American Flight Attendants Get Better Contract After All

I had intended to write about this last week, but got sidetracked. In early November I wrote about how American flight attendants rejected their new contract, which would have led to them getting a $193 million pay raise. This was interesting on a few levels:

  • The flight attendants were the first to vote on a combined contract at the “new” American, so the way they negotiate sets a precedent for the other labor groups
  • Out of over 8,000 votes, the contract was rejected by a margin of only 16 votes
  • Both airline management and the union leadership were pretty clear about the fact that if they rejected the contract they would go into arbitration, and the most they could get out of that was $112 million, which is $81 million less than in the proposed contract

Just under two weeks ago the arbitration happened, and the results were exactly as expected — the flight attendants got a $112 million pay raise, but not a dollar more.

But what’s interesting is that after arbitration, the president of the APFA sent Doug Parker a letter asking him to consider giving the flight attendants the amount in the contract they rejected… and he granted it!

Via The Dallas Morning News:

The Association of Professional Flight Attendants said Thursday that American Airlines management had agreed to give its flight attendants an additional $81 million a year that members had rejected in a tentative agreement.

Kudos to American management for this. In my opinion it shows goodwill on management’s part, which is great, since you don’t want disgruntled customer-facing employees. At the same time, I’m not sure what precedent this sets for other work groups. Even if you vote down a contract, you can still always write management and ask for what you rejected?

Anyway, I’m happy this negotiation worked out in the end… sort of.

Comments

  1. So all the kudos goes to management? How did you come to that conclusion? Have you ever had to vote on a contract or even work under a manager you weren’t related to in your entire life?

  2. This is a horrible, horrible precedent to set. All this does is teach the unions that they’ll get what they want no matter what management does or says, and that their (the union’s) actions have no consequences. Simply pathetic.

  3. All this does is teach the unions that they’ll get what they want no matter what management does or says, and that their (the union’s) actions have no consequences.

    Or, is it more likely that the contract was negotiated with oil prices at $90/barrel and now with oil at $55 AA it makes more sense to bump wages vs. deal with disgruntled staff?

  4. Most airlines hedge their gas prices into the future so AA likely won’t see the benefits of reduced gas prices for 4-8 years into the future.

    That being said, I agree, kudos go to management. The precedent is questionable but I do believe it has a lot to do with the airline having a good year, future costs going down (gas) and a bit of we want our employees to be happy. Will be interesting to see how union members consume this and if they decide this is now a “right” that they deserve.

    The union failed their members. Even though they told their employees that this was the best deal they were going to get, why would so many employees vote no on it? I assume it has to do with pumped up union reps telling their members that they deserve the world and not what is fair. It is their job to inform and CONVINCE the employees of what is fair and they clearly failed if more than half voted no yet the union line was this was the best we were going to get.

    Glad it had a happy ending and hopefully this is prelude to the two sides working closer together in the future where both sides understand what is fair and don’t ask for more than their fair share.

  5. @ Ted: “….where both sides understand what is fair and don’t ask for more than their fair share.”

    Interesting that you think that management will be best at deciding what’s fair. Let’s just take a quick look at the last time AA management made a decision about what was “fair”, just one year ago – and ask yourself “What are the flight attendants getting for guiding their poorly managed airline through bankruptcy?”

    ——-

    Former AMR CEO Horton receives compensation worth close to $17 million

    American Airlines former chief executive Tom Horton will receive almost $17 million in cash and stock compensation for guiding the carrier through its two-year bankruptcy.

    According to a Securities and Exchange Commission filing made on Monday afternoon, Horton will receive $12.7 million in cash payments and 170,722 shares in the new company. Based on Monday’s stock closing price of $24.60, the stock is worth $4.2 million.

    Horton will also receive lifetime flight and travel benefits for himself and his wife. He will also be provided an office and office support for the next two years.

    —————

  6. This is starting to get amusing. First we have a truly, monumentally, stupid vote by the Flight Attendants and now it looks like AA management is trying to beat them to the “idiot of the year” award by setting a precedent that’s guaranteed to come back to bite them in the ***. Bring on the popcorn.

  7. Unions are the worst thing than can ever happen to a company and a country. This is just terrible news for American Airlines stakeholders and customers. Here we go with the new AA, where anybody that’s there “primarily for your safety” (ha!) can make up to $50/hr and still treat you like crap and loudly complain about how horrible their job is.

  8. @Joe

    Yes, senior exec salaries in the US are out of control. I do not disagree. That goes for just about any industry with any CEO of a public company.

    That being said, the salaries that the management and union leadership agreed to but the employees rejected… but now they are getting… are the highest hourly rate among their peer. Hard to argue that this is not “fair”…

  9. @ Alex – yes, the unions – who brought you the end of forced child labor, the end of 70 hour + work weeks, paid sick leave, and occupational health and safety rules – are the biggest problem with America.

    Seriously, follow the rise and decline of the middle class in this country, and it correlates with the rise and decline in union membership.

    Who cares if a flight attendant earns $50 an hour? Isn’t that what capitalism is all about? Or do you think it better that a senior manager earns, oh, around $1,000 an hour?

    That asinine disparity is what is truly bad for the customer – and the country.

  10. I suspect this has more to do with the *exceptionally* narrow margin by which it failed and generating goodwill among the effectively 50% who voted in favor of the negotiated contract, than fuel pricing.

  11. @John,

    I can tell you are another clueless liberal nut. No, capitalism is not about flight attendants making $50 or $1,000/hr but rather about decreasing labor and operational costs while maximizing profit for stakeholders. Perhaps you forgot to take a business class in college and perhaps you didn’t even go to college, but maybe if you are courageous enough to start your own company you one day will understand the good you do to other people by just giving them a job while you do your best to make the most of it for yourself and your partners.

    We are not in the early 1900’s and nobody in America works at sweatshops anymore so unions are totally worthless. My comment about $50/hr is because that is an amazing hourly rate for the average person in this country, yet flight attendants continuously complain about their situation.

    Disparity in salaries? They are a flight ATTENDANTS. And if they don’t like it, they can quit and get another job or here’s a thought: become a job creator, make your own airline from the ground up and you make the rules. Let’s see then how much you pay you own people….

    A good rule of thumb in life is: if you have no idea what you are taking about, it’s just best not to talk at all.

  12. @Alex

    Perhaps you should take some of your own advice. If you don’t know much about the situation, don’t comment either. You have some seriously ridiculous arguments.

  13. Ooh, I want to work for @Alex. He sounds like a great boss. I know I would be so motivated to do my best work for someone who sounds so appreciative of his subordinates, as long as they know their place.

  14. @Aussie – you are entitled to your own opinions. However, as an American I don’t go around telling Aussies how ridiculous their points are on subjects related to Qantas let alone Australian ways, like you just did. Glad you read about my advise, you should put it to practice yourself.

    @Ken – I have 243 employees and I have the utter most respect for the people that help my company be great. My point is not about hierarchy in companies or power, is about the increasing number of people in this country that have the most ridiculous perceptions about how our economy works and how things should be.

  15. @Alex

    What does me being an Aussie have to do with your arguments? You’re an extremely aggressive person who puts his opinionated views out yet doesn’t respond well to others’. Just because you live in a first world country (which by the way, mine does just as well as yours), doesn’t mean job conditions still can’t be improved. Take a chill pill dude.

  16. @Aussie

    1. I initially responded to John, not to you. Yet you decided to jump in and make a stupid comment directed towards me, so I replied to you. Your comment is out of place as you can’t speak about AA or unions in this country because you are not from this country, period. But again, you are entitled to your own opinions. Also, I don’t make assumptions or comments about your country and I never made a comparison between the US and Australia like you did. By the way, I absolutely love your country and your people.

    2. You don’t know me. If you are one of those types of people who love to read tones on written stuff, that’s your own problem.

    3. I agree with you, job conditions can still be improved in the US and around the world. Completely separate topic and discussion.

    4. I’m having a glass of wine, finishing some work and on to eat a nice Christmas dinner with the family. The “chill pill” is not necessary, but I’d recommend a glass of “mind your own business” to you during the Holidays. Merry Christmas!

  17. @Alex

    Re: “Disparity in salaries? They are a flight ATTENDANTS. And if they don’t like it, they can quit and get another job or here’s a thought: become a job creator, make your own airline from the ground up and you make the rules.”

    What planet are you living on that you think people can just quit their jobs and start up their own business??!! (let alone an airline!!!!!!) Have you any idea of the economic realities that face most people out there?

    As for your comment suggesting that another poster “mind [their] own business” – if you don’t like people challenging you on your point of view don’t post on a open comments section on a blog.

  18. @alex

    General sweeping statements like these in your reply is what qualifies me to comment on your comment.

    “Unions are the worst thing than can ever happen to a company and a country.”

    Now that is a ridiculous view

  19. @SB

    My point exactly. So if you are in no way capable or in a position of starting your own business and making your own rules, then be grateful that you have a job and stop complaining about it so much. Thousands of union employees voted NO to yet another handout by AA executives when a bunch of people in this country are still out of a job. As an EXP, I actually speak with AA flight attendants quite a bit and I’m completely baffled at their surreal perceptions and what they think about their own airline (not all of them, but it is a large number of them). So again, if you don’t like the rules then you better quit because you don’t make the rules, you just work for a company where a group of people that are much more educated and business savvy make decisions to the best of their ability in order to satisfy all stakeholders, not one single group of employees. And if you can’t quit, then shut up or risk losing your job which another person will gladly take.

    As for your last comment, I have yet to see anybody really challenge what I said. I can take different points of view, like I’m taking yours because you decided to reply with an actual argument. I just can’t take it from people who have no idea what they are talking about, stand absolutely no ground to discuss it, and fail to even make a single valid point to challenge my comments.

    @ Brian

    Thanks. I know there are still few people in this world with common sense.

  20. @ Aussie

    You can absolutely comment on that, I agree. And I respect that you think it may be a ridiculous statement, and in fact it may as well be. It’s not fair I generalized, but the reality is that unions have been a disgrace for the US economy. AA’s union employees took advantage of bankruptcy proceedings then, and they are now taking advantage of many different scenarios again. I don’t blame the group for trying to make things better for themselves, but they are just doing it the wrong way is all.

  21. @Alex

    You continue to make generalisations about unions and their effect on the economy. There are many benefits that unions bring in advancing one country’s economy to things we now take for granted. It is not effective to outright write them off, otherwise their histories wouldn’t strech back as far as they do (from the 1870s in the case of the US I believe).

    If I’m correct, didn’t the unions want the original deal? Why do they get the blame for getting the deal they brokered?

    Enjoy your Christmas. I know i will enjoy my Union protected public national holiday and the ensuing weekend that follows.

  22. @Aussie

    Thanks for the wishes. As for the holiday, I’m pretty sure you will enjoy it. If one day you own a business your reality will change and so will your thoughts on the subject. When all you have to think about is working less, sleeping more, and having a few extra bucks to buy a new ipad or diapers, whatever it may be – in other words, taking, taking, taking – your perspective is very different from those whose actually have to make sure boards, creditors, and general stakeholders are getting a return on their investments. If management makes poor decisions with those groups of people companies cease to exist, and so do jobs, including those “unionized” ones.

  23. Alex,

    So, just to be clear. Employees have no right to organize and threaten to quit en masse unless their demands are met. Management is the only group that is allowed to collude?

  24. Sorry to interrupt the union “discussion” but I think Lucky has been on airplanes most of the week and missed the latest news in re: AA and the flight attendants contract.

    This week AA management, in light of very good 2014 results, gave the flight attendants an ADDITIONAL four percent (4%) over and above the $193 million (rejected but conceded) contract.

  25. For Alex:
    As far as Unions are concerned, well yes they do lots of good things for all the people who do have to work for the man – just ask Germany. They were the only country who managed to advance and not fall into recession during the Great Recession of ’08 and the German unions had a lot to do with that.
    Also, as far as Capitalism, one example of a large corporation NOT simply trying to make more money for their shareholders is CVS, the pharmacy company. They decided to stop selling tobacco products in all their stores….at a cost to their bottom line of an est. 2 billion dollars.
    That said, that was a strange deal the AA flight attendants got, eh? Good for both management and the FA’s!

  26. @Emily Garrigan – Yeah, let’s ask Germany, where the LH pilots threaten to go on strike every 5 minutes.

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