Labor Acrimony Begins at the New American Airlines

Mergers are Tough — Especially Integrating Union Workforces

Mergers are tough in any industry, bringing together large enterprises. It’s tough to realize the paper gains that were used to justify the merger.

Things become even harder merging unionized enterprises, since the layers of negotiations and contract complexity are far greater.

Unions of both airlines generally supported the American Airlines-US Airways merger because they were promised raises if it went through.

US Airways Never Managed to Complete it in Their Last Merger

US Airways never managed to integrate its pilots after its merger with America West… even though its pilots were represented by the same union. US Airways, in its second bankruptcy, was deemed a ‘failed carrier’ and union rules dictated that American West pilots would rank higher in seniority.

So the more numerous US Airways pilots, with enough votes to do so, created a new union whose purpose was bumping back down the senior of America West pilots. (Instead of fighting against the Romans management, they were fighting each other.)

This Merger Was Supposed to Bring Lake Wobegon to Labor: Everyone Gets Raises, Becomes Above Average

An American Airlines merger is supposed to bring big pay raises, and finally buy everyone out of the labor acrimony. The challenge of integrating two pilot workforces (US Airways and America West) is supposed to get easier by integrating three pilot workforces.

Meanwhile, American’s pilots favored the deal. They were promised pay raises and a rollback of some of the contract concessions from American’s bankruptcy. They also developed a personal dislike for American management, and got the psychic win of flexing their muscles and tossing management.

American’s pilot slowdown from September-October 2012 basically forced the merger. It laid bare that American wouldn’t continue as a standalone under current management. A merger may have happened anyway, in fact by July 2012 American was signaling as much by telegraphing that the merger with US Airways was actually their idea originally. But the pilots made it inevitable, greased of course by Doug Parker’s willingness to overpay such that not only would unsecured creditors be made whole in the American bankruptcy but equity holders wouldn’t get wiped out entirely.

How well a merger predicated on cost increases will do remains to be seen. But, somewhat predictably, labor peace already seems unlikely to be achieved. In fact, we’re already seeing labor acrimony.

Labor Is Already Squabbling Though

Terry Maxon reports that the President of American’s flight attendants union “blasted the [US Airways flight attendants’ union] for wanting to change the rules on how the two work groups would be combined and get a single contract.” The US Airways union leadership says that American flight attendants don’t want enough out of a new contract.

It appears to come down to the US Airways union wanting a new representation election, so that they might be able to represent all of the flight attendants at both airlines. They’re going to be combative and promise members more, to convince flight attendants to support them. American’s union leadership doesn’t want to be pushed out. So we’re beginning to see a power struggle.

I love that the dueling letters between the two union leaders end “In unity,” and “In solidarity.”

I don’t love that the merger might not be all unicorns and roses. I greatly prefer happy employees who enjoy their jobs and don’t take squabbles out on customers. Here’s hoping!


About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community InsideFlyer.com, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

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Comments

  1. I have booked an award flight for myself on Lufthansa through United Airlines for April 2014; Boston to Malaga and returning from Paris to Boston with stop overs. Perfect connections, 60,000 miles with $123.10 in taxes. This is the connection in question:
    Depart: 9:20 a.m. Sun., Apr. 27, 2014 Paris, France (CDG)
    Arrive: 10:40 a.m. Sun., Apr. 27, 2014 Frankfurt, Germany (FRA)
    Flight Time: 20 mn Flight: LH1027
    Depart: 12:40 p.m. Sun., Apr. 27, 2014 Frankfurt, Germany (FRA)
    Arrive: 2:25 p.m. Sun., Apr. 27, 2014 Boston, MA (BOS)

    I have on hold right now the same flights for my wife booked through Lufthansa for $618.94 in taxes but one different connection. The connection for her cannot be booked because the two flights are not married??? The flight leaves 3 hrs 10 min before mine and the flights of other people we are traveling with. So this is what they gave me for my wife:

    06:30 Paris, Charles De Gaulle 07:50 Frankfurt flight LH1053

    I have this on hold until Nov 23. Do you have any suggestion as to how I can get my wife on the same flight as myself.
    Thanks

  2. Seniority lists are always a big deal, but I’m not sure the general public is aware of why seniority is so important in a pilot or flight attendants life. They just have this notion of the unions being difficult.
    Pilots generally don’t get promotions (though sometimes they switch roles) or switch companies, except for possibly early in their careers. Everything depends on how far up the seniority ladder you are. It’s a big deal. So when you merge to seniority lists from 2 different companies with different demographics, things get complicated.

  3. Let the games begin!! It will be fun seeing how Dougie handles this obvious clusterf*ck that is going to be labor integration at his new airline. 3 pilot groups? Good luck, Dougie. It couldn’t happen to a nicer guy. I give the pilots 6 months, then they will start complaining about AA management. Again. And again.

  4. What is going to suffer is service. Not because unions are bad, but because Parker would rather dumb down the service to increase the profit. If that means labor peace at the cost of customer service then that is his model. That is the way USAir is run, they offer little for the customers to keep the airline running. Sometimes Parker can get a 1 plus 1 double hit, like removing meals from flights under 3 hours. Keeps both FT and accountans happy.

  5. Thank you, Nick, for explaining this to readers. Seniority is a very big deal for airline employees, who don’t really get to see career or ANY kind of labor mobility. Unless they simply change industries, seniority is the only thing keeping most airline employees above the poverty line (pilots and management excepted).

    Most successful, non-UAE / Asian airlines have strong unions representing these teams, and most are profitable. The key for success in this merger will be competent, focused, empathetic management. American hasn’t had this in years, and it shows.

  6. I will be laughing my tail off at the mess the union whiners and Dougie have gotten themselves into as I fly on United and Delta! 🙂

  7. @Nick – you write as though the notion that switching airlines/companies is impossible, the reason they do not switch in the first place is those seniority lists.

  8. Mergers are supposed to improve profitability thru cost savings. Yet the promises here are to not cut hubs, not abandon low profit routes, and not merely not fire redundant employees, but actually give them all raises. Plus a rollback of the post bankruptcy union concessions that allowed AA to recently become profitable. How is this supposed to work out?

    This reminds me of how Obamacare was going to insure many more people, provide better coverage, cut the average families health costs by $2500 a year, while reducing the Federal deficit. And we all know how that is working out. 🙁

    In addition, the AA pilot and FA unions, regardless of the reason, have a several decade long union culture of active hatred of AA management. Of which the recent pilot slowdown is but one example. It’s unlikely that they will suddenly change that ingrained attitude just because Dougie takes over.

    And ironic that with a proven record of failure in merging the four US and AW pilot and FA unions, he is now going to try to merge six of them. I’m afraid a multi front civil war between management and 6 unions is about to unfold.

    And we have already seen in the AA pilot slowdown how the union was willing to take out their unhappiness with management on AA’s passengers. So as much as I might want to think that Dougie is getting what he deserves, as a Lifetime AA Gold with a large stack of AA miles, I can’t feel too happy about it either.

  9. @Gary, I agree it’s a chicken and an egg situation. Merging seniority lists is about the only thing that has gone smoothly for the UA merger, perhaps too smoothly.

  10. @Robert Hanson: I see something different – AA’s management willing to line their pockets while failing to invest in pretty much anything that touches a passenger. That shows more contempt for customers than the cabin crew or pilots due.

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