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What Now?

It’s Jan. 2, 2020, and the amendable date of our collective bargaining agreement has come and gone. What now?

American Airlines CEO Doug Parker made a bold proclamation when he said “shame on us if we can’t figure out, over the course of a year, how to get a contract done before the amendable date.” APA took Mr. Parker at his word. No question, we’re disappointed by management’s failure to make good on Mr. Parker’s stated goal, but all is not lost. At least not yet.

Your APA leadership hears what you’ve told us since the very first contract survey. We’ve heard you during the town hall meetings. We’ve heard you in the crew rooms. We’ve read your SoundOff messages and your emails. We read you five by five — we hear you loud and clear.

We know you’re tired of a working agreement that makes work-life balance almost impossible. We have all had enough of unnecessary (and too often unexpected) time away from family and loved ones. We’ve had our fill of an agreement that management interprets at their whim and to their advantage. We’re sick of scheduling practices that are based on coercion, instead of the incentives our most successful competitors use.

We stand at a unique fork in the road during these negotiations that presents management with a rare opportunity to transform this airline for the better, or not. They can do so by resetting the relationship with pilots who have decades of service, and by presenting thousands of newly hired pilots their first mainline contract — one worthy of ratification by an overwhelming majority.

Beginning in late January 2019, APA systematically presented a series of detailed, well-researched, and well-supported proposals designed to accomplish these core objectives:

  • Improve Scheduling, Company Transparency and Accountability, and Quality of Work Life
  • Achieve Industry-Leading Hourly Pay Rates and Address Gaps in Compensation and Benefits with Peers
  • Undertake Contract Repair, With a Focus On Items That Were Lost in Bankruptcy

Our proposals address our pilots’ needs and also take into account the needs of American Airlines, its passengers, and its investors. They’re designed to create efficiencies and rid our operations of wasteful scheduling practices that degrade operational integrity and our pilots’ quality of life. They will help repair American Airlines’ reliability issues, with particular focus on provisions for swift recovery performance during IROPS. And while we structured our proposals to address our pilots’ needs, they will also improve the airline’s revenue performance by fostering reliable operations in all weather conditions, not just clear and calm days during off-season travel periods. APA’s proposals will help create an airline that passengers, employees, and investors can count on.

Simply put, what we propose is exactly what American Airlines needs.

Your Negotiating Committee worked at a high tempo in keeping with Mr. Parker’s stated goal of having an industry-leading agreement by the amendable date. By contrast, management’s negotiating team didn’t appear to have any sense of urgency and spent the first several months of bargaining in “receive only” mode, providing no counter-proposals until early August. Management then presented APA with what resembled an opening proposal, which included an arbitrary and insufficient dollar limit on all quality-of-life items.

Meanwhile, American Airlines continues lagging its peers financially and operationally, and Wall Street is watching closely. Buckingham Research Group analyst Dan McKenzie recently wrote the following in a note to investors: “AAL has been such a poor operational and financial story for so many consecutive years, shareholder frustration is high and sentiment is about as bad as we’ve seen.” Mr. McKenzie wrapped up his observations by stating “we’re concluding this is mgmt’s last chance to get it right, and that the urgency is not lost on them.”

We hope Mr. McKenzie is correct on that last point. If so, then most of that much-needed urgency must be directed to collective bargaining with APA.

Ironically, with billions of dollars on the line during the proposed merger of American Airlines and US Airways, this very same management group negotiated pilot agreements with an unmistakable sense of urgency. It took barely a month from when Mr. Parker and his team first approached APA in March 2012 about a possible merger to negotiate and execute the Conditional Labor Agreement, and only eight more months to negotiate the Memorandum of Understanding that led to the creation of the new American Airlines.

Today, management must prove they can do more than facilitate mergers. They’re running out of time to prove their team can create and manage an airline that is the first choice for passengers, pilots, and investors. Our airline is plagued by operational failings that cause it to underperform and fall behind our competitors. While other airlines save unnecessary costs, generate superior revenue, and earn the trust of their highest-value customers, our airline too often struggles to maintain the schedule.

Most of our competitors use an incentive-based model to maintain operational reliability, while American Airlines management clings to a coercion-based model. An agreement that effectively incentivizes our pilots to maintain the operation and recover quickly from breakdowns would better equip our airline to compete and succeed.

Right now, about 85,000 union-represented employees at American Airlines are in Section 6 negotiations with management, including the 15,000 pilots APA represents. Those 85,000 employees make up the overwhelming majority of American’s mainline union workforce. Let’s face it: Negotiating collective bargaining agreements — agreements that the represented employees will ratify — is integral to running a successful American Airlines.

I give Mr. Parker due credit for being a prime mover behind the U.S. airline industry’s transformation into a stable and profitable industry through consolidation. He had a vision and the tenacity to see it through. Nonetheless, during the six years since the merger, it appears he and his team have fallen short in day-to-day execution and in their ability to bargain with employees. They have been great transactional dealmakers, but the last deal has been done for quite a while, and we’re left with an airline that hasn’t yet realized its full potential. We all wish this wasn’t so.

Ever since we presented our opening proposals to management, APA has been saying “It’s Time.” I am sure you all have your own ideas about how to complete that phrase. How about this? It’s time for management to concede that rigid, coercive policies just don’t work very well. It’s time to be open to creative, mutually beneficial solutions that empower pilot leadership. It’s time to take that “leap of faith” they’re fond of referencing by investing in and inspiring the American Airlines pilot corps.

This is not a negotiation scenario in which one side loses and the other gains. Both APA pilots and American Airlines management need a contract that restores operational reliability. We understand this, and the investment community does, too.

Your APA leadership very much wants American Airlines to succeed, and I would wager the same is true for each of you. The opportunity awaits. No, we didn’t conclude negotiations by the amendable date, but we’re still here, and we stand ready to continue bargaining to secure the mutually beneficial agreement that APA and management need.

While there’s still time remaining, it’s far from infinite — and neither is our patience.

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