Spirit Strike Might Impact American, USAir - TheStreet

Spirit Strike Might Impact American, USAir

American may be viewed as too big to have a strike, but US Airways carries just 8% of domestic traffic.
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FORT LAUDERDALE, Fla. (

TheStreet

) --

Spirit Airlines

said it will resume flying Friday, marking the conclusion to a six-day strike by its pilots and raising the question whether a brief strike at a small carrier could impact bigger carriers' contract talks.

Moving quickly to entice its passengers to return, Spirit Airlines said it will offer $50 off the price of round-trip tickets for travel on select dates, as well as extra frequent flier miles. Union leaders have approved the agreement, which awaits ratification.

Assuming Spirit is able to retain passenger loyalty, it will be difficult to attach any great significance to the strike in terms of its relevance to the dozens of ongoing labor negotiations in the airline industry. Certainly, the case can be made that the big three network carriers would be viewed as too big to strike, prompting presidential intervention.

Among these three,

American

(AMR)

seems the most likely to test the system. Most of its employees are involved in contract negotiations. The carrier says those employees are already among the industry's highest paid. CEO Gerard Arpey said Tuesday that since 2005, American has had the highest cost per available seat mile in the industry, the result of a $600 million annual price gap between what it pays employees and what competitors pay employees.

"That gap will close" over the next few years, as competitors sign new contracts or implement negotiated raises, Arpey said. In the meantime, however, the carrier views its contract flexibility as limited.

Furthest along are negotiations with the Transport Workers Union, which represents 28,000 American workers. In the case of a tentative contract agreement with its fleet service clerks and other ground workers, the union has recommended that members turn the agreement down: the two sides continue to talk. Flight attendants are also talking and have requested a release from the National Mediation Board. But so far, the board has not been eager to issue releases, with the Spirit pilots as the primary exception.

The next biggest airline,

US Airways

(LCC)

, carries about 8% of domestic U.S. traffic. It is currently involved in negotiations with its flight attendants, and while they have taken a long time, they apparently continue to make progress.

As for US Airways pilots, contract talks have been delayed by an ongoing seniority dispute. The potential clearly exists for continued delay as the dispute plays out in the courts, but when that concludes, the two-year-old U.S. Airline Pilots Association will begin serious contract negotiations for the first time.

The union will be in a difficult position, eager to show that it can get a good contract for all of its members at a time when the airline has indicated that it compensates for a 10% revenue disadvantage relative to the big three carriers with labor costs that are about 10% lower. A merger would be the best way to eliminate the differential, the carrier has said.

On Tuesday, USAPA voiced its support for the Spirit pilots in a strongly-worded statement that reflects on similarities between the two work groups.

"US Airways pilots could not sympathize more with the Spirit pilots, since the similarities in our conditions are striking," said union president Mike Cleary in a prepared statement. "Like us, the Spirit pilots gave up pay, working conditions and benefits when our managements needed to save our airlines. Like us, the Spirit pilots have been working at the bottom of the industry pay scale and without a pay raise for years.

"Now is the time to draw a line in the sand with regard to passenger safety and worker respect," Cleary continued. "No airline group enjoys disrupting passenger travel, and we do everything possible to avoid striking. But under U.S. laws strikes are the only work action available to us to help achieve a fair contract."

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

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