Aug. 09-- A razor-thin contract ratification vote by American Airlines mechanics announced Wednesday is expected to save about 1,400 jobs at the carrier's Tulsa maintenance base, but it will start the clock on layoffs of 770 local mechanics, officials said.
The companywide layoffs of 2,615 mechanics and related workers and stock clerks are expected to begin in six to nine months, union and company officials said.
The stock clerks voted overwhelmingly for their contract, while the Allied Pilots Association solidly rejected its proposed agreement.
American officials originally wanted to cut more than 2,100 of Tulsa's 5,000 mechanics and related workers, and 160 stock clerks. The new deals reduced those numbers to 770 and 90, respectively.
The mechanics ratification vote saves jobs and wages and some benefits, but it will not restore prestige and pride to the profession, Transport Workers Union officials said.
"In Tulsa, at American Airlines, it was one of the best places to work," said John Hewitt, chairman of maintenance at TWU Local 514. "You had retiree medical and a pension, both of which are going away (in American's bankruptcy restructuring), so it's hard to call it a career anymore. A lot of incentive to stay here and retire has been taken away.
"At first, (the ratification vote) was a little bit of a temporary relief. But the next thing is implementing the painful part, working through the job losses, which will affect the community. At this point, I'm not looking forward to anything. The only thing to look forward to is the other side of it -- getting through the bankruptcy, renegotiating contracts and recouping some of the jobs lost."
American's mechanic and related work group ratified its contract by a 48-vote margin out of 9,504 ballots cast: 4,776 workers or 50.25 percent of M&R members voted for the contract, 4,728 people or 49.75 percent voted against it.
Stocks clerks voted 858 yes, or 79 percent; and 229 no, or 21 percent.
Five TWU work groups -- dispatch, fleet service, ground school instructors, maintenance control technicians and simulator technicians -- approved their contracts in May, while maintenance and related, and stock clerks rejected their agreements.
American spokesman Bruce Hicks said ratification of the agreements is an important step forward in the bankruptcy restructuring of AMR Corp., parent of the airline.
"We know these were difficult decisions, and we appreciate our people taking the time to voice their opinions through the voting process," Hicks said. "The ratified agreements will help American reach our targeted cost savings and increase productivity and network flexibility, while preserving nearly 1,900 TWU jobs that would have been eliminated under the original term sheets and offering pay increases for TWU employees."
Provisions of the contracts ratified by the two work groups include 15 percent wage increases over six years, improved health care coverage compared with previous offers, market wage readjustment, based on industry compensation, after 36 months, and the ability to reopen full contract negotiations after four years. The M&R contract also permits the company to outsource up to 35 percent of aircraft maintenance now performed in house
Chuck Schalk, vice president of TWU Local 562 in New York, said he voted against the agreement, which he termed "a management contract."
"Let me know in a couple of years how things work out for the "yes" voters," Schalk said. "There was a full-court press (by American) at AFW (Alliance Airport, Fort Worth) and Tulsa where mechanics were told a 'yes' vote will save more jobs. Those are words that are not written in the contract.
"This contract will give them the power to lay off at will wherever they want, whenever they want."
In March, American executives said they needed to reduce labor costs by $1.25 billion annually, or 20 percent from each work group, to emerge from bankruptcy and compete successfully in the airline industry.
Through negotiations with labor groups, American has reduced its targeted costs savings to just over $1 billion a year, or 17 percent from each work group.
Hewitt said early-out incentives in the M&R contract could reduce the involuntary layoffs, although they would not change the targeted reduction of 2,400 mechanics and related.
As part of the early retirement program, a mechanic who is 45 years old with 15 years with the company could be eligible for a $12,500 cash payout, plus $10,000 and 13 weeks' severance pay, Hewitt said.
"Considering the career status this job once had, it was more important to have a career than to walk away with money," Hewitt said.
In balloting that concluded at noon Wednesday, American's Allied Pilots Association rejected its contract 61 percent to 39 percent. The vote was 2,935 yes, 4,600 no.
APA spokesman Greg Overman said the ratification vote reflected a decade of frustration among pilots.
"There was the concessionary contract of 2003, which they looked at as an investment in the company's future," Overman said. "At this point, they think the decade was squandered (by management). Then there was the six-year duration of the contract. Pilots believe collective bargaining under the Railway Labor Act could mean six years could turn into eight years."
Pilots also reacted negatively to the proposed "pay bands" assigned to pilots flying specific aircraft.
The Airbus A319, among hundreds of Airbus aircraft on order by American, is assigned one pay band, below which is another for MD-80 aircraft, which is being retired by the company.
"The concern is that a lot of Super 80 flying will be done by A319s -- which would create essentially a B scale pay rate," Overman said.
Although APA's rejection of the contract is expected to trigger a federal bankruptcy judge's ruling on American's Section 1113 motion to cancel the APA collective bargaining agreement, the situation is not as dire as it seems, said a Dallas bankruptcy lawyer.
Jeffrey R. Erler, a partner at Bell Nunnally & Martin LLP and a participant in US Airways bankruptcy restructuring earlier this decade, said it will be "business as usual" for APA and American.
"The parties will operate as if the contract were in place," Erler said. "The company could impose some minor conditions, but it's not going to be something earth-shattering.
"They will start back at the negotiating table, and the question is, how long until the next (contract ratification) vote?"
--What happened: American Airlines reached deals with two Transport Workers Union groups -- mechanics and stock clerks. The company now has deals with all seven TWU-represented work groups, which represent about 24,000 employees.
--What it means: Fewer layoffs in Tulsa than originally projected. Originally, about 2,100 mechanics and related workers were expected to lose their jobs in Tulsa. The agreement calls for 770 layoffs. For AMR's Tulsa stock clerks, there will be 90 job losses instead of the original 160.
--How they voted: Mechanics narrowly approved the contract -- yes votes edged no votes 4,776 to 4,728. Stock clerks voted yes by a wide margin -- 858 to 229. Votes were companywide, not just in Tulsa.
--What's next: Job reductions in Tulsa. where American employs 7,000 people, could come in the next six to nine months.
Sources: Transport Workers Union, American Airlines
D.R. Stewart 918-581-8451
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