American Airlines’ pilots blew it by turning down last, best offer
mschnurman@dallasnews.com
Published: 03 September 2012 09:02 PM
The pilots at American Airlines had a chance to set an example, net some gains and boost their power in the airline’s reorganization.
But they threw it away by rejecting a labor contract that was the company’s last, best offer. And on Tuesday, they’re going to a New York bankruptcy court to try to stave off the consequences.
It’s the perfect case for why business doesn’t work as a democracy and real leadership makes all the difference.
The pilots union has a history of self-inflicted pain — from illegal sick-outs to picketing corporate customers to asking for holiday pay for Super Bowl Sunday. Last month’s contract vote joins the list, because pilots could lose millions in benefits and most of their negotiating leverage.
Added insult: Eight other union groups at American approved their deals. Some pain lies ahead for them, but so do pay raises, stock awards, retirement contributions and buyout offers.
For pilots, frustration is already evident, as more realize that management is likely to prevail in court and impose tough terms. Union leaders recently threatened a strike vote, even though a strike is a nonstarter in bankruptcy. The threat made some headlines, but the pilots might as well howl at the moon.
Don’t be surprised if they soon talk about work slowdowns and other tactics. It will be harder to get attention after last Friday, when American’s management began formal merger talks with US Airways. And while everyone prefers a contract, the urgency isn’t as great as in past airline bankruptcies; while lenders insist on such deals, American has enough cash to exit Chapter 11 without borrowing.
In the cockpit, American pilots take great pride in being leaders and taking responsibility. Many hold advanced degrees and closely track American’s financial results. Yet on the ground, they often make boneheaded decisions that confound even their union officers.
Consider the contract that the rank and file rejected in a landslide last month. It had job protection, a 4 percent pay hike, raises for five years, a 13.5 percent equity stake in the reorganized company, and a retirement plan contribution of 14 percent of pay per year.
Where do I sign?
There were major concessions, primarily new work rules and code-sharing provisions to shave $315 million in total pilot compensation. American is in Chapter 11, due in large part to high labor costs, so a reset was inevitable.
But the sweeteners were notable wins, especially the equity share and a pay match to industry-average salaries after 36 months. The leaders of the Allied Pilots Association should have sold it hard, the way that flight attendant union president Laura Glading pushed to approve. Instead, the APA sent a conflicted message: The board endorsed the agreement just 9-7, and national officers insisted on remaining neutral.
“We have not made any personal comments on how we plan to vote,” they wrote to members.
Opposition went viral, talking up takeovers, talking down management and suggesting the union would get another bite at the apple. A stunning 61 percent of pilots voted no.
“We’re hoping they understand, based on the voting,” said new APA president Keith Wilson, “that the pilots are serious about this.”
More like seriously out of touch. Pilots rejected an offer with $55 million in improvements and an equity piece that guaranteed more influence in bankruptcy. Union advisers compared it to having a seat at the parents’ table. Without the stock, they said, pilots would be relegated to the kids’ table, where they could scream all they wanted — and be ignored.
To end a stalemate in bankruptcy, a company can petition to throw out existing contracts and impose terms. With limited leverage and so much downside, workers get what they can and hope for a brighter future.
That’s hard to accept at American, because anger and distrust run so deep. But flight attendants did it, despite some legendary hostility. Transport workers and mechanics did it, too, despite thousands of job cuts to come.
In contrast, pilots are left to ask the boss to give them a break if the court rules for the company. American doesn’t have to grant raises, for instance, or contribute to a 401(k). And the double-digit equity stake? Dream on.
Last week, Wilson said that people offered congrats and condolences when he took the post right after the rejection vote. He explained to reporters that the union was governed by a 16-member board, and his job was to execute its instructions.
“So while I have opinions,” Wilson said, “they’ll remain private for most of the time.”
Too bad. The pilots need a leader who’ll shout out the truth. He could start with: We blew it!
