Amid all the election year hoopla, rotten economic data, and watching the College Football Top 25 getting turned on its ear again for another week is the story going on at American Airlines. As I live in the DFW Metroplex and know the value AMR Corporation has brought to the area since the early 80’s when they located their hq here, I am more than a tad concerned about what is going on with the airliner.
Effectively, something very suspect is happening to American Airlines. Now American has never had the best on time record in or out of DFW International Airport. Part of that has been an ineffective plan to rectify the problems of distance from the gates to the runways. DFW, when built, was not the most efficient use of land design for runways to gates; falling into the category of “Bigger and Better in Texas”. Problem here is that bigger was not better. However, what is occurring right now is beyond gate and runway issues of getting flights in the air.
This is sabotage.
American is the last of the large airlines to seek bankruptcy to get its financial house in order. After years of hemmoraghing losses for labor contracts it could no longer afford, AMR filed for Chapter 11 in November of 2011. Chapter 11 allows an entity to continue operations as it restructures its debt. Delta Airlines entered into Chapter 11 in 2005 and emerged out of it in 2007. When Delta filed, it took 4 of the top 7 carriers in the industry into Chapter 11 with it. When Delta came out of Chapter 11, it was leaner and meaner, able to acquire Northwest Airlines. Northwest had also filed Chapter 11 at the same time as Delta. Today, Delta and Northwest represent the second largest carrier in the industry. American has needed this move for quite some time.
For the liberals reading this – unlike what Barry did with GM and Chrysler, where he put aside US contract law and placed the auto unions into ownership ahead of invested bondholders (also spending billions in US tax dollars that would not have been needed had he stayed out of the process), what is supposed to happen is a debtor negotiates with their debt holders, labor contracts, etc to get costs down so they can remain in business. It is what the Chapter 11 laws were created for. Believe it or not, a company can file for Chapter 11 and survive. United Airlines, now number one in the industry since its merger with Continental filed for Chapter 11 in 2002. It took 4 years to get through the process, but made them a leaner company and attractive enough to be merged into a great situation with Continental.
However, we have a rotten situation going on with AMR’s Chapter 11 filing. They made the mistake of filing under the big labor administration of the BHO, as well as being located in Texas. That is a double whammy. AMR has never had the rosiest relations with labor with its pilots and flight attendants. There were issue in the 1990’s. Workers accepted pay cuts in 2003 to avoid bankruptcy then from the after effects of the September 11, 2001 terror attacks. AMR has 3 labor unions to contend with – the Allied Pilots Association, the Transport Workers Union, and the Association of Professional Flight Attendants. AMR has a website for all of these negotiations called http://www.aanegotiations.com/ . Here is some interesting data from the site:
- AMR and the APA have been in negotiations for 63 months; 43 of which is mediated.
- AMR has been in negotiations with several TWU factions for a long as 49 months, with mediation for 34 months. According to the site, 85% of issues are resolved.
- AMR and the APFA have been in negotiations for 42 months, of which 34 has been mediated.
And people wonder why they declared Chapter 11….
Here is some interesting information not being reported in the lamestream media:
- AMR pilots calling in sick is at all time high. Twenty percent (20%) called in sick last month.
- Union reports to AMR show their pilots calling in sick between 6 to 7% each month for the past year. October 2011 was 9.5%
- Crews are slowing flights by calling in large numbers of maintenance reports.
The AP has a great article on this in more detail at http://www.reporternews.com/news/2012/sep/20/american-airlines-faces-backlash-with-labor-woes/?print=1 Take a moment and read through it.
Now, the pride of the American fleet the Boeing 757, has loose seats? Really?? Of course the TWU has declared that these issues must be related to mismanagement and outsourced labor. That according to reports from the Dallas Business Journal http://www.bizjournals.com/dallas/news/2012/10/02/twu-says-labor-problems-not-behind.html. Only one challenge here – AMR is not outsourcing this area of maintenance.
Pure and simple – this is union sabotage and terrorism against American Airlines. In any other adminstration, including Clinton’s, the FAA and the Labor Department would be in the middle of this to stop this from escalating to a point where a plane crashes and this airline goes under. I happen to remember the last big airline that went under here in Texas at DFW Airport. It was a carrier called Braniff and they could not survive deregulation of the industry. Many ex-Braniff people got picked up by American when they came to Texas. However, if the unions push this to the point where AMR goes belly up, don’t look for a savior like American was for Braniff. While US Airways has indicated an interest to take over AMR (the unions have thrown their support to this transaction), it will not be pretty here in Texas if US Airways comes in to pick through the remains of AMR. US Airways has filed Chapter 11 twice in the past 10 years to get themselves lean and mean. As such, they have no intention of taking on the baggage of AMR in its labor issues and you can rest assured they will rid themselves of any labor they feel are responsible for taking down AMR. Also, they want AMR’s flight routes and gates at DFW. They are drooling to get those gates, equipment, and routes for pennies on the dollar. So the unions are cutting their throats along with AMR’s with this economic terrorism being pulled right now.
If this continues requiring American to continue to cancel flights over the next week, look for this debacle to creep into the Presidential race. It is a classic example of how far left unions have gone under BHO and their tactics to strong arm companies. The federal agencies that are in place to oversee this are not doing there job because of politics. If this continues, it will be bad for AMR, all the labor unions, the airline industry, and the US economy.
AMR is worth saving. Not with new laws or taxpayor dollars in a bailout, but by allowing it to re-emerge through the framework of US contract law determined by a free market of supply and demand. This is a time for the federal government in the FAA and Labor Department to look into the union sabatage and stop it in its tracks to protect the people.
All the people….