American mechanics' vote result expected at midday

BY JOHN STANCAVAGE World Business Editor
Wednesday, August 08, 2012
8/08/12 at 2:45 AM

Read all coverage of American Airlines, including bankruptcy issues.

Maintenance worker layoffs at bankrupt American Airlines could begin in several months, no matter which way a vote on a new contract goes.

The Transport Workers Union was expected to announce around midday Wednesday the result of a vote by mechanics and stock clerks on a six-year labor agreement.

For mechanics, American's latest offer includes 15 percent wage increases over six years and improvements in health insurance and other benefits, compared with a previous proposal. Stock clerks would get 10.5 percent wage increases and improved benefits. Each group is voting on its deal separately.

American is trying to shave $1.06 billion in labor costs to help the company restructure and leave bankruptcy court. If TWU members ratify the contracts, layoffs could begin within 90 days.

In Tulsa, American employs about 5,000 mechanics and related positions and 512 stock clerks. If the mechanics ratify their contract, about 770 jobs will be cut locally, according to data provided by the company. If the clerks approve their deal, 90 jobs would be lost.

The layoffs likely would not begin for several months, as the company would have to work through contract-specified "bump-and-roll" rules involving seniority, and also would have to give 60 days' notice as required by federal law.

If both groups do not approve the contracts, American likely will seek to impose a March 22 "term sheet" that calls for the elimination of 2,100 maintenance and related jobs and 160 stock clerk positions. That labor arrangement also would not be as attractive in pay and benefits.

The bankruptcy court judge in New York is supposed to rule Thursday on whether American can throw out its old labor contracts and implement the March 22 terms.

American has said its goal is to reach consensual agreements with its mechanics, pilots and flight attendants. If those unions all approve deals currently on the table, the judge's ruling would not be necessary.

Any group that does not ratify the current contract would face having a deal imposed on it, however.

In recent weeks, some union members have been skeptical about American forcing a contract on them, but others are taking the threat seriously.

"That's what they (American officials) have told us," John Hewitt, TWU Local 514's chairman of maintenance in Tulsa, said in an interview Monday. "I don't see why they wouldn't."

Some of the "vote no" contingent within the TWU believe American will continue to negotiate and sweeten the pot, but sources close to the company say that is unlikely.

Tulsa, with its large number of mechanics, became a key battleground after voting began July 23. TWU members have argued with each other in the press and in paid advertising, disputed each other's figures and picketed separately outside the local maintenance and engineering base.

Many TWU members are still bitter about a concessionary contract signed in 2003. At the time, American was losing more than $5 million a day. It asked labor leaders and employees for $1.8 billion in annual savings through changes in wages, work rules and benefits.

The unions reluctantly agreed. In May 2003, American made significant cuts, which included laying off 7,000 workers companywide, including 718 in Tulsa, where the airline then employed about 10,000.

Company leaders told the workers that executives would "share the pain" and that when a turnaround came in the industry, all employees would "share the gains."

American never got back on track, though, and TWU employees have been working under the same contract ever since. Along with being frustrated about years of negotiations going nowhere, union members also have criticized American's top leaders for paying themselves bonuses while the airline skidded toward bankruptcy.

Company officials, all the while, have maintained that American's labor costs make the carrier uncompetitive in the industry.

Gary Peterson, president of TWU Local 565, is among those who think American's current offer is inadequate.

"When you compare aircraft mechanics across the industry, you will find AA mechanics at the bottom of the barrel - and something needs to change," Peterson said recently.

Original Print Headline: American mechanics' vote result expected at midday

John Stancavage 918-581-8314
john.stancavage@tulsaworld.com

Associated Images:

American Airlines is trying to shave $1.06 billion in labor costs to help the company restructure and leave bankruptcy court. Bloomberg file