In August, American Airlines won a key victory in federal bankruptcy court over the Allied Pilots Association (APA), the union that represents its cockpit crews. Judge Sean Lane ruled that, under Section 1113 of the bankruptcy code, American could impose its own contract terms after the pilots rejected the company’s final offer. But the pilots, not a few of them ex-military, have shifted the battlefield from the courts to the tarmac — where they are in command.
American has suffered from a jump in flight cancellations and delays because of an unusual increase in the number of maintenance write-ups — “Many right at the time of departure,” says an e-mail American sent to its frequent flyers — that have to be addressed before takeoff. Additionally, the rate of pilots’ calling in sick is up 20% over the same period last year, says the company. The APA denies there is any concerted effort by its members to cause a slowdown or stage an illegal sickout.
By midday Saturday, American had canceled 34 departures, according to flightstats.com; 76% of departures and 64% of arrivals were running on time, although the airline’s Miami hub, which serves the increasingly important Latin American market, was faring significantly worse. (By contrast, Delta was more than 90% on time, which is a more typical performance.) To keep from further irritating passengers, the carrier is reducing its schedule 1% to 2% through October. American has more than 1,600 flights daily.
The dogfight comes at a critical time for American, which is trying to restructure itself in bankruptcy court into a more competitive operation, on par with other legacy carriers and much closer to the so-called low-cost carriers, such as Southwest and JetBlue. The latter, for instance, recently invaded American’s fortress hub at Dallas/Fort Worth International Airport.
American has been making headway too. In its most recent quarter, the company posted its best results in years, with sales of $6.5 billion and a net profit of $95 million excluding special items. American’s two other unions, the Association of Professional Flight Attendants and the Transport Workers Union, have already agreed to concessionary contracts that could include up to 4,000 layoffs. In addition, more than 2,000 flight attendants have taken buyouts.
The pilots have filed for a stay of Judge Lane’s order until an appeal can be heard, citing irreversible harm. In its initial ask of the pilots union, American demanded $370 million in cost reductions from the last contract, including changes in the medical and pension plans that would cost union members more. But more recently, according to the APA’s court filing, the company asked for changes in code-sharing agreements with carriers such as Alaska and Hawaiian that would allow it to code-share 50% of its monthly availability of domestic scheduled seat miles. The pilots are also unhappy about changes in what is called the scope clause: the number of regional jets American can fly with lower-priced pilots, which the company wants to expand.
A hearing is scheduled for October. In the meantime, the flying public gets the middle seat of the argument.