American, Pilots Settle Most Issues in Reno Air Fray

AMR Corp.’s American Airlines, the No. 2 U.S. airline, and its pilots have settled most of the issues that led to a February sickout that cost American $225 million and forced cancellation of 6,600 flights.

At issue was how to integrate 300 pilots from Reno Air Inc., which American purchased last November, into the ranks of American’s pilots. The disagreement led to the pilots’ sickout, which snarled air traffic and ended only after a judge fined the Allied Pilots Assn. $45.5 million.

The agreements between the union and American are seen as proof of Chief Executive Donald Carty’s desire to improve relations between the Fort Worth-based carrier and its unions.

Carty and other American executives met with the union’s leaders Friday. The pilots and American have been involved in particularly bitter disputes, and the union said the issues approved by its board were a “significant step” toward improved relations.

The union board also agreed to negotiate possible changes in its existing contract, which now runs to Aug. 31, 2001. Any extension would be for a maximum two years. Changes in the contract might be negotiated in exchange for American forgiving all or part of the damage award against the pilots’ union and its top leadership.

“I want to emphasize that the union will be seeking improvements in the current contract in return for any extension,” said Rich LaVoy, APA president and an American captain. “There are no guaranteed solutions and no requirement for binding arbitration in any of the processes the APA board approved.”

Still unresolved is the date American assumed control of Reno Air. The date was a major factor in the earlier disagreement, with the union saying Reno’s pilots should have been paid based on American’s pay scale from when American acquired financial control of Reno. American didn’t assume operational control of Reno until Aug. 31.

The union and American agreed to allow an arbitrator to decide.

On Friday, the APA board agreed to take part in mediated sessions to solve disputes with American and to work on an agreement to let pilots fly nonstop to the Far East.

Concessions American could seek in exchange for forgiving the sickout damage award include letting American increase the size of regional jets flown by lower-paid pilots and giving the carrier more freedom in negotiating code-sharing agreements. The second issue could be part of a protocol on future mergers the two sides agreed to establish Friday.

The union hasn’t announced board action on a proposal that it study creation of an employee stock ownership plan, with the eventual goal of gaining a controlling stake in American.