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Why American Can Avoid a TWU Strike

Stocks in this article: AMR

DALLAS ( TheStreet) - It is hard to imagine that American and its largest union, the Transport Workers Union, will be unable to reach a deal without a strike, because the relationship has been good for so long.

Additionally, American needs to show that it can indeed make a deal, as it continues talks with unions that have been more recalcitrant.

American Airlines

With open contracts at every major carrier, the airline industry is headed into a period in which labor relations will be the dominant issue. The general theme is that in every case, inside or outside of bankruptcy court, labor groups made concessions to keep airlines afloat between 2002 and 2005. Now, unions want to regain some or all of their sacrifice, despite the industry's fragile recovery.

American, one of the two major network carriers that did not seek bankruptcy protection, is slightly ahead in the sequencing. The Transport Workers, with 28,000 American workers in 11 bargaining units, requested a release from mediation on March 11. The Association of Flight Attendants, with 16,550 active members, asked to be released on March 16.

The NMB is studying the requests: some experts anticipate the TWU will be released before the APFA because it is further along in talks. In this case, a release would not foreshadow a strike, but instead would represent an effort to speed up a process that -- although it is moving slowly -- has produced several positive signs.

They include a letter to regulators last week from the TWU, which backed American's request for approval of antitrust immunity with partner Japan Air Lines. This type of gesture used to be commonplace for airline unions but now is rare, particularly at American. Moreover, of the four TWU-represented workgroups at AMR subsidiary American Eagle, three -- mechanics, fleet service workers and ground school instructors -- are currently voting on whether to ratify tentative agreements. At AMR subsidiary American, the two sides have recently made progress, reaching agreements on a half-dozen contract areas.

It is the contentious areas that remain, said John Conley, director of the union's Air Transport Division, in an interview. "It is instinctive that we find ways to reach commonality and work to return the industry to profitability," he said.

Not that many years ago, the cooperation between American and the TWU was the talk of the industry . In the spring of 2006, managers, union leaders and workers at maintenance bases in Fort Worth, Texas; Tulsa, Okla., and Kansas City, Mo., agreed to work together to generate a combined $1 billion in new revenue and cost savings by the end of 2008.

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