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
See Cramer's multi-million dollar portfolio for FREE and get his new book Get Rich Carefully! Learn More

American Airlines Merger Faces Multiple Labor Obstacles


But litigation has dogged the pilot seniority integration ever since a controversial 2007 arbitrator's ruling, and there is no indication it will cease due to a second merger.

In the case of the IAM, Wise said, US Airways needs contracts because it cannot secure single carrier status from the National Mediation Board until it has contracts with both the IAM and TWU. The two unions have agreed to joint representation, but "we will not touch a single American airplane or American baggage until we have a contract," Wise said.

The mechanics talks had reached the end game -- economic issues -- but stalled due to a 2013 Teamsters unionization effort and the merger. Now, American wants to pay top-scale US Airways mechanics less than top-scale American mechanics. The difference is about 62 cents an hour, or $1,300 annually. (Top-scale mechanics make about $70,000 annually.) IAM said US Airways mechanics deserve the same pay as their peers. The airline, according to Wise, argued that the discrepancy should be acceptable because US Airways mechanics have better health care and more holidays.

In both mechanics and fleet service talks, "We are waiting for the NMB to release us or call us back to the table," said Mark Baskett, vice president of IAM District 141. Baskett noted that American fleet service workers got raises last week, "while US ramp guys are still negotiating. Needless to say, the members are getting pretty restless."

US Airways spokesman Bill McGlashen said "the NMB will determine the next steps in the negotiations process" and declined to comment on the company's bargaining positions.

Among flight attendants, the question is which union will survive. APFA President Laura Glading played a major role in implementing the merger, which reshaped the airline industry and also brought her members a better contract than they would have had without a merger. But she also signed a contract in bankruptcy, always a dicey proposition in the harsh world of union politics.

Mike Flores, former president of the US Airways AFA chapter, said APFA made a mistake when it agreed to binding arbitration if the airline and the union cannot agree on contract terms. "That takes the negotiating process out of the equation," he said. "That avoids the mediation process under the Railway Labor Act and lets (the airline) go right to their end game." In arbitration, the two sides must agree on an arbitrator, much as lawyers agree on a jury in a trial. Selection of the arbitrator is key.

But an APFA spokesman said, "To look back and say that binding arbitration was a mistake is to look back and say the merger was a mistake, because you cannot have one without the other. We needed the cost structure in place to sell this deal to the creditors." Additionally, the spokesman said, binding arbitration benefits flight attendants as well as the airline, because it means negotiations will not stretch out indefinitely, as they have in some previous AFA mergers. "The sooner we get to a contract, the better," he said.

Flores said the AFA contract, which he negotiated, includes protections under Allegheny Mohawk protocol, which offers job and compensation protections in a merger. He said US Airways would like to get from under that provision. APFA said it would negotiate for the best aspects of each contract.

The pilot union merger is complicated not only by the seniority dispute but also because USAPA president Gary Hummel is facing a recall vote. Hummel backed the merger, which means a new contract that over six years would provide $1.6 billion worth of benefits, including pay raises of 13% to 35% over existing rates and lump sum payments around $10,000 each.

Hummel's opponents said he exceeded his authority in negotiating the contract terms and makes too many concessions to former America West pilots including allowing them to participate in merger talks with American pilots.

Written by Ted Reed in Charlotte, N.C.

To contact this writer,
click here.

Follow @tedreednc

Stock quotes in this article: AAL 

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.
DOW 16,501.65 0.00 0.00%
S&P 500 1,878.61 +3.22 0.17%
NASDAQ 4,148.3380 +21.3710 0.52%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto
Advertising Partners

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