Last Week's Spirit Dashed

Although there was strong reluctance on the part of the unions to take the huge pay cuts American Airlines was begging for, union bosses last week did a good enough job of encouraging the membership to take them. Although the Flight Attendants' vote(s) held surprises, even the FAs bit the bullet.

Well, as they say, the the cat sniffed the ammonia. Union bosses were furious, first because they found out that the top brass at AMR Corp had squirreled away millions for their own retirements, and secondly because the company said publicly that the union negotiators had knowledge of the pension trusts, before the vote.

American has since apologized for having said (revealed?) there was union bosses' prior knowledge; and the Board has stopped additional funding the trusts (while keeping monies already there, in them). The 'retention plan' has been scuttled. Nevertheless, there is a lot of bitterness in the air.

The unions, particularly the FAs and ground workers, are talking about having a new vote on the already-approved wage and benefit reductions, with the explanation that last week's votes were taken without some material facts' being known. If the unions are able to have that second vote, the current attitude of membership nearly guarantees that any new vote (especially given the closeness of last week's votes) would go against the new contracts.

If that happens, American, already on the edge of bankruptcy, may well go running for its cover; and industry overcapacity will continue. Additional airlines, still paying their bills, will be overwhelmed by United and American, which, under Chapter 11, wouldn't have to do so. The industry could thus collapse entirely.

That, of course, would take care of the 'overcapacity' problem.

FMI: www.amrcorp.com