American Airlines and Unions Begin Bankruptcy Talks | KERA News

American Airlines and Unions Begin Bankruptcy Talks

Feb 1, 2012

Today, American Airlines and union workers will discuss changes that must occur so the carrier can successfully emerge from bankruptcy. KERA’s Bill Zeeble reports pensions could be a prime target.

Colorado-based airline consultant Michael Boyd says pensions and old debt are two key obstacles to American Airlines making money again.

Boyd: But get rid of those two items and those two items alone, and American will be profitable. The other tweaks in Chapter Eleven is probably going to make American Airlines a very terrifying airline to other airlines out there.

Punting those pensions scares a lot of long-time American Airlines workers, like 21-year veteran pilot Tom Hoban, with the Allied Pilots Association.

Hoban: Every carrier that’s been through bankruptcy, whether it’s Northwest, Delta, Continental, or United fundamentally, they’ve lost the bulk of their pensions.

Other employees harbor the same fear. Patrick Hancock is a retirement specialist with the Association of Professional Flight Attendants.

Patrick Hancock, retirement specialist, APFA: An awful lot of us had planned to grow our pensions for many more years and we are worried about losing the option to do that.

American Airlines says most of those with pensions have little need to worry, nothing will happen. But they say 10 percent could lose pensions. The Pension Benefit Guaranty Corporation – the PBGC - says that number amounts to 13,000 workers. J. Jioni Palmer works for the PBGC, the Government agency that insures certain benefits under private, defined benefit plans.

J. Jioni Palmer, PBGC: It’s disturbing that American Airlines is sitting on a pile of cash $4 billion high and yet they have failed to make their January 15th pension payment. Our goal here is we want American reorganized in a way that doesn’t hurt the retirement sercurity of its workers and retirees. But the company doesn't even bother to pretend it's trying to preserve its pension plan. And that’s very, very unfortunate.

Palmer says some carriers that reorganized kept their pension plans, and American should use them as a model. But he acknowledges others did not.

The carrier said, in a statement "We are reviewing every aspect of our business and it's clear we have to be a more nimble, flexible and efficient in order to compete. The changes we are considering will help ensure American can prosper and grow." Pilot Tom Hoban says workers have additional worries before today’s meetings. There’s talk of closing a maintenance facility and outsourcing jobs. Hoban says pilots and others also worry about working longer days, losing health coverage, and earning less money.

Hoban: We had a near brush with bankruptcy in 2003. At a bare minimum, every pilot on the property took a 20 percent pay cut. I lost 50 percent of my paycheck because I was displaced from my captain seat in 2001. We’ve taken some big hits already. This is going to be far worse. This is a court managed restructuring.

Hoban and other union members say it’s time for a culture change, one that’s more cooperative and less adversarial. But consultant Michael Boyd says the word “adversarial” defines management/union relationships.

Boyd: So you’re going to have hyperbole. These are all employees. They’re family I think what you’ll find are frank talks. There’s no doubt in my mind, I think they’ll reach a meaningful decision.

But any decision will not be reached today. Parties expect the route to a final outcome will be long and painful.