Occupy the Cockpit? Former Union VP conveys his thoughts on American Airlines

[cpamomfromtexas]

Preliminary thoughts: The former VP of the union for the pilots of American Airlines, the Allied Pilots Association, details what he believes is AMR (the parent company of American Airlines) on what will effectively result in union busting for the pilots. I'm thinking "Occupy the Cockpit" needs to be initiated. Especially since Airline Unions are effectively hamstrung by the Railway Labor Act. They cannot legally strike when their contracts are up, the contracts become "amendable". It is very difficult to be released to self-help. They have been in negotiations for 5 1/2 years.

If we had a real Democrat in the White House, the RLA would be abolished. Keep in mind that the average pilot at American Airlines has lost 23-40% of their wages, and works for about 40% less than Southwest, FedEx, and UPS who work much less onerous hours (mostly day flying). They carry more cargo than Fed Ex or UPS but the revenues are skimmed off to the company AA Cargo (thus eliminating profit sharing and why they created the parent company in the first place. After all, American Airlines was the first company to exist and is the glue holding everything together.)

HERE ARE HIS COMMENTS,

All,

Back in August, John Hale wrote a hotline message that I believed signalled a new phase in our contract negotiations. As I discussed in the thread based on that hotline, CA Hale clearly stated that APA needed to stop focusing on "a long gone past", that AMR needed a "competitive" contract, and hinted at the "failure following close behind" if we did not heed his warning.

At the time, I wrote-
What will that threat be? It could be almost anything from a threat to cancel the aircraft order and simply shrink to oblivion, or a threat to spin off Eagle and then challenge our Scope clause by simply violating it and forcing us to defend it in arbitration, or a threat to park us like they have done with the TWU and simply stop negotiating, or they could pull out the nuclear option and threaten to accomplish all of these things through a bankruptcy filing.


For the last few months, we have vigorously debated the "nuclear option", and that debate has (I believe) made it clear to AMR that despite the hardship bankruptcy would certainly create, the membership has determined they are unwilling to alter the contract based on this threat. I believe this expression of membership will has altered AMR's strategy. I also believe that the "other path" AMR has been threatening to take is beginning to be revealed. I futher believe this "other path" (which Steve Roach accurately reported was threatened if APA did not agree to a contract on AMR's terms two weeks ago) does not include bankruptcy (except perhaps as a last resort) but involves something that will be much more difficult for APA to combat.

The motion passed by the Board over the weekend hints that the board is beginning to recognize what AMR might be up to (and to be clear, nobody knows for sure). In the absence of a contract on AMR's terms, AMR seems to have chosen (at least for the short term) a path that involves closing pilot crew bases and reductions in flying across the system.

This strategy will have several effects:
- Cause dislocation of pilots with the resulting political pressure on APA to do "something" to stop the pain
- Exacerbate the tensions between the various groups within APA (CA vs FO, Junior vs Senior, Native vs TWA, etc)
- Alter the make-up of the APA leadership by eliminating crew bases and thus the domicile officers representing those bases (this use of APA's governing documents against the APA is simply brilliant)

This strategy will be difficult to combat because:
- it will be publicly and legally defensible as simply implementation of the previously announced "cornerpost" business strategy
- it can be defended against any "status quo" claim by the simple fact that base closures are specifically addressed in our current contract (which for those who don't know is part of the legal definition of "status quo")
- it can be done without needing APA's approval; all that is required is "notice" and careful compliance with the existing contractual provision (which AMR would do to avoid the complication of an arbitration).

AMR is playing hardball and has just stepped up their game to World Series level play. Read the letter about SFO from Bob Reding (posted on another thread) carefully. His tone is as harsh as it ever was when dealing with Lloyd. It simply states AMR's position and their intention to pursue their course regardless of APA's opinion of that position.

As has been previously posted, AMR has already gotten APA to agree (in principle of course) to no A-fund for new hires and to productivity concessions that will allow AMR to further reduce staffing by about 10 percent (pay banding, de-confliction mechanisms for month-month and training conflicts, increases in monthly max for both individuals and line building, trip trade modifications making it easier for individuals to fly more, "Southwest style" productivity rules for the A-319, etc..). All AMR has left on it's goal sheet is to hold the line on pay rate increases and to obtain the ability to increase domestic code share (outsourcing) into the "cornerpost" airports.

If APA does not fold under the pressure of base closures (and I believe that BOS and or DCA are clearly in the line of fire), AMR has a couple of options to achieve their final items. A quick "pre-packaged" bankruptcy is one option, though I think this carries more risk for managment and is likely to be a last-ditch option. I believe a more likely option if APA holds up to the pressure would be for AMR to seek a release and imposition of a Presidential Emergency Board.

We saw a month or so ago that President Obama convened a PEB at the behest of Warren Buffett in his dispute with unions at his railroads. This PEB was convened before any strike was ever actually begun (an amazing detail). Once in a PEB forum, AMR will point to APA's prior agreement (again, in principle) to all of the above and if they are willing to offer even modest pay rate increases, AMR will likely be able to get a PEB to "recommend" the scope changes AMR wants (which they will argure is only what the "rest of the industry" already has). If AMR has it's act together, they will have already done the leg work on Capitol Hill to increase their chances of a Congressionally imposed contract in the unlikely even we decide to ignore the PEB "recommendation".

This path gets them the same contract they would achieve in bankruptcy without exposing AMR management to the risks and expense of bankruptcy. They would make partners with the other debt holders against the unions instead of making enemies of the debt holders (as would happen in a bankruptcy). Their stock wealth would not be at risk and the risk of managment change would be eliminated.

If this is in fact what AMR is up to, I've got to give them credit for the plan's simplicity and relative low risk to AMR and to the management team personally. It exerts great pain on not only the membership but on the APA leadership itself while leaving APA with very few legal options to resist. With our tendency to fracture into factional fights when pressured, it will be very difficult to mount any effective grass roots response. You can bet that AMR will be ready (just like USAirways did) to use court action to stop any resistance that may arise.

I have only recently begun to think hard about this scenario and I have not yet hit upon an effective counter strategy (i have a couple preliminary ideas, but no idea if they'd be strong enough to turn the tide). In all fairness to the Board, I believe they are in the same boat and their motion of last week was an attempt to fire a first shot. Unfortunately, AMR will be able to simply ignore this shot (I think many on the Board probably already realize this). This is going to be a real fight folks, with real casualties (not just pilots, but our families as well). We need to stop the bickering and get focused on finding a way to counter this strategy or in my opinion we are going to get a rotten contract with a rotten scope clause shoved up our ass.

Respectfully,

Tom (Westbrook)