American reaches tentative labor deal with fleet service workers

By Aaron Karp | May 31, 2010

American Airlines said Friday that it has reached a tentative agreement with its fleet service workers on a new labor contract, but the Transport Workers Union representing the workers cast doubt on whether the accord will win approval from rank-and-file members.

AA, which is simultaneously negotiating with a number of labor groups, recently reached a separate agreement with TWU on a tentative contract for its mechanics. TWU represents about half the airline's 50,000 unionized employees. The carrier said that 10,600 fleet service workers are covered by the deal reached Friday.

The tentative accord with fleet service workers includes "a lump sum signing bonus" of 3% of workers' annual salaries as well as a 3% raise on the day the agreement takes effect, AA said. It features additional 1.5% compensation increases one and two years into the contract.

However, a TWU spokesman told The Dallas Morning News that union leaders decided to accept the accord in part because "it became clear" that the US National Mediation Board won't release the workers from talks, a necessary step before any work action can take place, "unless the members from the union are first permitted to vote on the company's offer." He said workers will vote in July.

In a statement to ATWOnline, AA said, "Both parties worked collaboratively during the negotiating process and American believes the tentative agreement addresses the interests of both our TWU-represented employees and the company."

AA still remains far apart in negotiations with its pilots, represented by the Allied Pilots Assn., and is also in talks with the Assn. of Professional Flight Attendants and groups representing other workers. Chairman and CEO Gerard Arpey recently estimated the carrier's annual labor cost disadvantage versus United Airlines and Continental Airlines at roughly $600 million (ATWOnline, May 20).

Discuss this news 8

31 May05:29

Had AMR executives been so

By MK

Had AMR executives been so short sighted and taken MILLIONS of dollars in bonuses while he front line workers were working under voluntary concessions, this would not be happening. What happend to "shared sacrafice, shered gains" and "pull togeather win together"?

01 Jun08:04

Ha ha, MK must be a pilot for

By Jose

Ha ha, MK must be a pilot for AA.

01 Jun11:31

Jose, what's so funny you

By Anonymous

Jose, what's so funny you idiot?!
He or she could also be a flight attentant, mechanic, cleaner or a ramper!
Just wait till pilots anf F/A's contracts are signed off; again executives will reward themselves for ripping off its employees. In 2003 ALL unionized employees of AA saved the company from bancrupcy by giving in to menagment's pleas. Promises were made and folks want their money back. These days AA has enough money for executive bonuses (how many times since 2003?), new terminal at JFK, new terminal in MIA, fleet upgrades, new aircraft, investment in JAL, what else?

01 Jun14:12

When this cycle will stop?

By Flashing Gold

When this cycle will stop? Union pressure --> Increasing cost of labor --> Force company to bankruptcy to shed its high labor cost & pension funds.
Source: wikinvest.com

"In 2008, American Airlines had the lowest total Available Seat Miles (ASM) Produced per Dollar of Employee Compensation, 26.63, which was 18.4% lower than the industry average of 32.65. Since AMR was one of only two companies to avoid bankruptcy after the September 11 terrorist attacks, the company was not able to make the structural changes allowing employee pay cuts that others airlines made under bankruptcy protection and has been pressured to keep its pension fund by unions, costing the company $2 billion from the beginning of 2002 through 2008. These high costs put AMR at a disadvantage to the discount carriers that compete with the company on 80% of its domestic routes. Throughout 2008, AMR's labor costs proved to be much higher than competitors'. "

01 Jun14:18

You are all missing the most

By Anonymous

You are all missing the most important Issue in this whole predicament. United and Continental both were allowed to declare Bankruptcy which nullified their huge Pension obligations and pass the responsibility to the Taxpayers. With the reduced financial obligations of Bankruptcy they were allowed to re-enter the market and compete head to head with their competitors. This key advantage allowed them to also cut salaries and other costs which allowed them in turn to reduce the costs of tickets = revenue which competitors had to match. The Airlines are locked in a race to the Bottom and the winners will be the discount carriers with the lowest cost advantages. As a retired Marine Aviator with 5,000 hours I do not want to fly with the lowest paid Flight Crews and on Aicraft maintained by the lowest cost sub-Contractors. And no, I am not an Airline Pilot.

01 Jun16:52

I agree! We all have taken

By Anonymous

I agree! We all have taken pay cuts and need to put a stop to executive greed Give back what was taken.. However you need to have your facts straight.. I am a Continental Employee and Continental has not filed for Bankruptcy for many years and still offers a pension. That is until it mergers with UNITED..

01 Jun17:17

CAL did NOT file for BK, UAL

By Observer

CAL did NOT file for BK, UAL did, thus allowing IT to have the upper hand/advantage with labor. Some of you people have no idea what you're talking about here(some do). I wkd for CAL for 4 yrs back in the day with Lorenzo(88-92)BAD TIME to be at CAL, and moved on. Been in the ind for over 22 yrs as a maint mech, now with Boeing. It might surprise some of you to know that the ind darling, SWA, pays its mechs almost as good as FX(42-43/hr)and UPS(45/hr)(the ind leaders).
It's pilots don't do too bad either. It's not so much the costs with labor(altho it does account for the 2nd largest exp doing biz, right after fuel)as it is with the biz models of the legacy carriers. The LCC have such a streamlined operation and such a large fleet now-they are reaking absolute HAVOC on legacys, if it weren't for the Intl routes, some legacy carriers would be long gone by now.
The legacys have no other means to trim costs other than to go after compensation(renew fleet as AA is trying desp to do). Some of the carriers, seems, would slowly die even if there emps worked for free! It's a slow death. In case of AA, they MUST buy new aircraft to renew the fleet, get rid of the thirsty MD80s to have a prayer. Exec mngt team(way too thick at AA) has bonuses tied to compensation, I get that, but the emps at AA have taken a knot on the head and it's time to get a little of there benes/comp back. AA can't afford it....and the pilots/FAs are there to play hard ball(pilots by far, lions share of emp compensation!)and inflict most harm to AA balance sheet!
Tough deal for AA all the way around. Btw, I left AA for Boeing in '07. Wish the Co and emp good luck/prosperity.
They'll need it.

07 Jun16:37

Check your facts Sir.

By brober

Check your facts Sir. Continental did not file for Bankruptcy and did not nullify it's pension plans. Continental has continued to meet it's pension obligations.