Airline Union to Study Options

The group that represents American Airlines mechanics might consider variable pay, an official says.

PHOENIX -- Labor unrest is likely to be a major issue for the airline industry over the next few years, industry insiders say, as unions aggressively seek to recoup wages and benefits lost during bankruptcies and restructurings. One exception could be the Transport Workers Union at Fort Worth, Texas-based American Airlines. The leaders of the union are continuing to work with the company on a host of projects to bring in outside maintenance work, increase productivity and save jobs. While critical of executives on some issues, such as management's compensation, leaders with the union, which represents mechanics and ground workers, say they're proud of their partnership with airline management.

Transport Workers Union Local 514 represents 6,000 aircraft mechanics and related work groups at American Airlines' Maintenance & Engineering Center at Tulsa International Airport. The M&E Center is American's largest maintenance base, and it is the largest maintenance facility in the world. "We chose to do something about having a civilized relationship," said John Conley, international representative for the TWU who oversees the union's chapters for American employees. "I'm proud of the work we've done." Speaking on a panel at a recent aviation conference in Phoenix, Conley said union leaders are exploring several strategies for contract talks, which are scheduled to begin this year. "We've been exploring options, and that does include components we've never considered before," he said, such as some form of variable pay as well as traditional fixed wages. "We're broaching new territory for us." He stressed, however, that the union's research is still in the early stages, and no decisions have been made on how labor leaders will approach the new contract. American pilots, in contrast, have taken an aggressive stance with the company. Leaders with the Allied Pilots Association, who opened contract negotiations last year, have requested an immediate 30 percent pay raise, annual 5 percent increases during the contract term, and a one-time bonus that could cost the company as much as $400 million. Talks aren't yet scheduled for flight attendants. Jeff Brundage, American's senior vice president of human resources, said it is vital for the industry to tie the compensation of rank-and-file workers to the company's overall success. He said the airline should have created a profit-sharing plan in 2003 that paid out as soon as the company reported an annual profit. Instead, the plan only rewards workers if American earns more than $500 million. That means last year, workers didn't receive anything extra even though the company was profitable, because earnings totaled $231 million. Executives and top managers, meanwhile, shared about $160 million in stock bonuses under a separate plan, which angered employees and sparked protests. "We probably should have done first-dollar profit sharing," Brundage said. He added that changes to airline labor contracts, where negotiations are closely governed by federal regulations, won't be easy. "It's going to require a complete reshaping of the one-size-fits-all mentality," he said. Richard Michalski, general vice president of the International Association of Machinists and Aerospace Workers, praised American for staying out of bankruptcy after employees agreed to concessions in 2003. "American is unique. You have an airline that entered into a pact with its employees and honored that pact," he said. "Most airlines don't do that." While most other carriers have been increasingly outsourcing maintenance work, American has increased its maintenance capabilities and is doing additional work for other airlines. Conley noted that the airline recently acquired the old Delta Air Lines hangar at Dallas/Fort Worth Airport and might begin doing outside work there. And American has been doing additional work at its bases in Tulsa, Fort Worth and Kansas City. "We're looking at everything," he said. "We don't want to miss any opportunities that might be out there." The Tulsa World Business staff contributed to this report.

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