American Seeking Pilots' Union Talks

July 24, 2006
The airline is expected to want more flying time and pay likely to be issue.

American Airlines Inc. served notice Friday on the Allied Pilots Association that it wants to start talks early on a new labor deal.

Although the negotiations will probably touch on many subjects, American is expected to ask for work rule changes that will let it get more flying from each pilot.

But the union is expected to ask to get back some of the pay it gave up in 2003.

"Our goal in these negotiations is to work with the APA to identify creative ways to run the airline more efficiently," American spokeswoman Sue Gordon said Friday. "We really don't have any preconceived notions or ideas for how to best achieve this."

Allied Pilots president Ralph Hunter said union officials "would be rather shocked and surprised if they didn't seek productivity improvements. I think we're ready for them to ask for that. We, of course, have some concerns of our own."

Mr. Hunter, referring to a controversial bonus plan that gave stock and cash worth about $100 million to managers this year, said it appears that "increased compensation is not beyond the ability of this company to afford."

Under threat of a bankruptcy filing in April 2003, American won big concessions on pay and work rules from its major unions. The deal gave the Fort Worth-based carrier lower pilot costs than many major competitors.

However, several peers - United Airlines Inc., Delta Air Lines Inc., Northwest Airlines Inc. and US Airways Group Inc. - have slashed their pilot costs in bankruptcy court, pushing American closer to the top.

Allied Pilots leaders considered going to the carrier last November to propose productivity improvements, but that step was scuttled when rank-and-file employees learned about the size of the management bonuses.

The board of AMR Corp., American's parent, modified the bonus plan in April to make most of the payout in AMR stock.

The 2003 deal made the pilots' contract amendable in 2008. However, union leaders insisted during the 2003 talks on the right to open talks two years earlier, on May 1, 2006, in case a sudden improvement in AMR's fortunes could justify a better contract.

Instead, it was the airline that exercised the option to kick off negotiations early, two days after it announced net income of $291 million for second quarter 2006.

"We decided to move forward with the APA because the issues involved with our pilot contract are complex," Ms. Gordon said, "and starting early gives everyone involved more time to analyze the issues and discuss the right solutions."

Mr. Hunter said he doesn't expect the airline to seek pay concessions, as opposed to the 2003 talks.

"We have no bankruptcy threat at this point in time. The company has seen fit to reward its senior managers as if there were no financial crisis," Mr. Hunter said.

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