A Brief History: American Still Has No Joint Contract With Its Mechanics and Rampers After Five Years

Jun 10, 2019

More Reading on This Topic: American, Labor Relations

The rhetoric has ramped up dramatically, and the lengthy contract negotiation between American and both its mechanics and fleet service workers (aka rampers) has now spilled over into the public eye. American has sued for an injunction to prevent the mechanics from orchestrating what it says is a slowdown. (You can read the filing for yourself and decide if you agree.) And the unions are vocally lambasting the airline. If you haven’t seen this video of American President Robert Isom getting an earful from the TWU President John Samuelsen, then take a look. It will sum up the current state of affairs between union leadership and management. It’s not good.

Whether there is a slowdown or not is a sideshow. Sure, it’s the main point if you’re an impacted traveler, but I’m talking about this from a business perspective. It’s a symptom of the broader issue that American and its mechanics/rampers still have no joint contract more than five years after the merger was completed. Why is that? What are the issues? Welcome to the first of a two-part story looking at this in greater detail.

Today I’m going to focus on a look back at the last 5+ years to see how we got here. Then tomorrow we’ll look at the sticking points.

A Negotiation Deferred

Before the merger, you had US Airways mechanics represented by the IAM with American mechanics represented by the TWU. In May 2013, after the merger had been announced but before it was completed, the two unions decided to come together to jointly represent the mechanics as The TWU-IAM Association, commonly referred to solely as “The Association.” The Association was truly just two unions coming together to negotiate a joint contract. Even the head of The Association would rotate between the two unions every two years, but the pre-merger workforces would each remain members of separate unions.

I can’t speak to why they thought it was better to do this than to choose one union to jointly-represent them, and neither can TWU President John Samuelsen. When we spoke for this piece, he told me he didn’t know why the previous union leadership decided to move forward that way. He wasn’t involved in that decision.

Almost immediately after settling on this way forward, the Teamsters tried to take advantage and win a representation fight against the IAM at US Airways. That was a significant and annoying distraction. By the time the merger was completed in December, the representation fight had been resolved (the IAM won, obviously), but it certainly further delayed negotiation preparation.

That was hardly the only issue. The US Airways group had been working under an amendable contract for three years, and they wanted that to be settled before any joint negotiations were to begin. As the IAM District 141 President noted:

As long as this management team refuses to settle a fair contract, approximately 32,000 employees will remain separated and the merger’s synergies will not be realized.

That negotiation spilled into 2014 when it was finally resolved. A new agreement was voted in during July of that year, so then they could finally focus on a joint agreement, right? No, because The Association still wasn’t recognized as the bargaining agent.

In August of that year, The Association filed the request to have the airlines recognized as a single carrier. That would lead to the National Mediation Board (NMB) certifying The Association as the bargaining agent, but it didn’t come through until April 2015. Then the two unions went through a reconciliation process between the two contracts, and they prepared themselves to negotiate. Negotiations finally began on December 3, 2015, two years to the day after the merger was completed. That’s really when the clock should be started; it’s been more like 3+ years instead of 5+ years.

The Raise That Shouldn’t Have Been

Negotiations continued into 2016, and there was no resolution. But you may recall that back in mid-2016, American management decided it wanted to give workers raises outside of their contracts so they could benefit from the company’s success even if they couldn’t come to a full contract agreement. In August, it was announced that The Association members would get raises of 22 to 24 percent on average (the small delta depending upon which side you believe) beginning in November 2016. In exchange, the unions agreed to let legacy US Airways employees work on American aircraft and legacy American employees work on US Airways aircraft. This was a minor trade for the unions to get such large raises, but it has come back to haunt the company to this day.

With higher wages in place, it took the pressure off getting a deal done. Sure, there are many issues beyond wages, but that was one big issue that could have kept the heat on getting to a deal. Further, the union was able to twist this minor giveback allowing crews to work on the other legacy airline’s aircraft as a trade for the wage increase when it was not even close to an even exchange. Instead of pushing things along, they started going backwards.

Changing Tactics

By the summer of 2017, things still weren’t going anywhere, so American tried a different approach. Instead of negotiating point by point, it put out a comprehensive proposal that it wanted The Association to evaluate. This did not go over well, as you can see in this post where it calls the proposal “garbage.”

At the end of summer 2017, American CEO Doug Parker made his fateful proclamation that American would never lose money again. Even though his point was to suggest that the industry had changed and investors should recognize that, this statement was, to be kind, ill-advised. It became a rallying cry for The Association. It emboldened them further, and they break this quote out regularly as a reason that the airline should be able to give their members what they want.

Since then, there has been some movement but nothing significant enough to really move the needle. The company has improved its offer, including, as I understand it, higher wages in light of Southwest’s new contract and more job protections. But the union leadership is clearly not satisfied and isn’t even close to allowing a vote by the membership.

The National Mediation Board was brought in to, well, mediate, late last year. The last session ended in April without an agreement. There may be more sessions in the future, but nothing is scheduled. This appears to be a stalemate at this point, and that might explain why you see more heated rhetoric and discussion of a slowdown. John told me that he “absolutely, totally believes [American] to be our enemy.” Is it bluster in the face of negotiation? Of course. It’s getting pretty vicious and that’s not helpful.

Tomorrow I’ll dive into what the issues are that seem to be preventing a joint contract from being agreed upon.

Brett

13 responses to “A Brief History: American Still Has No Joint Contract With Its Mechanics and Rampers After Five Years”

Herman Teamster

Jun 10, 2019 at 4:40 am

Reminds me of the old US Airways / America West feud. A bunch of clowns (including the company) that creates anxiety for their customers.

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tvmccabe

Jun 10, 2019 at 4:51 am

Having worked through two Labor/Merger negotiations, one of which overlapped with Chap 11 just like AA and US, I think dealing with a hybrid TWU/IAM Union makes a difficult situation significantly more difficult to work through. The two sets of internal Union political dynamics that must remain in whole, or at best in part, must make getting to an agreement a nightmare. The raise to work on the other carriers metal was a big mistake by AA. The set up the expectation that both Union groups now get another “big bite” of the apple, prolonging the siege.

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Tim Dunn

Jun 10, 2019 at 6:09 am

good summary, CF.

The real issue is that AA mgmt. knows they still have too many people as a result of the merger and their underperforming hubs. AA has 20,000 more employees than DL or UA to generate very similar amounts of revenue – and the amount of maintenance outsourcing cannot explain the difference in total headcount.

AA tried to play nice with labor during the first few years of the merger including the pay raise you mentioned and the unilateral addition of profit-sharing, even though it is well below levels at other carriers. Now, with costs still too high and their efforts to increase revenue faltering, they have to take a much more confrontational approach with labor in order to try to increase their profitability.

No company wants to have poor labor relations but the issue is high employee costs. AA cannot expect its unions to negotiate their futures away via increased outsourcing but that is the only way that AA has proposed to cut their future labor costs.

AA cannot buy labor peace any more. They have to fix their root problems which include too many people as a result of mergers that didn’t produce enough increased revenue to support the labor inefficiencies that still exist because of the separate contracts – or the cost of getting joint contracts that will bake those costs in on a long term basis.

Many AA employees are not optimistic that there will be a peaceful resolution. AA might be the smoldering pot of labor relations which will help ensure that higher customer service and better revenues are found at other airlines.

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1. wow
  
  Jun 10, 2019 at 10:35 am
  
  You have no idea what your talking about, tell the whole story. AA also has about 200 more airplanes.
  
  Reply
  1. tvmccabe
    
    Jun 10, 2019 at 11:25 am
    
    200 ?? Better check again.
    
    In terms of mainline aircraft, AA has 916 and DL has 913.
    And UA does have less, although UA’s has way more widebodies, and on average has much larger aircraft than either DL or AA.
    BTW Southwest has the least mainline at 761 which is not 200 less either.
    
    Plus, the DL and UA mainline fleets are nearly 16 years old, while AA’s is 10.
    
    Reply
  2. Tim Dunn
    
    Jun 10, 2019 at 6:59 pm
    
    @wow,
    American and Delta generate almost identical amounts of revenue. Because it generates more revenue per seat mile, Delta has higher profitability. IOW, it doesn’t take as much in costs to generate the same amount of revenue at Delta – or it does take more cost to generate the same amount of revenue for American. So, you do have a certain point and American’s less efficient ability to generate revenue is part of the problem.
    
    However, even when you equalize for the higher amount of in-house maintenance that American does and also consider the maintenance insourcing that Delta does on top of the revenue generation differences, American is still overstaffed.
    
    Neither AA mgmt. or labor is without blame for American’s financial underperformance but the problems won’t be fixed until deep-seated changes are made from both management and labor.
    
    @tvmccabe
    United also generates a much higher percentage of its domestic revenue on much more costly regional jets and they show far less willingness to add a small mainline aircraft. So, United offsets much of its revenue efficiency on its international network using larger aircraft with inefficiencies on its domestic system. OTOH, American and Delta have much more similarly matched networks and fleets – which is why it is so much easier to compare AA and DL’s financial metrics.
    
    Reply
Jon Snow

Jun 10, 2019 at 6:59 am

Smisek’s tenure went on a few years longer than it should have. I wonder how much longer Parker will last.

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1. tvmccabe
  
  Jun 10, 2019 at 7:08 am
  
  Good point. Smisek was a disaster in terms of Labor Relations and HR
  
  Reply
  1. Jon Snow
    
    Jun 10, 2019 at 7:57 am
    
    Are LR and HR trailing indicators? Lack of strategic direction leads to uncertainty and unrest with labor and personnel?
    
    Reply
2. ProLabor-NotProIdiot
  
  Jun 10, 2019 at 7:56 am
  
  I hope it lasts a long time. Just because The Association has chosen to be adversarial in nature, does not mean that Doug Parker or AA management have been adversarial in their dealings. Frankly, they have been absolutely forthright. The Association leadership is embarrassing in their behavior, unprofessional in their dialogue, and should allow a vote by their membership on the comprehensive proposal.
  
  Reply
Wow

Jun 10, 2019 at 10:33 am

First of all do your homework. We’ve only been out of contract since September 2018, not even a year. Weve been negotiating a joint agreement because of two seperate unions caused by the merger. That has been happening a little over 4 years. Irresponsible articles like this are not a help to our cause of getting a fair contract quickly.

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1. ProLabor-NotProIdiot
  
  Jun 10, 2019 at 11:08 am
  
  JetNet Jockey spilling out
  
  Reply
Jeffery

Jun 10, 2019 at 11:25 am

This is why sector organizing is so much better than Enterprise organizing. There a plenty of things labor can do to be a PITA to management during a contentious negotiation that doesn’t screw over their other department co-workers and customers. If the allegations against the TWU-IAM are accurate, they are standing alone and not in unity.

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