New Votes May Take a Month

American Airlines' pilots won't have another vote on the wage concessions they've OK'd, but the union's board has told the union's president not to sign the agreement.

Quite aside from the problems that may cause, the two other major unions, flight attendants and ground workers, are planning on having another look at their concession contracts; a re-vote may take a month.

The unions' last votes were accelerated, because AMR Corp, the parent company, said the concessions were needed immediately, to help the airline avoid bankruptcy. 'Coincidentally,' the votes were tallied just hours before the company's SEC filings revealed previously-unknown executive perqs.

What followed has been written to death on this page, and many others: the unions cried, "foul;" the airline pointed out that union leaders knew of the perqs (but were prohibited from discussing them, under a nondisclosure agreement -- they nevertheless recommended passage of the concessions); then the unions denied that their leaders had any such foreknowledge, and CEO Don Carty agreed [perhaps by saying he wasn't telling the truth the first time, he saved the union leaders' collective bacon, and can expect some cooperation from the bosses --ed]. Then, two unions put aside the vote results, saying that 'material information' had been withheld; the airline reiterated that everything it did was legal.

OK -- got that? Now, it's mid-week, a week later. Two unions (not the pilots) are planning on having another vote. Because now there's no "rush," voting will take place the old-fashioned way: with mail-in ballots. In a month or so, when the votes are tallied, the airline should be in Chapter 11. [Since the "rush" vote was necessary to avoid bankruptcy, any delay would mandate a trip to Court, right?] Once in Chapter 11, as United has already demonstrated, the existing contracts (with or without the concessions package) can be set aside by the judge, if the airline and its creditors can make a strong-enough case. Therefore, the results of any future re-vote will be largely irrelevant -- merely an indicator of sentiment, rather than a contract; and the unions' sentiment is already pretty clear.

If American Airlines goes into Chapter 11, it will be better-able to compete with United and other airlines, since its prepetition debt will be "on hold."

This added 'competitiveness' may spell doom for other, responsible airlines -- airlines that are paying their creditors; and it will certainly have huge effects on all of American's creditors, and, because of American's size, the creditors' industries. In other words, by temporarily 'saving' the tens of thousands of American Airlines jobs, the bankruptcy code may force hundreds of thousands of workers, from well-managed businesses, to the streets.

The very structure of the US airline industry will change. Hopefully, the bankruptcy code will be revised, to reflect a better plan for delinquent and dead-beat companies, that won't penalize the well-run, honest companies -- suppliers and competitors -- whose management was better.

FMI: www.amrcorp.com; www.apfa.org; www.iamaw.org