American Airlines and Southwest Airlines are locked in nasty battles with unions representing mechanics, but the CEOs of both companies sought Tuesday to defuse controversy, saying they have no ill-will toward their mechanics, even if they say they’re sometimes puzzled by the actions of labor leaders.
“Our mechanics are superb,” Southwest CEO Gary Kelly said Tuesday at an investor conference in New York. “They work very hard, they do an outstanding job and they deserve an updated contract and that is and has been my desire.”
His opinions on the union representing them, the American Mechanics Fraternal Association, are another matter. On March 1, Southwest filed suit against American Mechanics Fraternal Association in federal court in Dallas, alleging it organized a job action to hamper Southwest’s operations. The airline said some mechanics have drawn attention to minor issues they normally would defer.
The union disputes Southwest’s claims, saying its members have a duty to maintain airplanes, and have wide latitude to question safety matters. But Southwest told the court some union members began finding more faults after a Feb. 12 negotiating session went awry. Kelly said Tuesday the airline noticed an “unprecedented” number of maintenance-related write-ups.
A Southwest spokeswoman said the airline had about 40 aircraft out of service on Tuesday, twice the usual number. In its complaint, Southwest said it grounded as many as 60 aircraft on some days in February.
“The damage to the company runs in the millions of dollars weekly in lost revenue due to canceled flights and millions of dollars weekly in terms of additional costs caused by delays and cancellations,” Kelly said at the JP Morgan Aviation, Transportation and Industrials Conference. “Customers are harmed.”
While a federal judge may give Southwest relief, this saga might not end until the mechanics and company agree on a new contract. Union members rejected a tentative agreement last year that would have given them substantial raises with “very minimal work rule changes,” Kelly said. Union leadership said it had concerns Southwest wanted to outsource maintenance work.
The union did not reply Tuesday to a request for comment. However, in a note last week to members Bret Oestreich, the union’s national director, called Southwest’s lawsuit “outlandish” and “frivolous.”
“It is disturbing and extremely concerning that Southwest Airlines misunderstands the most fundamental duties and responsibilities of federally licensed airmen and the services that they provide to a point at which it spitefully sues their representative body in attempt to suppress their mandated role,” he said.
American has similar issues with its mechanics, who have been negotiating with management since December 2015, though it is not clear the dispute has affected operations.
In an interview, Gary Peterson, a union vice president, said the sides are “are close on money,” but further apart on other issues, including outsourcing and healthcare. “For our side of it, it is fairly simple,” he said. “We are not going to give up any jobs to outsourcing or off-shoring of work.”
Negotiations haven’t spilled into public for American as much as for Southwest, but the union has made some attempts to gain leverage by questioning the airline’s maintenance practices.
Last month, after some American maintenance workers appeared in a CBS News story to complain about the airline’s approach to safety, the Transport Workers Union of America’s president wrote to American President Doug Parker and said: “It is atrocious and immoral that, solely in order to improve the company’s profitability, you would allow and oversee a system that potentially places air travelers at risk.”
In response to the CBS segment, an American spokesman said, “The FAA investigated all of the allegations and the vast majority were closed without any findings. In all cases, it was never alleged that any aircraft we flew was unsafe.”
Most investment analysts trust airlines to maintain safe operations. However, some have expressed concern about the optics of two major carriers with acrimonious labor relations. Over time, it can hurt business, as United Airlines discovered before Oscar Munuoz took over as CEO in 2016 with a mandate to improve management-union relations.
At Tuesday’s conference, JP Morgan analyst Mark Streeter asked American CEO Doug Parker whether his airline has slipped on labor relations in the past three years, after improving following the US Airways merger.
“There seems to be a growing perception that management relationships with labor at American, on a confrontation scale, may be leading the way” among U.S. airlines, Streeter said.
Parker said he’s not concerned, saying union leaders like to take negotiations to the public, because they want to curry favor with membership.
It’s just part of the negotiations, he said.
“They have hard jobs,” Parker said. “To stay elected, you need to make sure that you’re saying things about the company that reflect what your membership feels about the company,” Parker said. “One day, that’ll change, I hope. You’ll see at all airlines that even in negotiation times, we’re sitting down, talking about, ‘OK, what’s the right number here?’ instead of trying to make sure we’re saying things that speak to our base.”