American Airlines pilots and executives swapped proposals for a new contract Wednesday, with pilots seeking to regain wages and benefits lost in 2003 and management looking to cut labor costs and boost productivity.
The proposals from both sides were short on specifics, but it was clear that negotiators have their work cut out for them. The two sides conflicted in several areas: for example, pilots expressed the desire to keep their pension plan intact, while management suggested reducing costs with a market-based retirement plan, such as a 401(k).
The management proposal marked the first time that American executives have publicly explored the idea of replacing an employee pension with a market-based plan. Over the past several years, American has lobbied Congress for pension reforms out of a desire to keep its retirement plans intact.
Congress passed a pensions bill this year, but pensions are still a major financial drain on American, while rivals like Delta Air Lines and United Airlines have cut costs by slashing pensions and replacing them with 401(k) plans.
"We recognize that work at the negotiations table has inherent conflicts and disagreements," Mark Burdette, American's vice president of employee relations, said in a letter to Ralph Hunter, the union president.
American's goal is "to improve productivity and enhance our competitive position so that we can grow responsibly in a way that benefits our pilots and other stakeholders."
The union seized on American's increasingly strong results. The company has returned to profitability on strong travel demand and cost cuts since employees gave up concessions to keep the company out of bankruptcy.
"The time has come to provide our pilots with a return on their investment in the airline," Hunter said in a prepared statement. The union's "proposal is designed to recognize the sacrifices our pilots made to keep the company solvent in 2003."
Across-the-board pay raises
Enhanced medical, vacation and sick benefits
More pilot control of scheduling
Preservation of pension benefits
Protection from layoffs
Competitive labor costs
Pilots flying more hours
Compensation based on company and pilot performance
Possible replacement of pension and medical plans with cheaper, market-based plans
As a point of information, the contract is not amendable until 2008.
It's a new day. Every moment matters. Now, more than ever.
CHIFLYGUY From United States of America, joined Aug 2006, 141 posts, RR: 0 Reply 1, posted (6 years 8 months 4 weeks 3 hours ago) and read 1971 times:
I had an interesting discussion with a flight attendant coming back from London. I congratulated her on the latest quarter's profit, and her response was, "I guess management will get their bonuses". After chatting with her for a few minutes, it became clear that she believed that airline profits were somehow wrong, and that any profits generated really represented money that should have gone to the employees. So I'm not surprised that the minute AA starts making money, the unions want it for themselves.
This is the real risk to the AA recovery, and really that of any other airline. Can they sustain a viable cost structure in the face of a workforce that fundamentally doesn't believe the company should be profitable?
Make no mistake, AA needs further cost reductions - including some way to renegotiate its some of its crushing debt load - and above all better productivity out of employees, to stay competitive with the next round of carriers exiting BK with radically lower costs and cleaned up balance sheets, and to eventually replace its aging fleet.
USPIT10L From United States of America, joined Mar 2006, 3267 posts, RR: 8 Reply 2, posted (6 years 8 months 3 weeks 6 days 22 hours ago) and read 1835 times:
Quoting CHIFLYGUY (Reply 1): This is the real risk to the AA recovery, and really that of any other airline. Can they sustain a viable cost structure in the face of a workforce that fundamentally doesn't believe the company should be profitable?
As a former airline employee, I don't believe airline PROFIT is wrong, but when you talk to senior members of a company about company results, there is a certain amount of bitterness over money that has been given back, but has not been replenished. These people lived at a certain standard of living, and that standard has been taken away, across the board. They're just looking to get that money (and that standard) back.
These employees agreed to serious concessions in 2003, only to have their management agree on retirement benefits and perks far beyond what the employees would get. It caused AA to change their executive management around.
CHIFLYGUY From United States of America, joined Aug 2006, 141 posts, RR: 0 Reply 4, posted (6 years 8 months 3 weeks 6 days 21 hours ago) and read 1719 times:
For what it's worth, I think that top exec's setting up special, fully funded, guaranteed pensions prior to a BK filing is despicable. There are many, many examples of CEO greed out there which should be rightly condemned by everybody. But two wrongs don't make a right. The pilots and other groups of airline employees are nothing more than mini-me CEO's who've been, like the OEM's, engine manufactures, financiers, etc, feasting on the rotting carcass of an industry that hasn't turned a cumulative net profit in its existence. If they haven't been as successful at it as the C-suite, it certainly isn't for lack of trying.
I should be clear to make a distinctions between groups like the pilots, mechanics, and baggage handlers who have been very well compensated over the years, and the flight attendants, gate agents, etc. who have not. It's of course so typical of the dysfunctional airline industry that it invests the least in its customer facing product.
Quoting Dc10s4ever (Reply 3): It will likely NEVER happen. Most of the pilots (and most employees for that fact) I talked to said they would rather see the company shut down than give any thing else back.
Employee attitudes like that are why UA, DL, US, NW, and CO (twice!) ended up in bankruptcy. The AA employess will very much be making additional sacrifices if AA ever gets there too, say, because it can't complete against lower-cost competitors emerging from BK and it finally drowns in a sea of debt and decrepit planes.
RamerinianAir From United States of America, joined Nov 2003, 1486 posts, RR: 0 Reply 5, posted (6 years 8 months 3 weeks 6 days 20 hours ago) and read 1692 times:
People don't seem to have forgotten that AA and the rest of them lost A LOT of money the past few years! Just because they posted 1 quartely profit doesn't mean that everybody must get a pay increase . . . AA needs to SUSTAIN profit and regain some cash reserve. This will allow them to have a more secure future. More than anything else listed above, the pilot's want SECURITY.
DeltaSFO From United States of America, joined Nov 2000, 2488 posts, RR: 24 Reply 6, posted (6 years 8 months 3 weeks 6 days 13 hours ago) and read 1556 times:
I'm not sure why everybody is surprised at the typical tension between labor and management over the direction of this contract.
The reason I posted this article is because I was surprised that AA senior management has completely reversed course and decided to try to reduce or eliminate pension benefits so soon after disparaging other airlines that either ended their defined benefit pension plans and/or requested legislative help to avoid defaulting on pension plans.
It's a new day. Every moment matters. Now, more than ever.