Senior American Airlines pilots betting against the company’s success


In honor of this week’s Labor Day holiday in the USA here are a couple interesting stories related to airline unions.

Pilots

First up is the news from American Airlines that 111 pilots retired as of September 2011. This number is 10x the average per month from 2010 and 4x the peak number from last year. This spike in retirements has significance on a couple fronts.The company has lost nearly 25% of its 777 captains based in DFW, even as the company awaits additional 777 aircraft deliveries. The retirements also cost it a number of check pilots and the average seniority of the group was 29 years of flying for the company.

If those numbers don’t give pause perhaps the reason cited by some for why they left will. The current financial incentives for the pilots to leave are significant, to the tune of a few hundred thousand dollars per pilot. Apparently that was enough to convince many of them to go. This value effect comes from the ability of the pilots to pick the high point in the trailing 60 days in share price at which to lock in their retirement valuation. The recent financial downturn has, effectively, convinced many of these pilots that the chances of the company succeeding and the stock price recovering is slim enough that they are better off cashing out now.

Ouch.

Flight Attendants

Still at American Airlines, apparently the flight attendants are not too happy either. The company recently announced an upgrade in the service offering for their long-haul premium cabin flights, including turn down service and PJs for first class customers. These are services provided by many other carriers and not all that big a deal really. Except, apparently, to the flight crews.

Their union has filed a grievance against the company expressing their concern of the possibility of increased workload for the crew. Their efforts to "collect data from the field" include queries about whether the PJs cause queues for people looking to change at the lav, a supposed security risk. Apparently the goal of anything in the name of security is alive and well, especially if it means doing less work.

Everyone Else

Today’s Denver Post has a column from a relative of a retired United Airlines employee lamenting the company’s announced change of priority for pass-riders. The revised policy isn’t particularly new but the column is. The claim being made – that the pass-rider benefits are being revoked – is a bit of hyperbole stacked on top of reality. The benefit isn’t being pulled but the priority in which the retirees will be considered is changing to favor active employees.

The tale in the article, about an early retiree going back to work at another airline just to get flight benefits that weren’t actually revoked so she can care for her ill mother is pretty good for its purpose – tugging at emotion versus reason – but not so great for reality. Then again, involving reality in such debates rarely seems to be the course of action so I don’t know why I’m surprised.


And so there it is. A labor-focused news round-up here on Labor Day.

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Seth Miller

I'm Seth, also known as the Wandering Aramean. I was bit by the travel bug 30 years ago and there's no sign of a cure. I fly ~200,000 miles annually; these are my stories. You can connect with me on Twitter, Facebook, LinkedIn and .

3 Comments

  1. On the retirement of pilots… good for them. Can’t really blame them if they come to the conclusion that this move would be beneficial to them. Anyone who has stock options and sells the stock is ultimately doing a similar thing (sure, we call it “diversification”).

    Handing out PJs to a few F pax is extra work? Seriously, the FA union needs to check the unemployment numbers.

    Regarding retired UA employee pass riders, I think the system is switching to the CO system. Another group that is going to ridicule the “I think I’ll like the changes” line 🙂

  2. Apropos the UA pass-riders element to the story, it has always struck me that UA is largely run for the benefit of its employees, so I’m not sure that they have all that much to complain of.

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