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American Airlines labor negotiations have been grounded.
06:38 PM CDT on Tuesday, February 14, 2009
By Hugh G. Rection/ AP Associated Press
[email protected]
(FORT WORTH) American Airlines broke off negotiations today with all three of its’ unions that represent close to 60,000 employees of the Fort Worth based carrier. According to a spokesman from the labor negotiating firm of Dewey, Cheatum and Howe, speaking on condition of anonymity, talks between the Airline: the Allied Pilots Association (APA) as well as the Allied Professional Flight Attendants (APFA) and the Transport Workers Union (TWU) that representing ground workers and mechanics talks have ground to a halt and further negotiations have been shelved in favor of mediation under the National Labor Relations Board.
When confronted with the report of the company’s intent to break off talks and seek government intervention company spokesman Helen Abasket declared; “although the company negotiated in good faith there are vast gulfs of distrust, unrealistic expectations, and irreconcilable differences that simply cannot be bridged between labor and management […] it is in American’s best interest at this time to seek mediation under the Railway Labor Act†(RLA). The Railway Labor Act is a United States federal law that governs labor relations in the railway and airline industries. The Act, passed in 1926 for railroads and was amended in 1936 to include airlines, seeks to substitute bargaining, arbitration and mediation for strikes as a means of resolving labor disputes that would have a considerable impact on the nation’s economy. Under the act, union labor contracts do not expire but become amendable upon a date that is agreed upon by both parties at the date of signing. Both the Company and the union are legally bound by the existing contract until all other resources have been exhausted before government mediation can take place.
Workers at American have been working under concessionary labor contracts for five years when union employees voted in favor of cuts in wages and benefits as much as 23% to prevent what appeared to be an inevitable bankruptcy at the carrier in April 2003. After a 25 million dollar bankruptcy proof pension for upper level executives was disclosed to the Securities and Exchange Commission one day after the three unions had voted; only after resignation of then CEO Don Carty, the unions ratified the concessions and the carrier narrowly averted the gavel that so many other airlines have sought since the Airline Deregulation act. American Airlines (AMR) and its Texas based competitor Southwest airlines (LUV) are the only two pre-deregulation carriers to avoid chapter 11 bankruptcies since President Jimmy Carter signed the act into law October 24th, 1978. Since that date 12 major carriers including United, Delta, USAir, Northwest, Eastern, Midway, Braniff, Pan Am, Continental, America West Airlines, and TWA and over 100 smaller airlines have gone bankrupt or have been liquidated; including most of the dozens of new airlines founded in deregulation's aftermath. Four airlines; ATA Airlines, Skybus, Frontier and Aloha filed for bankruptcy protection in the month of April alone.
Mike Hunt an Airline Analyst with The Tampa Bay Statesman suggested that the long negotiations between the company and the union were intentional and he expects that American will use the Railway Labor Act to extend the concessionary union contracts long enough shed excess cash and seek bankruptcy protection in 2009. Hunt said, “American is faced with a clear-cut business decision, in every single market, every single competitor with the exception of Southwest has used bankruptcy protection to shed cost and still fly, now [American’s] employees are tapped out and can give no more[…] there is nowhere else management can turnâ€. But American will have to shed the some 3.1 billon in cash reserves before they can stand before the courts and ask to be absolved of their debt and financial obligations. Hunt expects that American’s losses for 2008 will reach 900 million. With escalating fuel cost American will total close to 2.6 billion in losses by the third quarter of 2009. This leaves AMR with 500 million in cash reserves. Even the notoriously anti-Union Federal judges Roy L. Fuchs in Houston and Benjamin Dover in Montgomery, AL would have a hard time justifying a company friendly chapter 11 ruling with that amount of cash in the bank.
Ron Jeremy, Southeast Regional Director for Oversight and Compliance at the PBGC (Pension Benefit Guarantee Corporation) the government agency that is responsible for insuring certain benefits under private defined benefit pension plans; said he would; “sue those [expletive deleted] if they were to attempt to abandon their pension obligations and leave the taxpayers footing another airline pension bill.†Jeremy would be able to use the Lieberman-McCaskill Protected Pension Act recently passed in congress that forces companies to fund pension obligations before Patrick McCrotch a financial advisor for Merrill Lynch expects that American will use the remaining 450 to 500 million cash reserves to shore up the under-funded pension plan before filing for bankruptcy to avoid a long term court battle and regulatory restrictions that would be imposed on any new airline that would phoenix from the ashes of the former carrier.
It would appear American Airlines management has had the RLA-bankruptcy plan on their short list as one of their best options for some time. In March of 2008, top executives were awarded 38 million in stock bonuses and they were sold the next day when the stock was at a 52 week low. Big sellers included AMR chairman Gerard Arpey, who sold 81,520 shares for $695,317. He had received 187,600 shares in the program that rewards executives based on how well AMR stock performs relative to that of competing airlines. Two of Mr. Arpey's top lieutenants surpassed his sales total. Executive vice presidents Dan Garton for marketing and Tom Horton for finance each sold their entire allotment of 103,984 shares, bringing in $886,932 apiece. Al Kuhallik, a former financial advisor with Bear Stearns said,†any person in that capacity would no doubt have access to planning and the company’s forecast, if I had been their broker I would have advised them to take the money and run.†After the March executive bonuses the company stock continued its downward spiral towards to near the record low February 2003 levels.
The Union’s leadership response over the past year has been one of frustration an outrage. Over the past year Attorneys from all three unions have spent countless hours and filed dozens of briefs trying to get a clarification of from government officials, the labor department and the Department of Homeland security concerning traditional union job-actions to force collective bargaining such as, boycotts, walk-outs’ and strikes as it relates to the Patriot Act that was rushed through congress six weeks after 9/11. The Patriot Act defines "domestic terrorism" as "acts dangerous to human life that are a violation of the criminal laws," if they "occur primarily within the territorial jurisdiction of the US" and they "appear to be intended ... to influence the policy of a government by intimidation or coercion." This definition can easily include almost any picket line or minor demonstration skirmish that occurs in the context of a strike against a factory, office, or more importantly as it relates to the nations airline and the economic impact of such actions.
Richard Cranium, professor of labor and economics at George Washington University said, “the labor movement in America has been under assault since Reagan declared open season on unions with PATCO [Professional Air Traffic Controller’s Organization],†President Ronald Reagan fired striking air traffic controllers in 1981 and although PATCO endorsed Reagan in his 1980 campaign he let it be known that the new administration would favor business in all disputes between labor and management and corporate America understood. Cranium said, “The bleak situation facing American Airline’s unions are by no means unique to the airline industry it is the result of thirty years of if not anti-union governmental policy, a solidly laissez-faire mind-setâ€
The remaining employees at a post-bankrupt American will have a tremendous battle ahead to secure decent wages and benefits for themselves and their families. But fortunately the one thing seems apparent is that the backlash of recent corporate greed has resulted in laws passed to protect the pensions of the current employees of American and others that will no doubt be exposed to corporate greed in the future.
Hugh G. Rection is a pseudonym for a non-existent reporter and is no way affiliated with the associated press. The report is totally farcical and the is no way affiliated with New York Times
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More Articles in Business »
American Airlines labor negotiations have been grounded.
06:38 PM CDT on Tuesday, February 14, 2009
By Hugh G. Rection/ AP Associated Press
[email protected]
(FORT WORTH) American Airlines broke off negotiations today with all three of its’ unions that represent close to 60,000 employees of the Fort Worth based carrier. According to a spokesman from the labor negotiating firm of Dewey, Cheatum and Howe, speaking on condition of anonymity, talks between the Airline: the Allied Pilots Association (APA) as well as the Allied Professional Flight Attendants (APFA) and the Transport Workers Union (TWU) that representing ground workers and mechanics talks have ground to a halt and further negotiations have been shelved in favor of mediation under the National Labor Relations Board.
When confronted with the report of the company’s intent to break off talks and seek government intervention company spokesman Helen Abasket declared; “although the company negotiated in good faith there are vast gulfs of distrust, unrealistic expectations, and irreconcilable differences that simply cannot be bridged between labor and management […] it is in American’s best interest at this time to seek mediation under the Railway Labor Act†(RLA). The Railway Labor Act is a United States federal law that governs labor relations in the railway and airline industries. The Act, passed in 1926 for railroads and was amended in 1936 to include airlines, seeks to substitute bargaining, arbitration and mediation for strikes as a means of resolving labor disputes that would have a considerable impact on the nation’s economy. Under the act, union labor contracts do not expire but become amendable upon a date that is agreed upon by both parties at the date of signing. Both the Company and the union are legally bound by the existing contract until all other resources have been exhausted before government mediation can take place.
Workers at American have been working under concessionary labor contracts for five years when union employees voted in favor of cuts in wages and benefits as much as 23% to prevent what appeared to be an inevitable bankruptcy at the carrier in April 2003. After a 25 million dollar bankruptcy proof pension for upper level executives was disclosed to the Securities and Exchange Commission one day after the three unions had voted; only after resignation of then CEO Don Carty, the unions ratified the concessions and the carrier narrowly averted the gavel that so many other airlines have sought since the Airline Deregulation act. American Airlines (AMR) and its Texas based competitor Southwest airlines (LUV) are the only two pre-deregulation carriers to avoid chapter 11 bankruptcies since President Jimmy Carter signed the act into law October 24th, 1978. Since that date 12 major carriers including United, Delta, USAir, Northwest, Eastern, Midway, Braniff, Pan Am, Continental, America West Airlines, and TWA and over 100 smaller airlines have gone bankrupt or have been liquidated; including most of the dozens of new airlines founded in deregulation's aftermath. Four airlines; ATA Airlines, Skybus, Frontier and Aloha filed for bankruptcy protection in the month of April alone.
Mike Hunt an Airline Analyst with The Tampa Bay Statesman suggested that the long negotiations between the company and the union were intentional and he expects that American will use the Railway Labor Act to extend the concessionary union contracts long enough shed excess cash and seek bankruptcy protection in 2009. Hunt said, “American is faced with a clear-cut business decision, in every single market, every single competitor with the exception of Southwest has used bankruptcy protection to shed cost and still fly, now [American’s] employees are tapped out and can give no more[…] there is nowhere else management can turnâ€. But American will have to shed the some 3.1 billon in cash reserves before they can stand before the courts and ask to be absolved of their debt and financial obligations. Hunt expects that American’s losses for 2008 will reach 900 million. With escalating fuel cost American will total close to 2.6 billion in losses by the third quarter of 2009. This leaves AMR with 500 million in cash reserves. Even the notoriously anti-Union Federal judges Roy L. Fuchs in Houston and Benjamin Dover in Montgomery, AL would have a hard time justifying a company friendly chapter 11 ruling with that amount of cash in the bank.
Ron Jeremy, Southeast Regional Director for Oversight and Compliance at the PBGC (Pension Benefit Guarantee Corporation) the government agency that is responsible for insuring certain benefits under private defined benefit pension plans; said he would; “sue those [expletive deleted] if they were to attempt to abandon their pension obligations and leave the taxpayers footing another airline pension bill.†Jeremy would be able to use the Lieberman-McCaskill Protected Pension Act recently passed in congress that forces companies to fund pension obligations before Patrick McCrotch a financial advisor for Merrill Lynch expects that American will use the remaining 450 to 500 million cash reserves to shore up the under-funded pension plan before filing for bankruptcy to avoid a long term court battle and regulatory restrictions that would be imposed on any new airline that would phoenix from the ashes of the former carrier.
It would appear American Airlines management has had the RLA-bankruptcy plan on their short list as one of their best options for some time. In March of 2008, top executives were awarded 38 million in stock bonuses and they were sold the next day when the stock was at a 52 week low. Big sellers included AMR chairman Gerard Arpey, who sold 81,520 shares for $695,317. He had received 187,600 shares in the program that rewards executives based on how well AMR stock performs relative to that of competing airlines. Two of Mr. Arpey's top lieutenants surpassed his sales total. Executive vice presidents Dan Garton for marketing and Tom Horton for finance each sold their entire allotment of 103,984 shares, bringing in $886,932 apiece. Al Kuhallik, a former financial advisor with Bear Stearns said,†any person in that capacity would no doubt have access to planning and the company’s forecast, if I had been their broker I would have advised them to take the money and run.†After the March executive bonuses the company stock continued its downward spiral towards to near the record low February 2003 levels.
The Union’s leadership response over the past year has been one of frustration an outrage. Over the past year Attorneys from all three unions have spent countless hours and filed dozens of briefs trying to get a clarification of from government officials, the labor department and the Department of Homeland security concerning traditional union job-actions to force collective bargaining such as, boycotts, walk-outs’ and strikes as it relates to the Patriot Act that was rushed through congress six weeks after 9/11. The Patriot Act defines "domestic terrorism" as "acts dangerous to human life that are a violation of the criminal laws," if they "occur primarily within the territorial jurisdiction of the US" and they "appear to be intended ... to influence the policy of a government by intimidation or coercion." This definition can easily include almost any picket line or minor demonstration skirmish that occurs in the context of a strike against a factory, office, or more importantly as it relates to the nations airline and the economic impact of such actions.
Richard Cranium, professor of labor and economics at George Washington University said, “the labor movement in America has been under assault since Reagan declared open season on unions with PATCO [Professional Air Traffic Controller’s Organization],†President Ronald Reagan fired striking air traffic controllers in 1981 and although PATCO endorsed Reagan in his 1980 campaign he let it be known that the new administration would favor business in all disputes between labor and management and corporate America understood. Cranium said, “The bleak situation facing American Airline’s unions are by no means unique to the airline industry it is the result of thirty years of if not anti-union governmental policy, a solidly laissez-faire mind-setâ€
The remaining employees at a post-bankrupt American will have a tremendous battle ahead to secure decent wages and benefits for themselves and their families. But fortunately the one thing seems apparent is that the backlash of recent corporate greed has resulted in laws passed to protect the pensions of the current employees of American and others that will no doubt be exposed to corporate greed in the future.
Hugh G. Rection is a pseudonym for a non-existent reporter and is no way affiliated with the associated press. The report is totally farcical and the is no way affiliated with New York Times
