Pilots Told to Pay $45 Million
A dispute over pay turned into a financial disaster for American Airlines’ pilots union Thursday when a federal judge ordered it to pay a stunning $45.5 million in damages for defying an order to halt its February sickout.
The Allied Pilots Assn., which has $38 million in net assets, said it would almost certainly appeal the decision and implored company executives to live up to a pledge to improve on the Fort Worth, Texas-based company’s history of rocky employee relations.
U.S. District Judge Joe Kendall, who levied the damages after two days of hearings, had earlier ordered the union to put $10 million into escrow and said the final assessment could be much higher.
“You pay for what you break, even if you can’t afford it,” Kendall said in announcing his ruling.
Kendall said he based the damages, which will go to the airline, on American’s estimate that it lost $51 million from Feb. 10, when he ordered the pilots back to work, to Feb. 13, when Kendall found the union in contempt of his order.
American said its overall losses from the sickout, which began Feb. 6 and ended Feb. 16, were about $200 million.
More than 6,600 flights were canceled and air traffic was snarled over the busy Presidents Day weekend by the job action. It arose from a pay dispute involving pilots who worked for small, Nevada-based Reno Airlines, which American acquired in December.
During this week’s hearings, expert witnesses for the union said the airline lost no more than $4.7 million, but Kendall rejected their testimony.
APA officers said earlier a big judgment would threaten the union’s survival, a possibility that Kendall acknowledged.
“I know what’s going to be a consequence of this is that a lot of fine men and women who are American pilots and who didn’t have anything to do with this whole thing are going to get hurt,” the judge said.
But union President Capt. Rich LaVoy told reporters the matter was far from settled. “We are a long way from this thing being fully adjudicated,” a grim-faced LaVoy said.
He said the union was “very, very disappointed” by Kendall’s ruling.
The sickout was the latest in a series of labor disputes that have plagued American. Last year, its pilots struck briefly in a bitter fight over a new labor contract.
When the sickout began, American Chief Executive Donald Carty pledged that the company, a unit of AMR Corp. would work to improve its labor relations. LaVoy said this would be a good time for Carty to make good on that pledge.
