Carty asks the TWU for concessions

[bagsmasher]

FOR IMMEDIATE RELEASE FOR FURTHER INFORMATION: 817-282-2544 M-F
Friday, December 6, 2002

UNION REPRESENTING 35,000 AMERICAN AIRLINES EMPLOYEES
COOL TO REQUEST BY COMPANY FOR FINANCIAL RELIEF

We know the record in these kinds of situations is not good.

DALLAS, TX ‑‑‑ A request by American Airlines for help to get our airline through its immediate and severe cash crisis was greeted with skepticism and non‑commitment by the union representing 35,000 Aircraft Maintenance Technicians (AMTs) and Related crafts, Fleet Service Workers, Stores, Aircraft Flight Dispatchers, Meteorologists, Ground and Flight instructors, Simulator Technicians, Technical specialists employed by the world’s largest air carrier.

We’re not sure there is a case for relief, or that the money would be used properly, said James Little, Director of the Airline Division of the Transport Workers Union, AFL‑CIO. We also know the record in these kinds of situations is not good.

Little said the union will review the company’s proposal in accordance with the requirements of the Railway Labor Act, but said such a review would be contingent on access to the company’s books by union economists and actuaries, as well as full financial disclosure to the union’s members.

In a situation like this, it is our members who will make any decisions, based on what’s best for them and their families. And they must have adequate information in order to even consider the company’s request.â€

Carty presented Little with a letter making the request following a meeting between company and union leaders this afternoon. The company specifically asked the TWU to forego a three percent pay increase and premium pay increases now scheduled for March 1. Little said neither of those specific proposals was likely to be considered. We’re always reluctant to open up our contract in that manner, and the company will have to be more creative in its approach if it wants to get even a hearing from our members, Little said.

Little said that any proposal would ultimately be up to a secret‑ballot vote of union members and that even taking things that far would depend on other circumstances.

We’re anxious to know what other labor groups at American will be asked to do, and we’re also watching the situation at United very closely to see how their impending bankruptcy influences competition. American Airlines could be in a much different position in a fairly short period of time. ‑ end‑

 

[bagsmasher]

Let me see.... Carty spent $2.4 billion to buy that POS airline TWA, and put people on the seniority list ahead of most TWU members, and now he wants us to dig in our own pockets to help him dig himself out of this one? I don't think so. Do CEO's have to pass a drug test? He's got to be smoking something to think that sounds reasonable.

 

[twaokc]

bagsmasher

Bags, my boy, what are you smoking????Where did you come up with $2.4 billion? You and your 11 years at AA just can't get over the fact that Carty made a good move buying TWA...I know you don't and won't agree, but just look at how many AA employees are still on the payroll at the expense of TWA employees....

 

[Rational Thought]

[blockquote]
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On 12/7/2002 2:05:08 PM bagsmasher wrote:

Let me see.... Carty spent $2.4 billion to buy that POS airline TWA, and put people on the seniority list ahead of most TWU members, and now he wants us to dig in our own pockets to help him dig himself out of this one? I don't think so. Do CEO's have to pass a drug test? He's got to be smoking something to think that sounds reasonable.
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[/blockquote]

You may be unaware, but the reasons for purchasing TWA where based on a forecast of economic and industry growth that was different than what it is now. As AA management saw things back then, the industry structure was frozen because of regulatory factors and as a result, domestic growth was limited. The purchase of TWA would have given AA several things:

- additional assets at a lower cost
- a loyal customer base
- an underutilizied East-West hub with capability of serving some North-South routes effectively

If the industry had continued to grow, AA would have had sufficient capacity to grow with it. ORD was constrained and DFW was becoming increasingly challenging to operate. The TWA acquisition would have been a master stroke if a). the economy had only suffered a minor downturn and B). passenger growth rates had continued on at the projected rate. UAL and DAL would have been boxed in and AA would have had strategic growth advantage to increase passenger volumes and lower per unit costs.

Alas, 9/11 changed all that. It prolonged the economic slowdown by 12 months, but worse, it

- depressed passenger traffic
- shifted the demand curve to the left (lowered the price-value proposition)
- created additional costs

These three changes are significant and beyond the scope of any CEO. Carty may be a poor leader, I can't tell, but the TWA acquisition was a smart move. No CEO is able to predict the future with certainty. And if they could, they wouldn't be running an airline.

So, you may disagree with a need for a labor cost reduction. But using the excuse that the TWA acquisition makes AA's request invalid is both, irrelevant and erroneous.