>>Heard from an AA Pilot that AA are losing $30.00 for every seat booked!!
Yeah, but they make up for it with volume...
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AIRLINES IN TURMOIL
Concessions Prove a Tough Sell
To American Airlines Workers
By SCOTT MCCARTNEY
Staff Reporter of THE WALL STREET JOURNAL
The contract concessions that AMR Corp.'s American Airlines tentatively won from its unions have run into so much employee resistance that union leaders are coming back to management to ask for changes.
Leaders of American's three unions agreed last week to a package of hefty concessions that would save the airline a total of $1.8 billion a year. American, the world's largest airline, says if it doesn't get the concessions, it will file for Chapter 11 bankruptcy-court protection. Last week, the airline was within minutes of filing in New York before union leaders approved tentative agreements.
Voting on those agreements, which require majority approval, will be completed Monday with results to be announced a week from Tuesday.
Leaders of unions representing pilots, flight attendants and ground workers have all run into complaints over the length of the contracts -- six years -- and the minimal annual pay raises of 1.5% that begin next year. "The sense I am getting is that this [tentative agreement] will not pass unless the six-year duration is shortened" and a provision to revisit pay rates before the contract runs out is added, Capt. Tom Frazer, chairman of the Allied Pilots Association's Miami base, said in an e-mail to pilots Sunday. Miami has often been a hotbed of dissent for pilots at American in the past.
Presidents of the pilots, flight attendants and ground workers unions together relayed their members' concerns to management late last week. A spokesman for American said Monday the company was not "back at the negotiating table," but declined to comment on whether executives were entertaining informal talks. "We're not discussing at all where anything is in this process," the spokesman said.
The tentative contracts cut deeply. Pilots would see an initial 23% cut in pay, easing to 17% next year, plus work-rule changes that would result in American shedding about 2,500 cockpit jobs this year. Flight attendants would see pay cut 15.6% on May 1. Within the Transport Workers Union, mechanics would see pay cut 17.5% and baggage-handlers would take a 16% reduction in salary.
Management and nonunion employees also would take pay cuts totaling $180 million of the $1.8 billion in annual savings.
American, based in Fort Worth, Texas, contends the cuts are necessary to stem its huge losses, which totaled more than $5.2 billion over the past two years. The carrier is believed to be burning through more than $5 million a day in cash with the war in Iraq reducing passenger bookings. The airline has told workers it needs to restructure, just like US Airways Group Inc., which emerged from Chapter 11 last week, and UAL Corp.'s United Airlines, which continues to operate under bankruptcy-court protection. American also told its workers that bankruptcy would entail contract cuts that are at least $500 million deeper than the $1.8 billion voluntary agreements.
Faced with the option of bankruptcy, union leaders still believe members will ratify the concessions. Pension benefits would be relatively unscathed, and workers had told union leaders ahead of time they preferred to trade lower pay for preserving pensions, something that could be harder to do in bankruptcy.
"It's not pretty. But it does represent perhaps the best chance we have at this time for keeping American Airlines out of bankruptcy," John Ward, president of the Association of Professional Flight Attendants, told his members.
The contracts do offer some potential upside. The company is offering stock options to purchase 37.9 million AMR shares, which would be priced on the day after ratification, and profit-sharing that would allow workers to share 15% of AMR's pretax operating profits over $500 million.
Opponents, particularly in the pilot ranks, complain that some pay rates will be even lower than at United, and came about under heavy pressure from the company. A group of hard-liners called "Pilots Defending the Profession," or PDP, contends the tentative agreement gives the company too much and accuses AMR Chairman and Chief Executive Donald Carty of "extortion."
"We all know that bankruptcy will most likely be worse, but I will not demean this profession by allowing management to extract more than they have asked for under the threat of a gun," said Capt. Sam Mayer, chairman of American's New York union base and a PDP leader.
Pilot message boards have been filled with anger over cuts and the ultimatum from the company. Some even outlined the "six stages" of grief. Still, even some PDP supporters have urged ratification. "I don't see how bankruptcy is in our short- or long-term interests," First Officer Robert Reifsnyder, a PDP supporter and union negotiator, concluded in a bulletin board posting that was e-mailed by union leaders to pilots in many American domiciles Monday.
Updated April 8, 2003 12:08 a.m.