Pilots Reject American Airlines Contract Offer
FORT WORTH (CBSDFW.COM) - In a crushing blow to American Airlines management, pilots have overwhelmingly rejected the carrier's last, best contract offer. Now, the airline will ask the bankruptcy judge to throw out its existing contract with its pilots in an effort to save money and emerge from bankruptcy.
A total of 7,535 pilots voted, which represents more than 96 percent of the union. Of them, 61 percent -- or 4,600 pilots -- voted against the contract while 39 percent -- or 2,935 pilots -- voted to approve the contract.
But by region, pilots felt differently. Allied pilots at DFW airport, the union's largest pilot base, approved the contract by the narrowest of margins: just 24 votes. At American's second largest pilot base, in Chicago, members approved the contract by nearly 200 votes.
Pilots in Miami and Los Angeles voted overwhelmingly against the contract offer
The sizable margin surprised the Allied Pilots Association leadership. Many expected it to be a very close vote.
WATCH: Allied Pilots Association President Howie Schack:
American Airlines spokesman Bruce Hicks issued a statement saying, "We are disappointed with the outcome of today's APA voting results, as ratification of the pilot tentative agreement would have been an important step forward in our restructuring. However, we respect the rights of our pilots to voice their opinions in the voting process. We now must await a ruling by Judge Lane that will allow the company to implement the changes necessary to move forward with our restructuring."
It's a different story for American's mechanics and store clerks, who are represented by the Transport Workers Union. In a razor-thin margin, the mechanics voted for American's last, best contract offer 50.25% to 49.75%.
The store clerks overwhelmingly approved their contract 79-21%.
American Airlines calls the Transport Workers Union members' vote "an important step forward in our restructuring." American's last contract offer included a a pay raise and a 13.5% equity stake in the new airline that emerges from bankruptcy.
The Allied Pilots Association says one contributing factor is the way American tried to sell the contract to pilots -- they say the airline was trying to call it a good deal, but pilots didn't think so.
Tom Hoban of the Allied Pilots Association said that there were several issues that pilots could not get past. The contract is six years in length, and pilots prefer a three-year deal.
Hoban said that another problem is the proposed two-tier pay scale for pilots of the soon to be purchased Airbus A-319 aircraft, which will replace American's current workhorse, the MD-80. Hoban said that the proposed pay scale for the pilots flying the A-319 would have been lower than pilots at Spirit, Frontier and JetBlue airlines.
Pilots are still very angry at American's management. For years, they have worked without a contract, and they made deep concessions in a contract in 2003 in a desperate effort to help American stave off a bankruptcy filing. Now, the pilots union accuses American executives of trying to influence the vote, which they believed backfired.
"Did anger play a factor in it?" said Hoban. "Most likely it did, no doubt about it. This was an overwhelming rejection -- this was not a squeaker as many people thought it would be."
The pilots' rejection comes after union leadership sent a newsletter on Monday telling members that advisors urge approval of the contract.
US Airways has made no secret that it wants to merge with American Airlines. It courted all of American's main unions and came up with tentative labor agreements in the event there is a merger. While US Airways wanted American's pilots to approve their contract with American, some analysts believe the news will help US Airways.
Mark Drusch, a retired executive from Delta and Continental Airlines who is now the Chief Supplier Relationship Officer at Fareportal, said that he believes the pilots' vote, "means US Airways has made a very solid offer, a better deal than the current deal." Drusch also said that it could send a signal to the bankruptcy court. "The bankruptcy judge and the creditors are going to look at this and say this plan isn't working, we need to look for Plan B."
WATCH: Airline Industry Executive Mark Drusch:
American says the six year contract has a mid-term point, after the third year, the airline can evaluate what the industry norm in salaries is.
As for the Airbus A-319's, American says it wanted to expand the number of planes the Allied Pilots Association could fly. American says its pilots were the highest paid until last year.
American's flight attendants' union is now voting on a new contract. Their vote ends on August 19. While one union leader urged members to approve, most analysts now believe that the flight attendants will reject their contract, following the pilots' lead.
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