This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Why American Can Avoid a TWU Strike

In Fort Worth, workers and managers were constantly in joint meetings. Working together, they came up with strategies like making parts in-house instead of buying from outside vendors. They figured out a way to place engines on hydraulic lifts in a pit, then move them up and down, so that seated mechanics could work on them, improving efficiency and reducing injuries. They decided to deliver cabin-ready oxygen masks to airplanes, rather than to take them out for maintenance and hope they would be returned on schedule.

As it turned out, the financial goals were not entirely met. The carrier said it reached goals of $500 million in Tulsa and $150 million in Kansas City, but has not reached the $400 million goal at Fort Worth or the $95 million goal for the line maintenance department. Still, the cooperation has enabled American to remain an industry leader in performing its maintenance in the U.S. rather than overseas.

"We set ourselves as the gold standard of the industry regarding efforts to achieve enhanced efficiencies and savings and to maintain work in-house and to draw work back in," Conley said. "Maintenance was the most highly visible, but we also did it in fleet service.

"It's to everyone's advantage to have a collaborative relationship," Conley added. Asked if the cooperative spirit still pervades, he responded: "I couldn't say 'it still pervades' as a blanket comment. It depends on who you ask." However, bonuses to American managers, after the TWU made concessions worth $620 million annually, as well as the intensifying contract talks, have gnawed at the cooperative spirit.

Without question, negotiations have reached a critical juncture. The parties have agreed on a half dozen issues, but compensation and pension benefits are still on the table, and some remaining issues are "must-haves" for the union. For instance, Conley said, "They have proposed outsourcing day cabin cleaning, (but) we are not of the frame of mind that will allow us to jettison 800 to 1,000 jobs." The TWU also wants to retain its defined benefit pension plan for current beneficiaries. The two sides have discussed offering 401(k) plans to new hires, but those talks broke down. Additionally, American wants a change in retiree medical benefits and wants more flying for regional partners including American Eagle.

American has emphasized the positive aspects of its labor talks, because it does not want to scare off potential passengers -- and because it needs a deal. "American Airlines' relationship with the Transport Workers Union remains strong and positive," said airline spokeswoman Missy Latham. "Negotiations are separate from operations and we continue to cooperate with one another." As aviation consultant Mike Boyd has said, "the TWU is one of the most rational, forward-thinking unions out there, and yet they are at the end of their rope -- American management has to address that."

-- Written by Ted Reed in Charlotte, N.C. .
2 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
AAPL $95.01 0.00%
FB $97.74 -2.00%
GOOG $682.74 0.00%
TSLA $142.31 -3.80%
YHOO $27.05 0.00%


Chart of I:DJI
DOW 16,027.05 -177.92 -1.10%
S&P 500 1,853.44 -26.61 -1.42%
NASDAQ 4,283.7530 -79.3910 -1.82%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs