American Pilots Union Counters Management Contract Offer: Both Sides Continue to Negotiate Past a Saturday Deadline

The Wall Street Journal
By Susan Carey
Nov. 16, 2014 1:14 p.m. ET


Ignoring a Saturday deadline agreed upon by both sides for a conclusion to contract talks, American Airlines Group Inc. and its 15,000 pilots continued to negotiate terms for a new, five-year labor agreement, with the pilots asking for big raises to compensate for the profit-sharing deal enjoyed by pilots at Delta Air Lines Inc.

The Allied Pilots Association, which represents 10,000 American pilots and 5,000 aviators from merger partner US Airways, late Friday countered American’s proposal made a week ago by asking for a 10% pay raise instead of American’s previous offer of an average of a 3% increase over Delta’s current pay rates. The APA contends that in the absence of a profit-sharing plan, its members should get a bigger raise.

Delta pilots, already slightly better paid in hourly wages, are in line to receive 15% of their annual earnings this year based on their airline’s financial performance and are preparing to negotiate a new labor agreement, expected to contain more pay increases.

American and APA, according to a postmerger protocol, had agreed to end the talks Saturday, with any outstanding items of contention going to an arbitration panel. According to the earlier agreement, American pilots would receive no economic improvements to their current contracts, bumped up after American and US Airways merged last December.

Partly as a result, the two sides seemed willing to keep talking. An American spokesman said Sunday that the parties hadn’t reached a deal and “will continue discussions” this week. A union spokesman said the APA “has moved” in accommodating American management’s public opposition to profit-sharing and countered on other aspects of the offer, including management’s interest in adding seats to regional jets operated by commuter affiliates.

The union said its 22-member board will meet again Tuesday. A memo to members late Friday said the union is “committed to securing a negotiated agreement commensurate with your sacrifices, your role in bringing the merger to fruition and your critical role in our revitalized airline’s day-to-day success.”

American, which is largely run by former US Airways executives, is highly motivated to buy labor peace, given that US Airways consummated a previous merger in 2005 that was complicated by labor problems. But American, based in Fort Worth, Texas, and now the largest U.S. airline by traffic, is mindful of Wall Street’s interest in maximizing profits, and appears uninterested in giving a lot in profit-sharing.

American recognizes that the three largest unions at the old American Airlines parent AMR Corp. were early and enthusiastic backers of US Airways’ controversial takeover of American when the latter emerged from bankruptcy-court in late 2013. Management is working hard to build a common culture and to avoid earlier labor woes.

American has generated outsize quarterly profits since the merger, raising employee expectations as it attempts to negotiate combined labor contracts with employees from both companies. The company sustained a blow a week ago when the 24,000 flight attendants rejected a joint labor agreement by just 16 votes out of more than 16,000 cast. The deal now goes to binding arbitration, with the attendants in line to receive less in terms of pay, benefits and other value than if they had accepted the negotiated deal.

- Source:  http://online.wsj.com