After Turbulent 2019 American Airlines Finally Reaches A Deal With Mechanics

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It’s been a bitter stand-off between American Airlines and their unionized mechanics. But after more than four years of bargaining, the Transport Workers Union-International Association of Machinists (TWU-IAM) Association has reached ‘Agreements in Principle’ with American Airlines. Announced on 30 January, these Agreements in Principle will provide all Association members with “wages, benefits, work rules, job security and retirement income that had never before been accomplished” says the union.

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A labor dispute, the 737 MAX crisis, and now the coronavirus. It’s been a difficult past year for American. Photo: American Airlines

Agreements for more than 30,000 workers

According to the TWU-IAM, five new joint collective bargaining agreements (JCBAs) have been reached. The total value of these agreements is US$4.2 billion and covers over 30,000 Mechanic & Related, Fleet Service, Maintenance Control, MLS/Stores and Maintenance Training Specialist members.

The deal isn’t final just yet. In fact, negotiating committees still have to finalize and proof contract language. This process could take a few weeks says the union. However, a few weeks more seems like almost no time at all when compared to how long this dispute has gone on. Below is a quote taken from the TWU-IAM announcement:

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“From the outset, we had a decision to make: get a quick agreement, or get the right agreement for Association members, regardless of how difficult, lengthy and contentious that process would be. As you review the complete terms of the contracts, you will see that we chose the correct path.”

For affected workers, the new agreements are said to provide wages, premiums, retirement, and profit-sharing that is the ‘richest in the industry’. Furthermore, the agreements provide certain levels of job protection.

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The deal has yet to be finalized. Photo: American Airlines

(Alleged) damage caused by the dispute

More than just a result of the 737 MAX crisis, American attributes a great deal of summer flight cancellations to the lengthy work dispute. For example, the month of June saw almost 4,000 cancellations of American flights. The airline alleged that there was an organized slowdown by its mechanics unions. The claim was that these were deliberate slowdowns meant to gain leverage in contract negotiations. The airline said that its workers are taking an “inordinately long time to repair aircraft”, with mechanics are refusing to work overtime.

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The unions insisted that there was no organized slow down and put the blame on American’s management for the operational problems. The airline’s pilot union also blamed management for not having enough pilots to fill in when problems arise.

The dispute reached an extreme with the actions of one mechanic, who was arrested in September and was charged with damaging an aircraft. The charge relates to a Boeing 737, which Abdul-Majeed Marouf Ahmed Alani is thought to have sabotaged. The situation was thought to have arisen from stalled contract negotiations.

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Once finalized, the agreements will cover over 30,000 workers. Photo: Getty Images

The airline’s reaction

In an official press release, American Airline’s CEO said the following:

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“Our Maintenance & Related and Fleet Service team members are the very best in the business and work incredibly hard to care for our customers…They deserve contracts that include meaningful improvements in pay, quality of life and job protections. The tentative agreements deliver on all of these — and more.” -Doug Parker, CEO, American Airlines

While Parker acknowledges that this is a positive for its team members, he had also previously acknowledged that contract negotiations would lead to higher expenses for the airline’s operations. During its Q4 2019 Earnings call, Parker said the following about the agreements in response to a question about the dispute and the MAX situation:

“This will lead to an increase in our costs. So on a year-over-year basis, I think those things certainly don’t have a huge positive.”

Conclusion

While this may not be great news for shareholders looking for a rise in stock price, hopefully, this translates fewer cancellations and operational disruptions for the airline – a great benefit for American Airlines passengers.

Do you think a resolution and a finalized agreement will lead to better performance for American Airlines’ flights in 2020? Let us know in the comments!

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