Wed, Apr 15, 2009
Despite Economic Recession, Unions Want Theirs
American Airlines is scheduled to report its first-quarter
financials Wednesday, and analysts expect a $400 million loss for
the first three months of 2009. But some have deeper concerns that
even if American has enough liquidity to get past the recession, it
may not survive its next round of union contracts.
Six years ago, wage and benefit concessions by unions at
American in the post-9/11 industry downturn allowed parent company
AMR to avoid bankruptcy. But now, The Wall Street Journal reports
that recession or not, unions are seeing red over $300 million in
executive bonuses paid out in the past three years, and are vowing
to be "made whole" for their sacrifices in past years.
The US DOT's Bureau of Transportation Statistics reported
American's labor cost is 3.69 cents per available seat mile as of
last September. Even after billions in cuts accepted by the unions
in 2003, that's the highest per-seat cost among the nation's 13
largest carriers, mainly because competitors got even deeper
concessions through bankruptcy.
The unions are undeterred. Pilots at American, already earning
salaries near the top of the industry, are demanding a 50 percent
pay raise. The Association of Professional Flight Attendants and
the Transport Workers Union of America are also seeking raises for
their members at American.
Aside from the direct impact on the airline's bottom line, the
likelihood of higher labor costs is also costing AMR in higher
interest rates when it has to borrow money.
Fitch Ratings cut the airline's credit rating last month to
triple-C, indicating a risky and speculative venture.
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