreclosure. I don’t think it’s right that the top gets bailed out and the middle pays for it.
I was wondering why I hadn’t seen any comments from the labor side here. Thanks for chiming in, blutarsky. I would disagree with you on the RLA. It drags out contract negotiations to EVERYONE’s detriment! It’s an awful process that really needs to go away. The long negotiations just don’t help anyone.
While I agree that it’s not right for the top to get bonuses while the middle takes cuts, the reality is that pre-9/11 wages aren’t coming back. It’s unfortunately just the way of the world – an airline with those wages would go under very quickly since other airlines have been able to get lower wages. I know that everyone wants to go back to those days, but it’s unfortunately not reality. BA’s flight attendants are learning that as we speak. If this continues, they’ll end up out of a job.