Tail Gunner Joe
Well-known member
- Joined
- Apr 22, 2005
- Posts
- 203
Source: Management seems to have forgotten that a disciplined union can exert a ton of pressure
American’s tardiness isn’t bad luck. American couldn’t get passengers to the airport on time because the pilots who fly the planes didn’t want to get passengers to the airport on time.
This horror story begins with the Chapter 11 bankruptcy filing made by AMR Corp. (the holding company that owns American Airlines) last November. Bankruptcy, conventionally speaking, is about restructuring debts owed to banks and bondholders. But most of American’s debt was backed by hard assets like airplanes. What’s more, AMR actually had some cash on hand at the time of the filing. The debts American really wanted to restructure were the implicit debts to employees. As S&P analyst Philip Baggaley put it at the time, the goal was to “reorganize in Chapter 11 and emerge as a somewhat smaller airline with more competitive labor costs and a lighter debt load.” In other words, American went into bankruptcy primarily so it could pay people less.
The bankruptcy process gave American management leverage with which to extract concessions from its labor unions. American got those concessions, except from the pilots’ union, with which no agreement could be reached. So American decided to call the pilots’ bluff and got a bankruptcy judge to void the pilots’ contract.
It turns out that the pilots weren’t bluffing. Organized labor in the United States—especially in the private sector—has been in decline for so long that management seems to have forgotten that a disciplined union can exert a ton of pressure under the right circumstances, even if the legal environment is hostile. American pilots weren’t allowed to strike over the contract voiding, so instead they did something clever: They started following the rules.
American’s tardiness isn’t bad luck. American couldn’t get passengers to the airport on time because the pilots who fly the planes didn’t want to get passengers to the airport on time.
This horror story begins with the Chapter 11 bankruptcy filing made by AMR Corp. (the holding company that owns American Airlines) last November. Bankruptcy, conventionally speaking, is about restructuring debts owed to banks and bondholders. But most of American’s debt was backed by hard assets like airplanes. What’s more, AMR actually had some cash on hand at the time of the filing. The debts American really wanted to restructure were the implicit debts to employees. As S&P analyst Philip Baggaley put it at the time, the goal was to “reorganize in Chapter 11 and emerge as a somewhat smaller airline with more competitive labor costs and a lighter debt load.” In other words, American went into bankruptcy primarily so it could pay people less.
The bankruptcy process gave American management leverage with which to extract concessions from its labor unions. American got those concessions, except from the pilots’ union, with which no agreement could be reached. So American decided to call the pilots’ bluff and got a bankruptcy judge to void the pilots’ contract.
It turns out that the pilots weren’t bluffing. Organized labor in the United States—especially in the private sector—has been in decline for so long that management seems to have forgotten that a disciplined union can exert a ton of pressure under the right circumstances, even if the legal environment is hostile. American pilots weren’t allowed to strike over the contract voiding, so instead they did something clever: They started following the rules.
