Oct 2 American Airline pilots this week are
expected to authorize their union to call a strike, but the
union says it may decide to keep the vote secret for now.
The airline's 8,000 pilots have been casting votes on
authorization for a month, escalating a long-running labor
dispute that has already created serious flight delays at the
nation's No. 3 carrier and a public relations nightmare for its
bankrupt parent, AMR Corp.
After the voting deadline passes at noon central time on
Wednesday (1700 GMT), the union might not immediately release
the results, and instead use them as a negotiating card in talks
with the airline, Tom Hoban, a spokesman for the Allied Pilots
Association, said on Tuesday.
Holding the strike vote results secret is especially likely
if the National Mediation Board declares an impasse in the
negotiations and imposes a 30-day cooling-off period on the
"Historically, we've held on to the vote and used it during
the 30-day cooling off period," Hoban said. "Our board of
directors will make the decision on that."
Even if the pilots vote to walk out, a work stoppage would
be weeks off and far from certain. Federal law makes it
difficult for airline unions to strike, and the White House can
intervene to stop a strike in the interests of U.S. commerce.
"Whether they would actually go out on strike is a different
question," said Scott Hamilton, an aerospace analyst at Leeham
Co. in Seattle.
The airline says a walkout would be illegal. The union
disputes that. "We believe we've got a right to strike," Hoban
Still, the threat of a walkout would likely be the final
straw for a many of the airline's long-suffering passengers.
LITANY OF DISRUPTIONS
In recent weeks, they have endured a litany of disruptions
linked to the labor unrest, including a 30-hour ordeal on a
Paris-to-New York flight memorialized by the novelist Gary
Shteyngart in a piece in the New York Times last Sunday. The
union has said it is not authorizing those actions.
Analysts say it is only a matter of time before the serial
woes begin to have a serious impact on the struggling airline's
bottom line - if they have not done so already.
"Anecdotes become financial reality very quickly in this
business," said Richard Aboulafia, an aviation analyst at the
Teal Group in Fairfax, Virginia.
"When you get well-known novelists writing op-ed pieces to
the New York Times describing how horrible it was to fly on you,
you've hit a tipping point of mass consumer discontent - which
means it's already translating into a revenue problem."
Some say if the uncertainty surrounding the airline fails
to lift soon, American may suffer the same death spiral that
sent Eastern Airlines, a once iconic U.S. carrier, to the
corporate graveyard two decades ago after a similar showdown
"They really, really need to get in front of this,"
Aboulafia said. "Serious labor disruptions like this can drive
an airline into the financial ground."
Bruce Hicks, the airline's spokesman, says the pilots'
campaign "is inflicting economic damage on the company,
frustrating and alienating our customers, and driving
unnecessary work and significant stress for other employees."
But American refuses to quantify the effect the disruptions
are having on its sales and profitability.
The airline acknowledges, however, that it cut capacity for
October and is spending extra cash to increase staffing to
re-accommodate passengers affected by the pilots' tactics, which
have included extra safety checks, slow taxiing and late-filed
maintenance writes-ups that caused delayed takeoffs and missed
Meanwhile, the Federal Aviation Administration is
investigating two incidents in which seats came loose on two
separate American Airlines flights, on Saturday and Monday.
The agency is still determining what caused the seats to
come loose, but early indications show both jets had recently
undergone maintenance "during which the seats had been removed
American Airlines also is logging considerable flight delays
and cancellations, topping the list of such problems for any
airline operating in the U.S. for the past week and past 30
days, according to industry research site FlighStats.com.
On Tuesday, just 72 percent of 1,007 American flights
tracked by the site arrived on time. That compares with 88
percent on-time arrivals for United Airlines and 90
percent for Delta Airlines.
The airline is trying to counter those dismal figures with
Rose Wylie, the manager of Travel 100 Group in Kenilworth,
Illinois, a travel agency on Chicago's North Shore that works
with American Airlines a lot, gives the carrier high marks for
trying to help customers. But she says many of the itinerary
changes the airline has asked customers to accept have required
maximum flexibility and involved "drastic inconvenience."
As a result, she says "People are hesitating to book on
American faces other problems beyond a strike. Holders of
$450 million in AMR bonds are arguing in court that the airline
is not adequately maintaining 143 jets that are used as
collateral for their bonds.
U.S. Bank, the agent for the bondholders, says the
jets would fetch just $501 million if it seized and sold the
planes. That's barely above the $491 million in principal and
interest that it says bondholders are owed. US Bank wants AMR to
bolster safeguards for the bonds under bankruptcy rules designed
to protect secured creditors from declines in the value of
American says that under AMR's appraisal the planes are
worth nearly double what the bondholders are owed, and it says
there has been no change in the maintenance policy of the
"The aircraft are being maintained in compliance with all
applicable FAA regulations," said Sean Collins, an airline
One analyst said it was unlikely a judge would allow the
bank to repossess the airplanes, noting that with $5.8 billion
in cash and short-term investments on its balance sheet, the
airline is positioned to make good on the bonds.
On the positive side, the airline won court approval last
week to pay for another group of bondholders to perform due
diligence on the company in advance of giving it a possible
equity infusion. The goal would be to help the company emerge
from bankruptcy as a standalone company.