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Jun292010

« Buried Alive: Signed Tentative at American Declared Dead »

As Gilda Radner on the old “Saturday Night Live” might say, “It’s always something.”

Less than a month ago, the Transport Workers Union (TWU) representing the Fleet Service Group at American Airlines (baggage handlers, freight service workers, aircraft fuelers/de-icers and aircraft cleaners) said it was “suspending” a tentative agreement (T/A)  reached with the company after more than two years of discussion.  Yesterday, after a meeting between American, TWU and the National Mediation Board (NMB), the union pronounced the agreement dead and asked the NMB to release the 11,000 workers in the group into a 30-day cooling off period.

But it’s been a twisting road to this point. When the TWU first announced the agreement, the union said it was strong armed into signing a T/A by NMB member Harry Hoglander.  In a May 28 press release, the TWU said:  “Although the committee cannot recommend the T/A, we believe the membership should have the final say. The decision to bring the T/A was made based on the NMB's premise that there would not be any other meetings scheduled until the end of year or possibly later.” 

The union then went on to say:  “The committee also took into serious consideration that the NMB would not look favorably upon the negotiating committee not allowing the membership to vote on the Company’s final offer.”

By June 3, 2010 the TWU bargaining team had decided to send the agreement to the membership with a “no” recommendation. President Jim Little then jumped in and said that the union would not send the agreement out for a vote without a recommendation to ratify the agreement.  At this point, the union “suspended” ratification of the agreement citing “unresolved Issues.”  

Yesterday the TWU used the same phrase, claiming that ”unresolved issues” with the agreement have created an “impasse” – a legal term under the Railway Labor Act to signal that the sides can’t reach agreement. The release quoted TWU International Administrative Vice President John Conley: “We are now at an impasse with AMR,” Conley said. “We no longer have a tentative agreement and no ballots will be presented to members for a ratification vote. We urge the NMB to promptly grant us release so that we can begin the self-help process.”

My Simple Question

So what exactly changed in the last month? By my read of it, nothing. It appears to me that the NMB won’t likely schedule any new mediated negotiations until 2011. 

But there is no evidence that the two sides are at an impasse.  Rather they are immersed in a political quagmire in which one side cannot convince its members that there must be some “give” in the agreement to make possible the “gets” the union wants in terms of wage increases and other contract enhancements. An impasse is declared only when the two sides cannot agree after exhausting the mediation process.

In this case the sides agreed to the economics – that was the basis of the tentative agreement that, if ratified by TWU members, would result in a new collective bargaining agreement.

A Conundrum in This Case

Let’s be clear: the company’s proposal would put more money in the pockets of fleet service workers. Now they will be forced to wait until negotiations are scheduled to reconvene yet again.  I do appreciate that there was a perception of layoffs associated with the agreement.  That is simply not the case – rather AA agreed that no TWU employee would be furloughed as a result of the company’s efforts to be more competitive, much the same guarantee AA has made in negotiations with other workgroups.

The conundrum is twofold.  First, the concessionary negotiations concluded during the restructuring round has resulted in a "mark to market" scenario that is no longer uniform among employee groups.  Remember that the bankrupt carriers took multiple "bites at the apple" by first reducing cash compensation; then achieving productivity gains that reduced headcount; and then reducing pension and health and welfare expenses.  American’s 2003 concessions were based mostly on that first bite, which means American’s labor costs remain higher than those airlines that restructured through bankruptcy - and it is different by work group.

Second, current negotiations are complicated by the increased use of outsourcing throughout the airline industry, which serves to fundamentally alter the comparisons of similar work from one airline to another.  This fact is most prevalent in “below the wing” work that most other airlines now outsource at significantly lower wages.

Today’s market for fleet service employees is not the fault of the Transport Workers Union per se.  But the union does have a responsibility to read the marketplace and negotiate an agreement that takes into account the economic realities out there. This is no impasse.  Rather it is a union’s misguided act in taking a live proposal that includes improved economics for its members and burying it alive.  Once again, the line workers see nothing in their pockets while the union lets a business agenda of maximizing headcount win the day. 

This is one tough round. 

Reader Comments (6)

Once again, a well constructed view into what is happening between these two groups. Thank you, Mr. Swelbar.

06.30.2010 | Unregistered Commenterwhenry

I hope the NMB releases the TWU, and they go on strike. With 9+% unemployement in this country I doubt AMR will have any difficulties finding people who would work as baggage handlers, fuelers, de-icers, etc.

I have to agree. Sometimes I really don't know what these union negotiators and leaders are thinking. Their members are now forced to work for the same wages they've had since 2003, when they could have had a raise and bonus this year.

I have little doubt that AA could fill their positions quickly in case of an actual strike. I think that would be the final reality check for a group of people who are probably overpaid already.

07.1.2010 | Unregistered Commentermalcontent

well for someone who is living in this problem what people dont know is what we gave up in 2003 5$ an hr vacation sick time holiday pay and more all to help stay out of bankruptcy but while we did our part management took overwhelming amounts of money in stock options
and we just waited as they kept feeding the bull share the pain share the gains well im waiting for my share of the gains so please dont talk about something you dont have to live with

07.2.2010 | Unregistered Commenterbob

First let's be clear, the definition of management by the unions (APA, APFA, and TWU) is roughly what five people (Arpey, Horton, Garton, Reding, Kennedy) right...for posterity, let's include the SVPs...add another 10-15. This does not include the other thousands of members of "management" who have received very little over the last few years. The delusion that ALL of management receives stock options and/or a bonus every year is both incorrect and insulting. Second, many people will not have to deal with the union's actions, but many people also will...roughly 70,000 employees, if you include the other unions. This burn the house down mentality is also insulting, you feel disrepected...well by driving the airline into bankruptcy, you disrepect all the work that many people perform everyday on their own, no union. The executives of AMR are not at the top of the industry payscale, call them overpaid if you wish, but it is not their fault that your wages are being cut, AMR has a history of outperforming the industry on the revenue side of the business equation. This has waned recently with the DL attacking JFK, and starting to realize their ability to scale up after the merger, but rest assured, AMR will not fall far behind in this category, as they never have. Thirdly, what gains do you expect to share, AMR made a (small) profit in 2006 and 2007. The only two years that they have since 2000. Where does this money come from? The market does not exist in a bubble, you cannot simply compare what you had, and what you want, you have to weigh in what everyone else has. It stinks yes, but AMR's competition shed not only their salaries, but their pension costs and healthcare burden as well. These are things that currently those at AMR still enjoy. In an industry with such pricing transperancy, and low-cost competition, there is no way to generate the kind of revenue needed to continue to fund these things, whenever no one else has too. Lastly, I pose a question to any AMR union member out there who wishes to answer it, I don't believe that this has been asked enough. You are currently very close to highest paid in your profession already, typically the highest paid in their professions i.e. executives/engineers/etc. are, if not the best, very close to it. I pose the question, what value do you bring that the pilot/FA/mechanic at United, Delta, Jetblue, Virgin America, etc, does not? I'm not hostile toward labor, I grew up in a family with a father who was a shiftworking pipe-fitter for much of his early life, I know and respect what that life is like. My only issue is the refusal to acknowledge and respect the situation as it stands, and to see it like it is, not like it used to be, or you wish it still were.

07.6.2010 | Unregistered CommenterBA

If I were labor, I would accept the contract then look for other work that I would prefer to do. This way you have an income. If you strike, driving AMR into BK, then where do you go?

By the way, those execs can and will go elsewhere. They may not earn as much but they are marketable or can just go fishing if presented without options.

I am an AA labor retiree. There are no jobs out here. If there are, very highly qualified people are downgrading to get them. Be careful in what you do.

07.7.2010 | Unregistered CommenterBeth

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