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Old 09-28-2005, 03:11 PM   #1  
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Default Concessions looming at AA

Pilots expect American to call for concessions

Union leader says airline has provided data on current plight

12:00 AM CDT on Wednesday, September 28, 2005

By ERIC TORBENSON / The Dallas Morning News

American Airlines Inc. expects its pilots' union to craft new concessions to help the Fort Worth-based carrier remain solvent, according to the labor group's president.

Ralph Hunter, president of the Allied Pilots Association, said in an address Monday to the union's board of directors that members have asked him when he expects American chief executive Gerard Arpey to ask for contract changes.

"My answer to you is that, in his own way, he already has," Mr. Hunter said.

"Mr. Arpey and his management team have chosen to provide us with virtually every bit of data we have requested with the hope that we will come to the right conclusions on our own," he said.

"If we are not able to understand the need for change with the data we have, no amount of asking or explanation from management will make any difference," Mr. Hunter said. "In short, if you are awaiting a formal invitation to examine change, don't."

American's vice president of employee relations, Mark Burdette, said he was "encouraged by the leadership role taken by Ralph Hunter."

The airline doesn't know what to expect from the pilots' union and hasn't specifically asked any of its unions for any concessionary plans, Mr. Burdette said. "I don't know what their plan is likely to be. I know they've had some fairly extensive strategic discussions."

American has used about 100 employees in recent months to benchmark American's performance against other airlines, and has left the unions to think about what might be the next step for the carrier.

"One of the most interesting things about this process is that when you give them detailed information about what's happening, that rational people come to the same kinds of conclusions," Mr. Burdette said.

Last of its kind

American finds itself the last traditional network airline that hasn't yet sought Chapter 11 bankruptcy protection. Both Northwest Airlines Inc. and Delta Air Lines Inc. filed for protection earlier this month, joining United Airlines Inc., which has been reorganizing for nearly three years. US Airways emerged from its second filing in three years on Tuesday through a merger with America West Airlines.

"Where do we go from here?" Mr. Hunter said. "First, we must recognize that 'here' is not a place that we want to remain much longer."

The pilots were briefed Monday by American chief financial officer James Beer on the airline's financials.

Though parent company AMR Corp. has a cash hoard of more than $3 billion, enough to survive at least until next year by most analysts' thinking, high fuel prices are likely to persist and drain those reserves until a filing becomes inevitable.

"There is a growing chorus of individuals throughout the financial, governmental and airline communities who advocate that American Airlines should go ahead and declare bankruptcy to 'fix' their business model," Mr. Hunter said. "I find this refrain particularly frustrating because the overwhelming evidence clearly demonstrates that bankruptcy does not fix an airline."

Previous sacrifices

American's pilots have already sacrificed a lot. Their May 2003 concessionary contract gave back $660 million in annual pay and benefits. More than 2,000 of American's 12,000-plus pilots remain on furlough as the carrier has shrunk its fleet and optimized its operations.

The APA and other unions will have a chance to begin early contract discussions next year. The concessionary agreements are amendable in late 2008.

Mr. Hunter noted that Southwest Airlines Co. pilots are now among the industry's top paid, including benefits, and reiterated that American's pilots should strive to match that pay.

"Achieving pay comparable to Southwest pilots, however, cannot be achieved just by demanding it," he said. "We must also be willing to adopt a Southwest-style culture."

Southwest gets more hours each month from its pilots than does American or most other carriers. That is a function of how Southwest schedules flights and also reflects more restrictive work rules in its pilot contract.

American's pilots remain focused on keeping their pensions. The APA has teamed with other American unions and the carrier itself to resume lobbying in Washington for pension relief.

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