American Airlines & Mechanics Reach Agreement

Filed Under: American, Unions

The very drawn out dispute between American Airlines and the company’s mechanics is finally coming to an end, and it looks like mechanics are winning big time.

American Airlines & TWU-IAM reach agreement

American Airlines and the TWU-IAM (the unions representing mechanics) have finally reached a tentative agreement worth $4.2 billion, covering more than 31,000 employees.

As American Airlines CEO Doug Parker describes the deal:

“Our Maintenance & Related and Fleet Service team members are the very best in the business and work incredibly hard to care for our customers. They deserve contracts that include meaningful improvements in pay, quality of life and job protections. The tentative agreements deliver on all of these — and more. We appreciate the Association and company negotiators who worked so hard to get us to this day, as well as the National Mediation Board for their guidance.”

Meanwhile TWU-IAM describes this as the richest contract in the industry:

These Agreements in Principle will provide all Association members with wages, benefits, work rules, job security and retirement income that had never before been accomplished. Total compensation (wages, premiums, retirement, and profit sharing) is the richest in the industry. Not only are all Association members’ jobs protected in their locations, but more importantly, we were able to protect the work we do. The considerable benefits to all members will be immediately apparent.

What are American mechanics getting with new contract?

This new contract appears to be a big win for mechanics:

  • Mechanics go from getting 5% profit sharing, to getting 10% profit sharing on the first $2.5 billion in profits, and 20% profit sharing on anything above that
  • There will be a $3,000 signing bonus for fleet service, and a $6,000 signing bonus for mechanics
  • There will be pay raises of anywhere from 3.9% to 17.7%
  • No mechanics will be losing their jobs or having to relocate
  • Legacy US Airways mechanics will keep their current health plan for the next five years, which is something that was important to them

Why this battle has been so drawn out

I’ve been writing about the battle between American management and mechanics for months now. To sum it up, the mechanics were the only work group that didn’t have a new contract since American and US Airways merged.

That’s because American and US Airways mechanics wanted different things, and management was happy to just drag things along.

Earlier this year the situation escalated, as mechanics had enough. In May the head of TWU-IAM made some bold threats towards management, promising:

  • “The bloodiest, ugliest battle that the United States labor movement ever saw”
  • If it comes down to a strike, it will be “absolutely vicious” and will be “organized by a guy that came out of the New York City subway system that’s well inclined to strike power and who understands that the only way to challenge power is to aggressively take it to them”
  • To “shut this place down”

Sure enough, for the next several months American mechanics intentionally took planes out of service, and one mechanic was even arrested after intentionally sabotaging a plane.

American ended up suing mechanics, and they even won that lawsuit.

Next up are pilot & flight attendant negotiations

American’s contracts with both flight attendant and pilot groups are also currently up for renewal, and both unions have accused management of dragging their feet.

The unions have long pointed out American’s abysmal profit sharing, especially as Delta just reported record profit sharing with employees (14% of their salary).

I suspect the mechanics union playing tough will be used as an example for the other unions, since ultimately the mechanics more or less got what they wanted.

I think it’s safe to assume that pilots and flight attendants will be fighting hard for more profit sharing, and this is going to be a real challenge for management.

Bottom line

I’m happy to see that we shouldn’t have major operational problems stemming from American’s mechanics anymore. That’s good news.

At the same time, this negotiation probably sets the precedent for some rough upcoming negotiations with pilots and flight attendants. They’re going to want their “fair share,” and I doubt management will give in that easily.

Frankly it seems to me like American’s management did a lousy job negotiating here. The mechanics destroyed the operation all summer, management won a lawsuit against mechanics, and yet mechanics still won big with these negotiations.

Don’t get me wrong, I’m all for these work groups taking some money out of the company’s bottom line but it just seems to me like American lost on just about all fronts here.

While this is now behind them, I think the success of the mechanics will only cause more problems among pilots and flight attendants.

What do you make of this agreement between American management and the mechanics union?

  1. Our flight from ORD was canceled after the pilot timed out from a 3 hour lightbulb change in the galley… a lot of money for mechanics who can’t perform a simple task. AA has REALLY gone down hill, it’s really sad.

  2. Sorry, Lucky, but this is pretty lazy analysis. Saying that the mechanics won because the terms look good ignores what the mechanics were demanding. Did they demand higher pay raises, higher profit sharing, etc, but settled on these levels? How far are these levels above what AA originally offered (if at all)? We only have one side of the story here, i.e. the resolution, without knowing where both sides started, so it’s impossible to call it a win one way or another.

  3. I am sure Brandon is a real expert when it comes to repairing aircraft. He is probably one of those guys who can’t change his own flat tire on his car.

  4. I’m going to disagree here because if you create an incentive for frontline employees to participate in profit sharing at an attractive rate, then that should help to boost morale, make employees be mindful of costs and reduce waste. The company has subjugated their frontline employees while giving to their pilots which creates animosity among crew members/mechanics against the pilots and management. Maybe management has finally gotten the message that creating an incentive for employees may create the favorable “attitude adjustment” needed. Believe me, surly FAs serving First Class and gate personnel leaving luggage on the tarmac during a rain storm as opposed to leaving the luggage in the jetway (witnessed in DEN last summer), makes a paying First Class customer rethink flying with them again.

  5. dfw88

    don’t expect Lucky to be analytical. Most of the bloggers just like to give their opinions and they come across as facts. I wonder if it was Delta instead of AA if the narrative would be the same.

    Oh it’s cool that Delta employees get a big profit sharing but now that AA has given the mechanics a similar profit sharing percentage AA does a lousy job.

    If the mechanics didn’t get what they wanted we would hear Lucky complain about there being low morale and all the other negative stuff.

    Go figure!

  6. Wasnt one of the big sticking points sending maintenance work overseas? The settlement says no one will lose their job, but that leaves the door open for them to hire mechanics in cheaper countries and basically replace any US mechanic who retires with a foreign one for cheaper, over time dropping the number of union members. AA management will view that as a win if playing the long game.

  7. Congratulations to the IAM TWU on the contract!

    A well paid, long term, secure workforce is in the benefit of passengers and the public.

  8. Meanwhile Delta gives huge profit sharing, has reliable and desirable operations, and happy employees. I still say that top level, the C-Suite and board of AA should all be replaced with real management, not that of low cost cut rate regional America West management that is
    in place now.

  9. Yep this is the type of leader you want for any organization. All you need is a common thug.

    Go to war by declaring these terms.

    “The bloodiest, ugliest battle”
    “absolutely vicious”

    And the victory speech with the term

    This makes Donald Trump look like a saint.

  10. Legacy US Employees continue (for 5 years) to receive health care insurance at NO COST to them while AA insurance continues to go up every year. This alone could be thousands of dollars a year in compensation for one group of employees that is not offered to another group performing the same job.

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