Skift Take

As far as contracts with bankrupt companies go, the one the pilots were offered wasn't too shabby -- with a nice ownership stake included. But after the flyers voted to reject it Bates was left with few options.

The leader of the pilots’ union at American Airlines resigned Thursday after pilots rejected a concessionary contract offer that he supported.

David Bates said that the union’s board asked him to step down and he agreed.

Bates supported ratification of a company offer to give pilots pay raises and a 13.5 percent stake in the company after it emerges from bankruptcy protection. He portrayed it as the best deal possible under difficult circumstances. But 61 percent of pilots voted to reject the offer, which contained outsourcing provisions that they opposed.

After the vote, American indicated that it will ask a federal bankruptcy judge to impose terms of an April offer that included smaller pay raises and no stock in the new company for pilots.

“Although I believe that ratifying the tentative agreement would have been the best course for our pilot group, the majority of our pilots signaled their preference for taking a different path,” Bates said in a message to union members. “Given these circumstances, I concluded that continuing to serve as your president was not in the interests of the pilots.”

American officials declined to comment.

Vice President Anthony Chapman, 53, was elevated to acting president of the Allied Pilots Association until the board picks an interim leader for the rest of Bates’ term, which runs through next June.

Bates, 57, a Miami-based pilot who had served as a union director, was elected to a 3-year term as president in 2010 in a close runoff. He struck a firm but more conciliatory tone toward American Airlines management than did his predecessor, Lloyd Hill. Bates even praised some management decisions, such as last year’s announcement of a huge order of new planes.

However, Bates defied American’s management when he and leaders of unions representing flight attendants and ground workers met secretly with US Airways executives this spring. Those meetings resulted in provisional labor contracts that would take effect if US Airways succeeds in forcing a merger with American Airlines while American is still in bankruptcy proceedings.

Many pilots harbor long-standing animosity toward management at American and favor a merger that would result in US Airways executives running a larger, combined airline.

Skeptics among the pilots believed that approving American’s contract offer would have strengthened American’s current management and made a merger less likely. Opponents also objected to what they considered a new two-tier pay scale with lower pay for flying smaller planes, and to the agreement’s long life — the prospect of working for six years under a contract hammered out during the bankruptcy process.

The pilots’ vote — and especially the lopsided margin against the agreement — caught many people by surprise. On the surface, the pilots got a better deal in some ways than did mechanics and other ground workers, who ratified contract offers from American, and flight attendants, who are still voting.

While the pilots would have owned 13.5 percent of the company after bankruptcy, flight attendants would get only 3 percent. The company said Thursday that it’s still working on details about stock for the Transport Workers Union, but the pilots’ union said it will be much less than 13.5 percent.

US Airways encouraged all of American’s unions to ratify the contract offers. It would give American’s employees better terms than they would get from the bankruptcy court and speed up a possible merger by settling American’s labor issues.

“Even if the pilots had approved their deal, they could have still worked with US Airways” on a merger, said Ray Neidl, an analyst with Maxim Group LLC. “So it was a mystery to me that they voted it down. Sounds like it was a vote against management.”

American, the nation’s third-largest airline, has about 7,500 active pilots. It is a unit of Fort Worth-based AMR Corp. Both AMR and American filed for bankruptcy protection in November. American is seeking about $1 billion in annual labor-cost savings from pilots, flight attendants and other employees.


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Tags: american airlines, labor

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