AA Warns Strike Would Bring Layoffs, Turmoil
American Airlines on Tuesday warned that the immediate impact of a threatened pilots strike Feb. 15 would be the layoff of 75,000 employees and turmoil for an estimated 200,000 daily travelers.
In a tactic interpreted by a pilot and a negotiations expert as a pressure ploy as the final round of contract talks begins Thursday, the airline issued a study contending that a 60-day strike would cost the national economy almost $5 billion, including the loss of an additional 101,000 jobs at companies that do business with American.
American has 90,000 employees nationwide; only 13% would be kept on staff even temporarily in the event of a strike.
The company has been urging the 9,000-member Allied Pilots Assn. to accept binding arbitration, which the union adamantly opposes, to settle the contract dispute. The two sides appear to be about $500 million apart.
The union is asking for pay raises of about 11% over four years, stock options on 10 million shares in parent AMR Corp. at $10 below the market price, and the right to fly any jets purchased for AMR’s American Eagle regional airline, which currently uses only prop-driven aircraft.
The company has offered a 5% pay raise over the four years, and stock options on about 6 million shares, along with a demand that up to 50 regional jets be flown by members of another union.
The airline estimates that the pilots’ contract proposal would cost $200 million a year, while the union contends the cost would be about $285 million over the span of the contract. American said the average pilot earned $120,000 in 1996.
Capt. James Sovich, pilots union president, said the union’s negotiating committee and company executives would meet Thursday in the Dallas-Forth Worth area, where AMR is headquartered. He said the union would present an economic analysis to support its demands in the context of American’s competitive position within the airline industry.
In 1996, AMR enjoyed its best year ever, as its profit surpassed $1 billion for the first time. The union has presented similar arguments to Wall Street analysts who follow the airline industry to bolster its case for a substantial raise and a share of AMR’s profit.
Raymond Friedman, who teaches negotiation at Vanderbilt University’s Graduate School of Management, said, “They’re loading their guns and rattling their sabers and getting ready for the final push.”
