By Samantha Shankman
The long and arduous contract negotiations between American Airlines management and pilots ended on Friday with a 74 percent endorsement of the proposed contract. Almost every member (96 percent) of the Allied Pilots Association voted on the contract with 5,489 pilots voting for and 1,951 voted against it.
The union rejected the first proposal from the carrier by a wide margin in early August, causing a major issue for bankrupt airline in the midst of its restructuring process. In the four months that followed, AA dealt with flying seats, picketing pilots, and massive cancellations due to Hurricane Sandy.
So what were some of the game changers that led to the union approval this time around? Jim Scanlon, a spokesperson for the APA, explains which three clauses he believes were the most influential in pushing the proposal through this week:
1. Scope clause: The new contract includes a scope clause that states aircraft with 76 seats or less can be outsourced to regional airlines like American Eagle. In August, American Airlines proposed that flights with 88 or fewer seats could be outsourced -- a huge jump from the 50-seat cap currently in place. The agreed 76-seat cap is similar to those of American's competitors like Delta and United Airlines.
An airline's scope clause determines the size of aircraft that can be outsourced to regional carriers. The use of regional flying makes it easier to cut costs and compete with low-cost carriers, but also takes jobs away from AA pilots while increasing furloughs.
This was a vital part of negotiations since it decreases the number of outsourced flights and thus minimizes the probability of furloughs. "We need some job stability," says Scanlon. "There should be an assurance that when you go to work for a company that you won't get furloughed."
Safety is another issue related to outsourcing. Pilots on regional carriers are generally younger, less experienced, and paid less.
2. Furlough protection: The approved contract included a clause that protects every pilot currently on the seniority list from being furloughed. The seniority list includes every actively flying pilot in the order that they joined American Airlines. The clause adds a layer of job stability for pilots despite regional outsourcing.
3. Pay for Airbus A319: The approved contract also increased pay rates for pilots that will fly the Airbus A319 aircraft when it joins the AA fleet in 2013. Pay rates detailed in the contract in August were significantly lower than the rate that was approved.
American Airlines' perspective
Securing the pilot contract brings American Airlines one step closer to emerging from bankruptcy and facing the decision of whether it will do so independently, find a strategic investor, or choose a merger partner. The APA vocally supports a merger with U.S. Airways.
"This agreement addresses the priorities identified by the APA during collaborative talks. Today's ratification gives us the certainty we need for American to successfully restructure, providing opportunity and growth for all of our people and stakeholders," American Airlines Senior Vice President Denise Lynn said in a statement today.
American CEO Tom Horton released a letter outlining the company's restructuring process following Friday's contract ratification. The letter can be found here.
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