American Airlines Pilots Want A New Contract, Running Out Of Patience

Filed Under: American, Unions

Unsurprisingly, American Airlines pilots aren’t happy…

American’s 2019 Struggle With Mechanics

The spring and summer of 2019 was a rough period for American Airlines operationally. This came as the company’s mechanics got into a habit of intentionally delaying flights as a way of sending a message to management.

In the past few months things have returned to normal, which coincided with:

So for now things are better operationally, which is good news.

Pilot & Flight Attendant Contracts Are Now Amendable

In February 2019 I wrote about how contract negotiations would be ramping up between the company’s management and the unions representing pilots and flight attendants:

  • The contract with flight attendants (represented by the Association of Professional Flight Attendants) became amendable as of last month, December 2019
  • The contract with pilots (represented by the Allied Pilots Association) became amendable as of this month, January 2020

Well, at this point contracts with both work groups are amendable, and there’s no new contract yet.

What American Airlines Pilots Are Saying

Today Captain Eric Ferguson, the President of the Allied Pilots Association, published an open letter answering the question “what now?”

The premise of his letter is that American Airlines’ CEO, Doug Parker, said “shame on us if we can’t figure out, over the course of a year, how to get a contract done before the amendable date.” Now that the amendable date has passed, pilots are of course wondering what’s going on, after having proposed several contract ramifications.

I have to say, Ferguson’s letter is very well written:

  • It’s “softer” and more respectful than the threats we saw from the union representing mechanics, who promised a “bloody battle”
  • It clearly explains how a good contract with pilots also benefits shareholders and customers
  • He’s pointing out the weakness of American Airlines’ management post-merger
  • He’s putting it in management’s court to get the ball rolling on negotiations

Ferguson claims that since January 2019, APA has systematically presented a series of detailed proposals designed to accomplish the following core objectives:

  • Improve scheduling, company transparency and accountability, and qualify of work life
  • Achieve industry-leading hourly pay rates and address gaps in compensation and benefits with peers
  • Undertake contract repair, with a focus on items that were lost in bankruptcy

However, they haven’t gotten very far. Ferguson claims that management’s negotiating team has had no sense of urgency, and spent the first several months of bargaining in “receive only” mode. Management has so far only presented APA with what they claim resembles an opening proposal.

This is a rather refreshing letter to read from the head of a union to management:

Our proposals address our pilots’ needs and also take into account the needs of American Airlines, its passengers, and its investors. They’re designed to create efficiencies and rid our operations of wasteful scheduling practices that degrade operational integrity and our pilots’ quality of life. They will help repair American Airlines’ reliability issues, with particular focus on provisions for swift recovery performance during IROPS. And while we structured our proposals to address our pilots’ needs, they will also improve the airline’s revenue performance by fostering reliable operations in all weather conditions, not just clear and calm days during off-season travel periods. APA’s proposals will help create an airline that passengers, employees, and investors can count on.

Simply put, what we propose is exactly what American Airlines needs.

And they call out Parker and his team about how they could get a contract done in no time when the merger relied on it, but are now taking their sweet time:

Ironically, with billions of dollars on the line during the proposed merger of American Airlines and US Airways, this very same management group negotiated pilot agreements with an unmistakable sense of urgency. It took barely a month from when Mr. Parker and his team first approached APA in March 2012 about a possible merger to negotiate and execute the Conditional Labor Agreement, and only eight more months to negotiate the Memorandum of Understanding that led to the creation of the new American Airlines.

Today, management must prove they can do more than facilitate mergers. They’re running out of time to prove their team can create and manage an airline that is the first choice for passengers, pilots, and investors. Our airline is plagued by operational failings that cause it to underperform and fall behind our competitors. While other airlines save unnecessary costs, generate superior revenue, and earn the trust of their highest-value customers, our airline too often struggles to maintain the schedule.

Most of our competitors use an incentive-based model to maintain operational reliability, while American Airlines management clings to a coercion-based model. An agreement that effectively incentivizes our pilots to maintain the operation and recover quickly from breakdowns would better equip our airline to compete and succeed.

Ferguson points out that Parker is great at mergers, but hasn’t done much in the six yers since:

I give Mr. Parker due credit for being a prime mover behind the U.S. airline industry’s transformation into a stable and profitable industry through consolidation. He had a vision and the tenacity to see it through. Nonetheless, during the six years since the merger, it appears he and his team have fallen short in day-to-day execution and in their ability to bargain with employees. They have been great transactional dealmakers, but the last deal has been done for quite a while, and we’re left with an airline that hasn’t yet realized its full potential. We all wish this wasn’t so.

The letter finishes with the below line:

While there’s still time remaining, it’s far from infinite — and neither is our patience.

Bottom Line

This could prove to be yet another messy year for labor relations at American, as both pilots and flight attendants have amendable contracts. My hope is that management and the unions can come to an agreement before we see some sort of industrial action (whether official or unofficial).

Unfortunately I’m not all that confident, based on how management has worked with mechanics, and the generally reactive approach they take towards running the company.

So I wouldn’t be worried about American’s operations yet, though I do think with this American’s pilots union has at least issued a “heads up” of what might become a problem if management doesn’t act.

Comments
  1. Good lord, Parker is like the Trump of the airline industry… completely dishonest and incompetent. Perhaps AA’s pilots should consider a strike that will make AA lose so much money that the board will finally have enough and kick Parker out on the poor performer express lane he belongs in.

  2. AA management is going to sit on this and do nothing until this fall at the earliest. In the meantime pilots will grow increasingly frustrated and will employ their “fly safe” tactics during the busy summer season. Management will cry foul and seek, and receive, a court injunction against the pilots but operational reliability will continue to suffer. Then about a year from now they’ll hammer out a new agreement

    Ditto for the flight attendants.

    The only real losers in this game are the customers who by choice or necessity have to endure another year of bad service from AA and it’s employees.

  3. “Achieve industry-leading hourly pay rate”

    Yes, I understand the union wants the highest pay out there. Can you understand why the airline does NOT want that and would not be amenable to a contract that pays the most in the industry? They may get there, but why would AA want to do that now?

  4. Thank goodness I’m not hub captive! One of the benefit living in a big city; plenty of choices and I can careless if AA pilots and/or flight attendants decide to call in sick last minute! I guess I should be booking UA or Delta for the later half of the year….

  5. @David

    American Airlines pilots are already handsomely paid with great benefits. The union push to suck a company dry never ends and will inevitably lead to more bankruptcy. Nothing good for the shareholders or passengers come from these extreme pilot demands.

  6. These pilots are already paid enough!! ENOUGH of trying to bankrupt this carrier by its GREEDY unions!! The pilots received a mid contract raise already! What about other work groups making pennies vs these pilots! Remote flying commercial aircraft cannot come quick enough!

  7. @Adam Rogerson
    Without pilots and flight attendants an airline can’t function. Yes, they are probably being greedy but why shouldn’t they be when CEO Parker gets a very high salary while his complete lack of vision continues to worsen AA’s stock?

  8. People seem to forget who actually does the work of an airline. Short of professional sports teams, I cannot imagine an industry where there is a more direct connection between the labor of the employee and the profits of the company. Pilots and flight attendants run the airline. Parker and every airline CEO could fall off the face of the earth tomorrow and air travel would still continue. You cannot say the same about pilots, flight attendants, mechanics, and air traffic control.

  9. AA mechanics still don’t have contact since you did them a disservice by ignoring them Makes you’re reporting questionable

  10. This whole thing could be solved by adding seats and devaluing the Aadvantage program. Parker’s got this.

  11. I think the biggest mistake Mr. Parker’s team made was removing the bonus structure from the unions’ last contracts. It’s true that some of what drives an airline is outside of the pilots’ and FAs’ control, but the reality is incentives on performance and customer only align if they exist.

    Generally, I agree that American’s management lacks vision. I think Captain Ferguson gets that right. But to imply that the APA contract proposals solve the needs of the customer when, bluntly, the average customer wants the cheapest ticket, means he can’t accept the reality of the airline industry either. Sure, you can extract marginally higher RASM under limited, usually regulated circumstances (slot constraints), but the reality is the spreads just aren’t that large to justify “industry-leading” anything.

  12. I have a question from this… hearing all of this, the absolutely no engagement by what seems just about all levels of employee at AA… and the recent issue of the baggage handler… is AA a truly safe airline? We all know the less the engaged someone is … the more eff ups occur. Are we getting to a place to where it is only a matter of time that something really bad will happen?

  13. Ugh, unions. In a free society, the threat of being fired would place the negotiations on a level playing field.

  14. @james N
    in most jobs if your company is treating you badly you can just go to another company and recieve similar pay and benefits, but that does not exist in aviation because there is no universal seniority list.

  15. To all the leftists on here complaining about greed, you would be happy working for an employer that underpays you compared to your peers? American pilots make less than all of their peers, Delta, United, FedEx, UPS and for the same category of aircraft less than Southwest. Not a single one of you understands why a union exists in aviation nor are you aware of the facts, but carry on, ignorance suits you beautifully.

  16. @Stevo – do you even understand the concept of a “leftist”? A leftist is much more likely to side with the unions…

  17. Emil – you’re right, the average airline customer… can’t accept the reality of the airline industry either.” You all think the points and upgrades and lounges can be provided on economy (plus?) fares alone? Most of the capital expenditures to provide those niceties have been done on the backs of labor groups’ wage stagnation and lost pensions. How can those international carriers provide the nose-up-the-butt you’ve come to expect? Government subsidization.

    So it doesn’t surprise me that a knee-jerk reaction would be to call pilots and attendants “greedy” and proclaim them already overpaid. All the labor groups at American have a DIRECT impact on the success of the operation and its only thru their sacrifice of “mandatory overtime,” suffering under inconsistent applications of work rules and overcoming lack of support from outclassed supervisors (ON A DAILY BASIS) that anything manages to proceed.

    Nor is it surprising that another reaction would be to just abandon AA and fly DL. There’s not just one bad actor in this more that we call American (USA) aviation. Yes, the airlines have contributed much to the industry’s decline. But I reckon that once they realized just how disloyal the general customer base had become, they had to figure out a method to survive.

    Also, props to Stevo for pointing out that yes, AA groups are paid less than peers at other (more?!?) profitable airlines. And can someone please explain the virtue that we end up recognizing when a CEO takes compensation in stock versus a paycheck? How does that encourage his best performance for the company, and company, and not indulge in ways to manipulate the stock price in correlation with his tranche awards?

  18. Good luck pilots!! The company is all promises until negotiations start then they are pure BS..
    Corporate Greed at its best!
    If you do get a raise they’ll take it back in infated insurance premium!!
    Text book accounting!! GREED!!
    THANKS PARKER!!!
    Maint…

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