Pay raises a key gesture at American

It’s a fair guess that very little about labor relations at American Airlines, from its birth in the consolidation of small companies in 1930 to today, has ever been easy.

Through most of that period, union and management representatives have played tough.

That’s what makes CEO Doug Parker’s move last Thursday all the more remarkable. Parker gave American’s flight attendants $81 million in raises he didn’t have to give.

The flight attendants lost that much last month when they turned down a new contract worth $193 million. The rejection, by just 16 votes out of 16,000 ballots cast, meant the contract negotiations went to arbitration.

Arbitration yielded a contract worth $112 million. Flight attendant union leaders asked Parker to restore pay raises to bring the total back to $193 million, but all they could do was ask.

Clearly, anybody in Parker’s position wants something in return. From all indications, what he wants is labor peace.

The coming year will be loaded with difficulties as American and US Airways work to complete their merger as American Airlines Group.

American’s executives still have to reach significant milestones like merging computer reservations into a single system, combining two large frequent-flier programs, taking delivery on more than 100 new aircraft, upgrading planes and facilities and, finally, obtaining a single operating certificate from the Federal Aviation Administration.

While they are doing that, they must negotiate joint labor agreements with unions from the two airlines.

Parker got the unions on his side with informal agreements while he headed US Airways and was pushing to merge with bankrupt American. But none of that was set in stone.

By making the flight attendants whole with the previous contract offer on pay, Parker was also sending a strong message about how he wants other labor agreements to go.

The key sticking point on the failed contract was a desire by some flight attendants to have a profit-sharing plan.

Parker has said he wants industry-leading pay rates, but he doesn’t like the uncertainties of profit sharing.

Now he has sent an $81 million message to other union groups that this is the way it’s going to be.

If American’s pilots don’t agree soon on a new contract, they, too, could be headed to arbitration.

This story was originally published December 22, 2014 at 5:52 PM with the headline "Pay raises a key gesture at American."