Contract will be tough sell for AA mechanics
July 03-- A tentative agreement on a new contract for 11,000 American Airlines mechanics and stock clerks will be a tough sell and a vote to ratify could be close, mechanics and industry analysts say.
But members of the Association of Professional Flight Attendants, who also are negotiating new contracts with American in Fort Worth this week, are expected to reject the company's latest offer, officials said.
"The mechanics will see some movement but not a lot," said Robert Herbst, an airline industry analyst and founder of . "The first time it was a close enough vote, and I expect the second time around it will be voted up by mechanics.
"I don't believe the flight attendant leadership will agree to concessions that will be necessary to get a tentative agreement. The flight attendants are near the industry's highest costs, so they would have to agree to the largest concessions to get them down to a competitive contract with the industry. I don't see them doing that."
Executives at American, whose parent AMR Corp. filed for bankruptcy in November, said they need 20 percent cost savings from the APFA, the Transport Workers Union and the Allied Pilots Association to exit bankruptcy and compete successfully in the airline industry.
About 5,600 mechanics and related work groups are employed at American's Maintenance & Engineering Center in Tulsa.
The TWU mechanics and stock clerks and the flight attendants rejected American's "final" offer in May.
Five TWU work groups accepted the company's last offer in May, which saved 1,300 jobs of the 13,000 jobs American said it needs to cut to be profitable.
U.S. Bankruptcy Judge Sean Lane postponed a ruling on American's motion to reject its collective bargaining agreements with the three unions after the negotiators for the Allied Pilots Association agreed last week to present a final offer to its membership for a ratification vote over the next six weeks.
The hiatus allows negotiations to resume between American, TWU mechanics and stock clerks and the flight attendants.
TWU mechanics and stock clerks are striving to improve the terms of the company's "final" offer, which included 7.5 percent wage increases over six years.
"If the fleet service (agreement) is a guide, they got 11 percent wage increases over six years," said Chuck Schalk, vice president of TWU Local 562 in New York. "Eleven percent is great for Tulsa. For New York, it doesn't help me at all. If that's what it is, I'm going to push a "no" vote."
The pilots union has been offered 14 percent wage increases over six years and a claim against AMR in the form of a 13.5 percent equity stake in a newly reorganized American Airlines.
"Our advisors stated that a 13.5 percent equity stake should make APA the largest equity holder in the company," said APA President Dave Bates. "As a result, we would be able to influence key decisions from our seat on the unsecured creditors committee that will take place for the balance of (bankruptcy) restructuring, such as the makeup of the reorganized airline's board of directors.
"Our advisors also noted that if a merger between American Airlines and US Airways take place -- whether during restructuring or after AMR emerges from bankruptcy -- the value of that equity stake should increase since the overall enterprise value would go up through the combination of the two airlines."
All three unions have stated they would prefer a merger with Tempe, Ariz.-based US Airways, with which they have reached tentative contract agreements that would be effective upon a merger.
US Airways executives said the company would cut only 450 jobs in Tulsa compared with up to 2,100 workers American said it may need to lay off. Systemwide, a merger would eliminate about 4,900 mechanics, baggage handlers and other ground workers, US Airways officials said.
"The agreement we have with AA management is a safety net," said APA spokesman Tom Hoban. "In the event we don't get a US Airways agreement, this is our fallback position."
Herbst, the industry analyst, said a tentative agreement will be much easier to accept by APA than it will be by mechanics, stock clerks and flight attendants.
A factor in the divide between the labor groups is American's impending $37 billion acquisition of 460 Boeing and Airbus narrow-body aircraft, the analyst said.
"American is going to need all its pilots," Herbst said. "But the mechanics are going to lose jobs because.... new aircraft don't need maintenance."
D.R. Stewart 918-581-8451
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