American’s final offer to pilots rejected before it’s even voted on

Source: Fort Worth Star-Telegram
By Andrea Ahles

The board of the Allied Pilots Association rejected American Airlines’ “best and final offer” Wednesday, declining to send the contract proposal to pilots for a ratification vote. The union’s board voted 11-5 against the offer after three days of deliberations.

“There was just too much uncertainty, too many holes in the six-year contract for the board to approve it as a tentative agreement,” said APA national officer Scott Shankland. The Dallas-Fort Worth base representative voted in favor of allowing a vote to occur.

American said it was disappointed with the board’s decision. The carrier had initially asked the pilots for $370 million in annual concessions. However, the company said its most recent offer included pay increases, furlough protection, profit-sharing and an equity stake in the airline after parent company AMR Corp. emerges from bankruptcy.

“Both parties worked hard to reach a compromise on what are very intricate and complex issues, resulting in a proposal that provides significant benefits for pilots,” company spokesman Bruce Hicks said. “We hope the APA will ultimately allow our pilots an opportunity to vote.”

American has asked the bankruptcy court to allow it to reject its union contracts and implement restructuring proposals that include layoffs and changes in benefits and work rules for pilots, flight attendants, mechanics and store clerks.

The company is seeking more than $1 billion in employee-related concessions as part of its bankruptcy restructuring.

U.S. Bankruptcy Judge Sean Lane is scheduled to rule on American’s request Friday.

The APA has asked American to request that the judge delay his ruling so the two sides can return to the negotiating table.

“We are not going to speculate on what the next steps may be,” Hicks said. “Our goal remains to reach consensual agreements with all of our unions.”

In recent weeks, Fort Worth-based American has been revising its initial restructuring proposals to unions since US Airways, which wants to merge with American, reached tentative agreements with the unions that would require fewer job and benefit cuts. American reached deals with five of its work groups with the Transport Workers Union but mechanics and store clerks voted against the carrier’s last offers. The company was also unable to reach an agreement with the flight attendants union.

As part of its restructuring, American initially said it would have to terminate the pilots’ “A” pension plan because it was concerned that with its lump sum benefit, many pilots would retire after the company’s emergence from bankruptcy.

However, on Wednesday, the Treasury Department issued a proposed regulation that could allow American to freeze the plan instead of terminating it.

The Pension Benefit Guaranty Corp., which has worked with American and its unions to keep pensions intact, said that the new rule could allow companies to remove the lump sum benefit payout, making a freeze possible.

American has already agreed to freeze its other pension plans.

Separately, a federal judge in Fort Worth plans to hear arguments today from American and the National Mediation Board regarding a union representation election by the carrier’s passenger service agents.

American has asked the judge to issue an injunction to stop the election and previously filed a lawsuit claiming that the Communication Workers of America did not collect authorization cards from 50 percent of workers, as required by a new law.

The union and the board say the petition for an election was submitted two months before the law was enacted and does not have to meet the new standard.

The Communications Workers union is trying to organize American’s 9,700 passenger service agents.

Andrea Ahles, 817-390-7631

Twitter: @Sky_Talk