Outsourcing creates problems at American; passenger service agents prepare for union vote

The New York Times reports that outside contractors hired by American Airlines did not know how to install airline seats that subsequently came loose during flights in October. The loose seats caused unscheduled landings and dozens of planes  to be grounded for safety reasons.

American, which filed for bankruptcy last year,  has been outsourcing more of its work as part of its bankruptcy restructuring plan.

In addition to outsourcing work like the seat installation, which had been performed by unionized maintenance workers, the company has recently begun to outsource work done by passenger service agents.

The passenger service agents are currently non-union employees, but a union representation election for the agents is scheduled to take place beginning December 4.

When American filed for bankruptcy in November 2011, it had $4 billion in the bank. According to one analyst, the bankruptcy filing was an offensive strategy designed to weaken union members bargaining power.

“(American’s bankruptcy) is not a defensive move, but an offensive bankruptcy where they go after their labor groups to reduce costs,” said Avondale Partners airline analyst Bob McAdoo to the New York Times. “They have a great franchise and lots of cash.  They are not being forced into bankruptcy here.”

American used its bankruptcy filing as leverage to get unions to agree to changes to their collective bargaining agreements.  American negotiated new consensual agreements with the Transport Workers Union, which represents maintenance staff, and unions representing its pilots and flight attendants.

American originally planned to reduce its maintenance workforce by 14,000, but TWU managed to save nearly half these jobs. Still the consensual agreement that TWU members eventually ratified will result in the loss of at least 7,000 maintenance-related jobs.

To get the work done with 7,000 fewer maintenance workers, American planned to outsource more work.

One of its outsourcing projects was the re-installation of seats on planes whose seating pattern was being reconfigured, so that some seats on these planes would have more leg room, and American could charge more for them.

New York Times reporter Christine Negroni after reviewing American’s internal documents, reported that American was aware that its contractors did not know how to install the seats, and acknowledged that incorrect installation was a contributing factor when the seats came loose during flight, putting passenger safety at risk.

The loose seats caused the grounding of dozens of American’s 757s and at least one 767.

When the loose seats were first reported in October, American implied that union workers may have been engaging in sabotage; after backing away from that allegation, the company offered what Negroni calls “an evolving set of explanations,” including clamps that didn’t work, spilled soda and dirt, and “a defective part.”

Negroni also found that Timco, one of the contractors working on the seat re-installation project, used students from the National Aviation Academy in Bedford, Massachusetts to perform some of the installation work.

Larry Pike, president of TWU Local 567 told Negroni, “You can’t have just anyone doing that maintenance. You can’t pull over in the sky and fix something if you hear something go thump.”

While American was cutting corners on maintenance work, it was also outsourcing customer service work just as the busiest travel season was getting underway.

In August, about 700 agents at the company’s call center in Phoenix were laid off. Agents at airports began getting layoff notices in November. American transferred some of their work to outsourcing contractors.

“My last day was Tuesday (November 13), and they put us out on the street with nothing,” said Sylvia Solis, a former passenger service agent at Miami International Airport. “The outsourced people don’t know how to check in an infant, and they think JFK is London. They do not have the slightest airline industry background.”

According to Renee Similien, who worked the first class check-in counter at Logan Airport in Boston until she was laid off, American laid off agents like herself, who earns about $50,000 a year, and replaced them with people making $9 per hour and no benefits.

Agents who remained on the job had their pay and benefits reduced.

The agents with the help of the Communication Workers of America began organizing a union well before American commenced its bankruptcy proceedings.

Shortly after, American filed for bankruptcy, agents filed a petition with the National Mediation Service, which oversees union elections in the transportation industry, seeking recognition of CWA as the agents’ bargaining representative.

American has done everything it can to prevent the election from taking place, but in October, a federal appeals court ruled that the union election could proceed.

While the union election is scheduled to begin on December 4, American has said that it will appeal the lower court’s ruling to the Supreme Court.

CWA points out that since American filed for bankruptcy it has spent $200 million on legal fees and expenses related to the bankruptcy. It has also paid the law firm Paul Hastings LLC $19.5 million to renegotiate existing union contracts and prevent passenger service agents from unionizing.

Union supporters say that the bankruptcy has revealed American’s disdain for its workers. “The company is not on our side,” said Ted Tezino, who works at American’s Southern Reservation Office and supports the union. “It’s time to stand up for ourselves.

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