Pilots at American Poised to Walk Out
The U.S. travel system braced for holiday-weekend chaos after American Airlines, the nation’s largest domestic carrier, and its pilots’ union failed again Thursday to agree on a contract that would prevent a pilots’ strike set for tonight.
But the top U.S. negotiator said late Thursday he was becoming more optimistic that a last-minute settlement might be possible. “I am hopeful,” said Kenneth Hipp, chairman of the National Mediation Board. American Airlines officials began around-the-clock bargaining Thursday night with leaders of their pilots’ union in an effort to head off the approaching strike. President Clinton urged both sides to “reach out to one another” and settle their differences.
American’s 9,300 pilots plan to walk out starting at 9:01 p.m. PST if a settlement isn’t reached. If they strike, American plans to ground its 640-plane fleet that carries nearly one-fifth of the nation’s air passengers daily.
A strike would trigger national economic upheaval, and speculation is mounting that Clinton will intervene just as he did when flight attendants struck American in 1993.
This disruption, coming at the start of the Presidents Day holiday weekend, “would be enormous because American serves such a significant chunk of the traveling public,” said Rich Barlow, a director of GRA Aviation Specialists, a consulting firm in Herndon, Va.
Airports where American has a big presence would be especially hard-hit, including Los Angeles, Chicago, New York, Miami, Washington and at Dallas/Fort Worth, where American not only dominates but is also headquartered.
Clinton said early this week that a strike “has huge implications for our country,” but so far he’s taken no action to block it. White House spokesman Mike McCurry said Thursday that Clinton “remains convinced” that both sides should solve the situation with the help of federal mediators but without the help of the president.
Asked if the White House would step in after a strike starts, as it did in 1993, McCurry replied: “I’m not going to speculate at all about what happens if there’s no agreement.”
Earlier in the day, American Chairman Robert L. Crandall used an appearance before a House subcommittee to reiterate that American will accept binding arbitration to reach a new four-year contract with the pilots.
American also used its Internet site to urge consumers to pressure the White House and Congress for arbitration before a strike, and provided the officials’ e-mail addresses.
But the pilots’ union, the Allied Pilots Assn., has opposed arbitration, which “is an admission of failure,” APA President Jim Sovich said in a statement Thursday. “We are not ready to make that admission.”
American and the APA--whose members earned an average of $120,000 in 1996, plus benefits--continued last-ditch talks in Washington but remained apart Thursday. Although Hipp voiced optimism, airline and union officials earlier were grim about prospects for averting a walkout.
Airline spokesman Chris Chiames said “the negotiations are basically at a standstill,” and APA spokesman Wally Pitts reiterated that a strike “is more likely than not.”
Besides urging American and the pilots to use arbitration, Clinton’s options are limited. But if the National Mediation Board recommends it, the president could block or end a strike by convening an emergency board that would keep the pilots flying while it considers solutions for a new contract.
Tens of thousands of passengers and their travel agents, alarmed as the strike deadline grew nearer, have already tried to take evasive action either by snubbing American or re-booking their American flights with other airlines.
United, Delta and other major airlines, along with Amtrak, say that if a strike occurs they will accept passengers holding American tickets--but only as space permits. And the airlines have warned that seats on their planes won’t be plentiful.
American flies to more than 90 domestic cities and 68 international destinations, many in Latin America and the Caribbean. Its American Eagle commuter line--which the company also plans to ground even though its 2,200 pilots are represented by a different union and are not involved in the dispute--serves 88 U.S. cities and 27 foreign cities.
American said it will furlough most of its 90,000 workers without pay if the pilots walk out, and estimates a strike would cost it $50 million a day. A monthlong strike would wipe out the record $1-billion profit that American’s parent company, AMR Corp., earned during all of 1996.
Moreover, American each day flies more than 200,000 people--equal to the population of Des Moines--on 2,200 flights, and the inability of many of those passengers to get flights on other airlines would harm hotels and resorts, rental-car agencies, airport shuttle services and other enterprises tied to air travel.
Cruise ship lines in the Caribbean and ski resorts in Colorado were among those trying to help consumers find alternative air travel, lest the resort operators lose the business.
American also is a major cargo carrier, and shipments of U.S. mail, along with fruit, flowers and other goods that American moves between the United States and Central and South America, would also be affected.
At the White House, Clinton received a report from the Transportation Department on Thursday estimating that the strike would cost the U.S. economy up to $200 million a day.
In preparation for a strike, American negotiated a new line of credit from its lenders, and now has a $2-billion war chest to help weather a walkout. For customers that made reservations but did not yet have tickets, American has been sending them tickets via overnight delivery so that the customers could get rides on other airlines.
American also canceled many of its overseas flights beginning tonight. Citing insurance concerns, the carrier said it didn’t want its airplanes sitting idle on foreign soil if its pilots walked out. The airline also canceled about a dozen round-trip domestic flights scheduled for today so that aircraft would not be stranded at airports with no room to store them for an extended period. John Hotard, an airline spokesman, said the canceled flights included those into and out of John Wayne Airport in Orange County and White Plains, N.Y.
The strike deadline follows more than two years of often bitter negotiations between American and the APA.
They tentatively approved a pact last November in which American offered the pilots a 5% raise over four years and stock options. But the pilots shocked both sides by rejecting the agreement last month. The APA later proposed that the pilots get an 11% pay hike over four years and more stock options than American offered.
And there was another big dispute over who will fly new, small jets that American plans to add to its American Eagle commuter fleet.
American wants the jets to be flown by the American Eagle pilots who currently fly the commuter line’s turboprop airplanes. Those pilots earn much less than their American Airlines counterparts and have a different union.
But the APA insists that its pilots fly the new American Eagle jets, because it fears that American ultimately will use the lower-cost planes on American Airlines routes--thus displacing its members.
American claims it can’t accede to the APA’s demands without eroding its competitiveness. With low-cost, low-fare carriers such as Southwest Airlines and Delta Air Lines’ new Delta Express division growing in strength, American says it must keep a lid on labor expenses.
Peltz reported from Los Angeles and Salem-Fitzgerald from Washington. Times wire services contributed to this story.
* AMR’s TOUGH CEO: Robert Crandall is ready for a pilots’ strike. D1
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Pilot Pay
American Airlines’ 9,300 pilots, who may walk off the job tonight, earn less on average than pilots working for four other major U.S. carriers. American does, however, fly smaller aircraft than other major carriers, leading to lower salaries for pilots whose compensation is based on seniority and the type of planes they operate. Average pilot salaries at major U.S. airlines:
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Pilot average annual Rank Airline wage in 1995 1 Northwest Airlines $154,586* 2 United Air Lines $140,280* 3 Delta Air Lines $129,329 4 USAir $128,971 5 American Airlines $115,484 6 Southwest Airlines $107,109 7 Continental Airlines $90,461 8 Trans World Airlines $85,420 9 America West Airlines $77,093 Total majors $123,321
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* Northwest and United pilot compensation figures may include stock options.
Note: Major airlines have more than $1 billion in annual revenue. Pilot wages are total payments to pilots as wages--including captains and co-pilots--but do not include benefits, insurance and taxes.
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AMERICAN’S IMPACT
American Airlines, the nation’s largest domestic airline, will ground its operations if its pilots strike tonight as threatened. The company, which holds 12% of the Los Angeles market, has the industry’s second-highest labor cost per available seat mile, a measure of airline capacity. For example, American pays 3.6 cents for labor per seat per mile flown. Labor costs per available seat mile for major carriers as a whole increased about 27% from 1986 to 1995.
Los Angeles: 12% MKT SHARE
Chicago O’Hare: 34% MKT SHARE
Dallas/Ft. Worth: 64% MKT SHARE
Miami: 59% MKT SHARE
New York Kennedy: 29% MKT SHARE
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LABOR COSTS
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Per seat mile in Rank Airline 1995, in cents 1 USAir 4.7 2 American Airlines 3.6 3 Northwest Airlines 3.3 4 United Air Lines 3.2 5 Delta Air Lines 3.1
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MAJOR CARRIERS OVERALL
Year: Labor costs per seat mile, in cents
1987: 2.6
1989: 2.9
1991: 3.1
1993: 3.1
1995: 3.2
Sources: AirTrans; Transportation Department; Avitas Aviation; Airline Monitor
Researched by JENNIFER OLDHAM and JAMES F. PELTZ / Los Angeles Times
