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Mechanics Have a ‘Concessionary,’ Tentative Contract With American Airlines

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Mechanics and stock clerks and American Airlines tentatively agreed to a six-year contract Tuesday that affords 15 percent wage increases and improved health insurance and other benefits.

The agreement with the bankrupt airline must be ratified by 11,000 mechanics and stock clerks in the next month, and includes a 3 percent signing bonus for mechanics, reports the Tulsa World‘s D.R. Stewart.

The contract is an improvement over one the Transport Workers Union’s mechanics and stock clerks workgroups rejected in May, but it’s still “not a good deal,” Local 514 organizer Rick Mullings tells the Journal Record.

“It is a concessionary agreement,” Mullings tells reporter D. Ray Tuttle.

Mullings hopes TWU mechanics and stock clerks ratify the contract in a vote that runs through Aug. 8. A concessionary contract is better for workers than allowing a bankruptcy judge to terminate the contract, he tells the Journal.

American filed for bankruptcy in November 2011. In February, the airline announced restructuring plans that included 2,600 job cuts from the airline’s 5,000-employee Tulsa maintenance base.

American’s cost-cutting plan includes laying off 13,000 workers, trimming $1.25 billion from its labor costs, and increasing revenue by $1 billion annually.

Five of TWU work groups agreed to the airline’s “last best” offer, which the mechanics and stock clerks rejected.

From the Tulsa World:

In a parallel development Tuesday, American CEO Thomas Horton disclosed for the first time that his management team is evaluating “a range of strategic options, including potential mergers, which could make the new American even stronger.”

American has tried to delay merger talks with US Airways. The merger is supported by American’s labor unions and some of its creditors. And there might be a reason why Horton has resisted a merger until American emerges from bankruptcy: “A giant payday,” Andrew Ross Sorkin writes in the New York Times’ DealBook column.

Mr. Horton and his management team stand to receive somewhere between $300 million and $600 million if he can make it through bankruptcy court without merging first with a rival like US Airways.

In an odd twist of the bankruptcy process, airline management teams have typically managed to extract 5 percent to 10 percent of the company’s shares for themselves upon exiting Chapter 11, with the C.E.O. often getting 1 percent.


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