AMR Bankruptcy: Unions Demand Business Plan, Standards For Executive Pay
Feb. 01-- On the eve of meetings between American Airlines management and union leaders to discuss restructured labor contracts in bankruptcy, union executives demanded a company business plan and pay-for-performance standards for company executives.
Representatives of American's flight attendants, pilots and mechanics said Tuesday the company cannot simply ask for further sacrifices by employees without changing the direction of the airline.
"We are standing on the precipice of a very stressful and tumultuous time in this bankruptcy," Laura Glading, president of the Association of Professional Flight Attendants, told 16,000 members in an email. "Our experts and I expect this initial proposal to include drastic cuts across the board. Further, I expect dismay and outrage from our membership as details of the proposal are made public.
"I urge you to remain calm. Our strategy for negotiations will remain unchanged."
Leaders of the APFA, the Allied Pilots Association and the Transport Workers Union, which represents 5,600 airline mechanics and related work groups in Tulsa, are gathering at the company's corporate offices in Fort Worth on Wednesday to meet with American management.
The labor leaders expect the company to present proposals offering cuts in the workforce and/or wages and benefits, as well as freezes and/or termination of employee and retiree defined benefit pension plans.
"We are reviewing every aspect of our business, and it's clear we have to be a more nimble, flexible and efficient airline in order to compete," said American spokesman Bruce Hicks. "The changes we are considering will help ensure American can prosper and grow. We will be meeting with our unions on Feb. 1 to begin the process for making those changes."
American officials said they will hold a general meeting with all the labor representatives at 10 a.m. Following the general meeting, American executives will hold individual sessions with each union to outline proposed changes to the collective bargaining agreements, officials said.
"The stress level is up there because of not knowing what's going to happen," said Sam Cirri, president of TWU Local 514 in Tulsa. "People are worried about their jobs."
The meetings in Fort Worth are nine years after members of the three unions agreed to $1.62 billion a year in wage and benefit cuts to keep American parent AMR Corp. from filing for bankruptcy.
The three union contracts became amendable in 2008, but negotiations on new contracts have faltered as members were unwilling to agree to further cuts in wages and benefits.
American executives say the airline is operating at an $800 million a year labor cost disadvantage compared with its competitors, who reduced wage, benefit and pension costs through the bankruptcy process after 9/11.
Prior to AMR's Chapter 11 bankruptcy filing on Nov. 29, American was the only U.S. airline never to have filed bankruptcy.
AMR's bankruptcy petition, filed in New York, lists assets of $22.87 billion and liabilities of $30.08 billion.
AMR has reported losses of more than $11 billion over the past decade.
Glading said the way forward is not through cuts in worker wages and benefits but with a viable business plan.
Mismanagement at the highest level of the company has led to a revenue gap between American and its competitors, Glading said.
"We need top-down improvements, not bottom-up cuts," she said. "If the company cannot implement major business changes in this bankruptcy, then we do not have the right management team in place."
Glading said she and her financial advisers will review the company's business plan to see if it includes:
--Pay-for-performance standards for American management. Company executives in recent years lost the support of employees when their annual bonuses did not align with the airline's profitability, Glading said.
--Growth in profitable routes. Glading said management should do more than cut routes that aren't profitable. Management should grow the airline and be competitive on routes American once dominated, she said.
Glading, along with leaders of the TWU and APA, called for the company to negotiate in good faith with the unions.
"Our flight attendant costs are competitive with the other major carriers," she said. "In 2003, American Airlines experienced a virtual bankruptcy, and we gave back 30 percent of our salaries and benefits. The flight attendants are making 37 percent less in real dollars today than they were in 2003."
Showdown in Fort Worth
What: Management of American Airlines meets Wednesday with representatives of the company's Transport Workers Union, Association of Professional Flight Attendants and Allied Pilots Association.
Why: American, whose parent AMR Corp. filed a Chapter 11 bankruptcy reorganization petition Nov. 29, hopes to reduce an $800 million-a-year labor cost disadvantage with competitors who slashed wage and benefit costs in bankruptcy after 9/11.
How: Section 1113 of the U.S. Bankruptcy Code allows a debtor to assume or reject collective bargaining agreements.
Sources: AMR Corp., U.S. Bankruptcy Code, Transport Workers Union, Association of Professional Flight Attendants, Allied Pilots Association
D.R. Stewart 918-581-8451
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