American Airlines workers facing the loss of their jobs and benefits on Wednesday set up informational picket lines at terminals at 13 US airports including Los Angeles, Dallas-Fort Worth, Tulsa, and Miami. American’s parent company AMR in January filed for bankruptcy protection in order to break its contracts with unions representing American workers.
In February, American submitted a proposal to the bankruptcy court that would allow it to lay off 13,000 workers, eliminate workers’ pension plans, and drastically reduce health care benefits. The company also wants to outsource much of its airplane maintenance work.
“I believe American has the best safety record in the industry because we are the last carrier to do our maintenance in-house,” said Steve Marr, vice-president of Transport Workers Union Local 502 to the Los Angeles Daily News at Wednesday’s demonstration at the Los Angeles International Airport.
TWU represents American mechanics and ground crew. About 9,000 TWU members could lose their jobs if the court approves the company’s plan for emerging from bankruptcy.
To protect workers’ interests, TWU and other unions have been actively involved in the bankruptcy proceedings and have been negotiating with American to revise what TWU calls the company’s draconian proposals to lay off workers and reduce their benefits.
In a related development, the head of a federal agency that guarantees private pensions said that American needs to reconsider its proposal to eliminate employee pensions.
Unions propose early out program
Two weeks ago TWU made a counter offer to American’s draconian proposal. Included in the counter offer was a proposal for an “early out” program that would allow workers who meet certain qualifications to separate voluntarily, receive a lump sum payment, and retain their health care benefit.
The proposal was similar to one adopted by United Airlines when it went through bankruptcy proceedings. The United early out lump sum payment was $75,000.
The Association of Professional Flight Attendants also presented an early out proposal that would have allowed flight attendants with 15 years of service to voluntarily separate with a lump sum payment equal to one year’s wages and continuation of health care coverage.
Last Friday, the company rejected both proposals. In response, TWU said that it wouldn’t give up the fight for an early out provision. “An early out program is essential for this reorganization and as such your TWU bargaining team will be pushing the matter throughout the negotiations,” read a recent TWU message to members.
The early out proposal is just one of a number of counter proposals made by TWU that American is still considering.
No need to terminate pensions
News about American’s proposal to eliminate worker pensions was a little more hopeful. Josh Gotbaum, director of the Pension Benefit Guaranty Corporation, a federal agency that guarantees private pensions, said that American should consider alternatives to eliminating its four traditional pension plans.
“I think that (AMR CEO) Tom Horton has alternatives,” Gotbaum told the Chicago Tribune. “We think that from a menu of things, American can do . . . you probably don’t need to terminate your pension.”
Gotbaum said that in the past when the airline industry as a whole was losing money, he supported allowing bankrupt airlines to shed pensions, but this time, it’s different. Not only are some airlines making money, American has more than $4 billion in cash on hand.
Recent reports suggest that American’s financial problems may not be as dire as stated in its bankruptcy filing. The Associated Press reports that much of the $1.1 billion that American said it lost in the quarter before its bankruptcy filing was the result of depreciation on its aging air fleet and other assets.
Furthermore, the Fort Worth Star Telegram reports that AMR increased its cash on hand in January by $331 million and that while American reported an operating loss in January, the loss was primarily due to expenses associated with its bankruptcy filing such as fees for attorneys and financial consultants.
Even though American’s financial situation doesn’t appear to support its request to eliminate pensions, the company seems committed to doing so. The Association of Professional Flight Attendants recently reported that AMR has hired expensive lobbyists to convince Congress to support its effort to shed pensions. APFA is asking members to contact Congress members and urge them to oppose AMR’s end run around Director Gotbaum.
Non-union workers seek representation
In a related bankruptcy development, CWA announced that it helped non-union passenger agents at American form an ad-hoc committee to represent them in the bankruptcy proceedings.
“CWA helped airport, cargo, and reservation agents create the ad hoc committee so they would have legal standing as the airline goes through bankruptcy reorganization,” read a statement by CWA.
American’s passenger service agents have been trying to form a union, and in December, CWA filed a union election request with National Mediation Board.