American Pilots Reject Contract

Pilots at American Airlines have left the future of their contracts in the hands of a judge, as they decided not to vote on a final concessionary offer from the carrier – which filed for Chapter 11 bankruptcy last November. The Allied Pilots Association (APA) board decided 11 to 5 not to allow the members to vote on the offer. Now a federal bankruptcy judge has extended his deadline for a decision on whether to void the union collective bargaining agreements, giving the parties more time to negotiate consensual labour deals.

American Airlines sought permission from the courts to void its labour contracts after it failed to negotiate concessions in a previous round of talks, which followed with the bankruptcy filing. The airline made its final contract offer on June 15 after the last round of talks failed to result in an agreement. From June 18, the APA board had been evaluating the offer and debating whether to put it to membership vote. Union spokesman Tom Hoban said in an interview that the offer from American Airlines was too ambiguous and sketchy for their members to vote on. He added that pilot scheduling is the biggest unresolved issue.

American Airlines spokesman Bruce Hicks says that the carrier is very disappointed that the union didn’t allow the pilots to vote on their best and last contract deal. The proposal included a 4% pay increase on the day the deal is signed and 2% increases in each of the following five years, mid-term adjustments to industry pay rates, profit sharing, furlough protection, an equity stake in the new airline and a move to freeze pensions instead of terminating them.

The carrier is seeking to reduce spending in every work group by 20% per year – or $370 million for pilots. This is part of a total $1.25 billion savings plan. The airline’s original contract offer included laying off 400 pilots and loosening restrictions on journeys made by regional partners and on the use of flight marketing accords with other airlines in the country.

US Bankruptcy Judge Sean Lane had urged negotiations between American Airlines and the APA, which were overseen by another bankruptcy judge. He had hoped that an agreement could be reached before his deadline on Friday. However, when the day came he gave both sides more time to come to an agreement. He also granted the airline’s motions for extensions on deciding if it will assume or reject dozens of unexpired leases at airports around the world – including half a dozen at Tulsa International Airport.

In regards to the contract extension, both American Airlines and the APA supported the decision. The union had apparently changed its mind and decided to review the final offer more. Airline spokesman John Hale said that the delay is focused on giving the union’s board more time to carefully consider the proposal and everything that’s at risk. Their negotiators listened to the union closely to address issues critical to them and their pilots – like more ownership in the company, more pay and more predictability while still achieving a 17% cost-savings, compared to their initial 20% target, he added.

Meanwhile, the APA, Transport Workers Union (TWU) and Association of Professional Flight Attendants (APFA) have reached contract agreements with US Airways Group. However, this is subject to a merger of the two carriers, and US Airways hasn’t made a formal bid for American Airlines yet. The airline says it’s meeting with creditors to build support for a merger.