American pilots' deal scrutinized

Friday, September 1st 2000, 12:00 am
By: News On 6

American Airlines Inc. and the leaders of its pilots' union have staked their hopes of building a more competitive airline and fostering labor peace on a tentative one-year contract extension agreement that pilots will vote on this month.

Donald J. Carty, American's chairman and chief executive officer, made a special appeal to the Fort Worth-based airline's 11,000 pilots and fielded their questions this week during a live Webcast.

"We are at a historical crossroads. ... And if we can move forward with this, it will benefit the company in many, many ways," he said.

Meanwhile, opposition to the agreement is mounting. On Thursday, the chairman and the vice chairman of the Dallas-Fort Worth domicile, the airline's largest base of pilots, sent 2,600 pilots an e-mail urging them to vote against the extension.

"We want you to know that we plan to personally vote no to this tentative agreement," stated the letter e-mailed by D-FW base chairman Phillip Beall and vice chairman Jeff Sheets. "Further, we recommend you do the same."

In addition, 12 members of various committees of the Allied Pilots Association and three former union negotiators have established a Web site to try to derail the agreement.

Without it, the current contract would become amendable Aug. 31, 2001.

American and the board of the pilots' union reached agreement on the contract extension in late July. Ballots were mailed to pilots Thursday, and results will be announced Sept. 20.

Mr. Beall, a member of the APA board, voted to approve the contract extension in July. In an interview Thursday, he said he had changed his mind because of a tentative labor contract reached Saturday by pilots at United Airlines Inc. Industry analysts expect this contract to set higher standards for pay and other benefits.

"United absolutely raised the bar as far as compensation and quality of work issues are concerned," he said.

"Management [at American] should not take this [letter] in any means as a rejection of the airline's efforts to establish a better relationship between management and employees," Mr. Beall said.

'A trust issue'

American says the contract extension will help the airline grow, make it more competitive and provide job security for its pilots.

"Some of our pilots don't believe an agreement can have benefits for both the company and the pilots," said Jeff Brundage, American's managing director of employee relations for flight. "Some of the 'just vote no' contingent are really suffering from a trust issue."

"We have not let ourselves into a position where we don't have alternatives," he added.

During the last few weeks, union leaders have been promoting the benefits of the agreement in presentations to members around the country. But as details of the United agreement leak out, some pilots are complaining that the extension doesn't measure up.

United's pilots negotiated better wage increases coupled with tighter restrictions on how the carrier can use its regional jets, some American pilots say.

Airlines are trying to add as many regional jets to their fleets as possible. The planes fly longer distances at higher speeds than turboprops.

Regional jets are feeding traffic into hubs from medium and small cities that lack the population to support the service of a big jet but are too far away for turboprops to reach.

American's pilots have long viewed regional jets as a threat to their job security, because the planes are flown by lower-paid pilots at American Eagle, American's regional affiliate.

During contract negotiations in 1997, disagreements about regional jets helped lead to a brief pilot strike.

The contract extension allows American to purchase an unlimited number of small or regional jets with 50 or fewer seats.

Under the pilots' current labor contract, American cannot buy more than 67 regional jets with 45 seats or more during the life of the agreement.

Still some questions

Although the pilots won the right to fly regional jets with more than 50 seats, they won't be flying any of these planes in the short term, even if the contract extension is ratified.

Instead, American will transfer its firm orders for 25 70-seat Canadair regional jets to Horizon Air, a regional affiliate of Alaska Air Group Inc. of Seattle. In exchange, American will be able to sell seats on Horizon flights as if they were its own, a marketing arrangement called code sharing.

The Allied Pilots Association expects American to purchase large regional jets to meet consumer demand, said Gregg Overman, a spokesman for the union. So far, the airline has no plans to do so, but Mr. Carty told pilots that it is too early to tell.

If the contract extension fails to pass, American Eagle will take delivery of the 70-seat planes next year.

While acknowledging that United may have made different concessions on regional jets, Mr. Brundage noted that negotiations are an imperfect, give-and-take process that will produce varying results from carrier to carrier.

Pay issues

Yet regional jets are not the pilots' only concern. Some expressed fears that they would fall behind the pay of their peers at United and Delta Air Lines Inc.

To allay these fears, American has proposed beginning early negotiations on the next labor contract once the extension is approved. Consequently, Mr. Brundage said, pilots would be negotiating a new contract while also receiving a wage increase from the extension.

Without the contract extension, he said, pilots would be in talks next year without a raise.

"The fact of the matter is," Mr. Carty told pilots during Tuesday's Webcast, "the company doesn't want American pilots to have a contract on an ongoing basis that's less good than our major competitors."

New contract talks could begin either 30 days after Delta's pilots, now in negotiations, ratify a new contract or by Aug. 31, 2001, whichever comes first. Normally, these talks would not begin until early 2002.

Mr. Beall, the local domicile's leader, and other pilots say American's offer to launch earlier contract talks is inadequate.

Leaders of the Allied Pilots Association are still studying the details of the United agreement, Mr. Overman said. APA president Rich LaVoy was not available for comment Thursday.

A strained past

The contract extension is viewed as an effort to improve relations between American and its pilots union. Many pilots staged an 11-day sickout in February 1999 to protest the way the airline handled the integration of newly acquired Reno Air Inc.

The sickout canceled nearly 6,700 flights and cost American $225 million.

It also resulted in a $45.5 million fine against the union after a federal judge in Dallas ruled that the union's membership had failed to promptly obey his order to get back to work.

Some pilots resent the fact that APA leaders negotiated the contract extension with the fine hanging over the union and some of its top officers.

The union is fighting the fine in a federal appeals court in New Orleans.

Under the contract extension, the fine would be dropped.

The union says that seven of the 12 board members who voted to approve the contract extension were not involved in the litigation.

"The fine is a black cloud – it needs to be addressed and if not now, when?" Mr. Overman said. "There is not a perfect time to do it."