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
TheStreet Open House

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

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

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
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

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

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, 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
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 17,131.97 +100.83 0.59%
S&P 500 1,998.98 +14.85 0.75%
NASDAQ 4,552.7590 +33.8570 0.75%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs