By Mitchell Schnurman
mschnurman@star-telegram.com
Is there a leader in the house?
The pilots, the captains of the ship, abdicated that role at American Airlines last week while CEO Gerard Arpey and his management team were practically invisible. The last time American faced such a moment of crisis, Arpey's predecessor, Don Carty, was barnstorming the country and selling his rescue plan in airport hangars.
But today, it's all about brinksmanship and stalemates -- and not solving problems, from the Congress to the NBA.
In American's case, no leadership could mean no future.
When the board of the Allied Pilots Association rejected a tentative agreement on a new contract, American's stock price fell as low as $1.63, the debt was downgraded and the prospect of bankruptcy was officially put on the table.
The drumbeat toward Chapter 11 is growing as outsiders and even some employees get comfortable with the idea. A month earlier, most seemed shocked that dysfunction at the airline could lead to such a destructive path. Now they've moved on to dissecting the advantages of Chapter 11.
Analysts put a dollar value on dumping pensions, evaluated which airplane leases must go and speculated on rivals that could absorb American. A merger with US Airways, one analyst wrote, could create $1.5 billion in synergies.
For those at American who say bankruptcy wouldn't be much worse, imagine thousands of job cuts and the Fort Worth airline being run by a company in Arizona.
The pilots had a chance to change that story, at least for a while. And they left open the door for more talks -- after a week off for Thanksgiving. They seem to be saying, What, me worry?
Management deserves credit for its contract offer, but, anticipating it would be rebuffed, the response was to post it online for all to see. Sorry, somebody's going to have to sell a little harder than that.
While the pilots posture and management wrings its hands, two more work groups are on the clock with real deals. In the next month, the fleet service group and the dispatchers from the Transport Workers Union could step forward and approve their contracts.
Their members would get more money immediately, and their employer would notch a few desperately needed wins. Dispatchers are influential because they're highly skilled, but they're only 180 people.
The fleet service and ground workers total 10,350, which is more than the pilots. Their average pay is about $22 an hour, and many don't have college degrees or high-end skills.
But they have a chance to show how you get past anger and frustration and embrace pragmatism. Call it a leadership moment -- for workers who aren't usually thought of as leaders.
It's too much to hope that these TWU units would turn the tide in the labor-management standoff. The pilots alone have that power. They're highly respected, they get paid the most and they must sign off on changes that would make American more competitive.
The airline wants to redeploy its fleet, add new jets and deepen code-sharing agreements with other carriers. Considering that money-losing American is offering higher pay and signing bonuses, these are mission-critical changes.
Two other small groups in the TWU have ratified contracts: ground school and simulator pilots in September, and maintenance control techs last year. Together, they have 250 employees.
If the fleet service group isn't moved by the idea of inspiring change at American, maybe self-interest will do. While a bankruptcy filing would ripple through American, the TWU would be hardest hit.
You can't fly planes without pilots and flight attendants, but you can outsource baggage handling, fleet service and much of the maintenance work. American's rivals do exactly that.
For many current TWU jobs, American could hire a third-party operator and pay half the going rate, without expensive benefits. Even if American executives wanted to continue the current structure, creditors would probably challenge that strategy in bankruptcy court.
At United, whose Chapter 11 reorganization stretched on for three years, 4,441 pilots have lost their jobs since the 2001 peak, according to the MIT Airline Data Project. But in maintenance, United eliminated 10,656 jobs.
The takeaway is that if bankruptcy comes, the ax won't fall evenly.
Many rank-and-file workers believe that American has beefed up its management ranks since it reorganized almost a decade ago. In fact, the MIT numbers show that almost 5,000 jobs have been cut in American management since 2002, reductions that were roughly one-third deeper than at the rest of the company.
Bankruptcy usually means lower pay and fewer benefits, but at least the survivors have something to hang on to. It's laid-off workers who usually suffer most, and those numbers will climb if American goes that route.
Since its peak employment in 2001, American has cut almost 27,000 full-time jobs, according to the Bureau of Transportation Statistics. But United, which was slightly smaller in 2001, eliminated 50,000 over the same time.
Northwest, whose workforce was roughly half the size of American's, slashed as many jobs as the then-largest airline in the country.
It's been a trying, difficult decade for American. Unless some leaders step forward soon, the next few years will be tougher still.
Mitchell Schnurman's column appears Sundays and Wednesdays. 817-390-7821Twitter: @mitchschnurman
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