Thursday, February 2, 2012

American Airlines' Nosedive to Impact Employees' Jobs; Pensions

Everyone knows by now that American Airlines is in a world of hurt, especially after the company's bankruptcy declaration last November. The persistent high cost of aviation fuel and a flying public with less money in their pockets to spend on airline tickets has been hammering the entire industry. An article published this week by CNN Money spells out just what is in store for the beleaguered workers:
American Airlines' parent is meeting with its unions this week to lay out cost cuts it wants to implement as part of its bankruptcy reorganization -- moves that could cost many of the company's 81,000 workers their jobs and a portion of their pension benefits.

AMR Corp. said at the time of its Nov. 29 bankruptcy filing that it was forced to file because of the need to achieve a more competitive labor structure. Most other major U.S. airlines have already cut labor costs by their own trips through bankruptcy over the last 10 years.

Among the moves that American's unions expect include having aircraft flown overseas to low-cost maintenance facilities for the extensive overhaul required for planes on a regular basis. Most U.S. airlines, including United, Continental, Southwest Airlines and Delta Air Lines, already have costly maintenance performed at overseas facilities.

AMR, which owns both American and feeder airline American Eagle, is the only major carrier to perform the work in-house at U.S. facilities.

"This is the dirty little secret of U.S. aviation. You don't know where the plane that you're flying was repaired," said Jamie Horwitz, spokesman for the Transport Workers Union. "You assume standards are high for the person who works on your fuel line, but it doesn't necessarily follow."
Doesn't it just give you a warm, fuzzy feeling all over to know that almost all airline maintenance work is now being performed by poorly paid drones God knows where? Fuck, I may never get on an airplane again.

But please continue:
Horwitz said there are two major American-owned facilities doing the heavy maintenance work -- one in Tulsa, Okla., which has 6,500 union members, and another outside of Dallas with 2,200 union members.

Horwitz and industry experts say almost all other U.S. airlines already have outsourced regular overhaul maintenance required for aircraft to facilities in countries such as China, El Salvador and throughout South America.
Oh, so THAT'S where. Yep, I'm seriously going to have to swear off flying. Or do you really think a maintenance worker living in some crowded dormitory and getting paid a buck an hour really gives a shit whether that bolt is tightly fastened or not?

But the airline off-shoring maintenance work isn't the only potential ball of suck in this deal:
He also wouldn't comment on whether the company will seek to move its pension plans, which it estimates are underfunded by $5 billion, to the Pension Benefit Guaranty Corp., a federal agency that protects the pensions of workers in private-sector retirement plans.

The Pension Benefit Guaranty Corp. has issued numerous statements since the American bankruptcy that it would seek to keep the airline from dumping its pensions on the agency, which is already facing a deficit of its own. The agency's estimate is that the American pensions are underfunded by $10 billion.

If the company is successful in shifting its pensions to the agency, workers would likely lose promised retiree health-care benefits. Many, especially the pilots, would have their pension benefits slashed.
And the taxpayer would have to pick up the tab. Beautiful, just beautiful. How fitting is it that the company is still named AMERICAN Airlines? Because they have the new American way down PAT.

Addendum: a subsequent story published by MSNBC after I wrote the initial post listed the number of coming layoffs at American Airlines as up to 15,000 (although an even later update said 13,000):
American Airlines officials were meeting with their three major unions amid reports that the bankrupt airline company is making plans to eliminate up to 15,000 jobs.

Representatives of the Allied Pilots Association, Transport Workers Union, and Association of Professional Flight Attendants were meeting with company officials in Dallas, said Sam Mayer, a long-time American pilot who sits on the union's communication committee. The three unions represent about 54,000 total employees.

"Right now we have no idea what they're going to be asking for as far as pay cuts, work rules, job cuts, furloughs, etc.," Mayer said.

Bonus: Big ol' jet airliner...please don't crash due to poor maintenance


  1. Only us superior Americans are capable of working on complicated machinery like air liners. Rest of the world is full of cheap, stupid people who are incapable of the type of work we do. Course they build, maintain and fly civilian and military aircraft everyday.

    I just keep wondering when many Americans will wake up and realize that many in the rest of the world are smart, educated, work hard and that's our competition. I fully understand globalization has it's downside and there are problems. But it's reality and it's here to stay. We need to stop playing victim.

    1. Sorry, eugene, but globalization has maybe one more decade before it run its course. After that, the skyrocketing price of oil for transport is going to bring the whole project down in a smoldering heap.

      And I should clarify that I have nothing against the foreign workers doing work that benefits THEIR OWN country.

  2. I know it'll be a cold day in hell if I ever fly again.

  3. Just in case anyone forgot, the 1979 Chicago American DC-10 that lost an engine and rolled over like a dying whale, killing everyone on board, was a victim of AA getting cheap on maintenance. Using a forklift instead of the oh so expensive engine hoist. Opps.

    Anyway, my only question is, if the pensions are sluffed off on the PBGC, can we assume that upper management pensions will also be under funded??

    Nah, didn't think so.

  4. I tend to agree with eugene12 in regards to this post. I was an aviation support equipment technician in the Navy; I spent a lot of time in hangars, depots (that's where major aircraft overhaul/inspection occurs), flight-lines, support-equipment shops, etc. in several countries. They aren't morons 'over there'. It's not like everyone in other countries are Foxconn assembly-line level technicians, making '$1' an hour. Even if they were, there isn't a direct correlation to the U.S. cost of living. For example, someone in India making ~$6000 per year lives a middle-class lifestyle. Here, a person making ~$6000 per year would likely be homeless. Big difference.

    1. Okay, I'll concede that these are not assembly line factory workers. But as these airlines become more and more financially stressed, how do we know in a place like China what quality control corners will be cut in order to save money? And if a jet airliner does fall out of the sky due to faulty maintenance, how will there be any accountability? I'm not advocating that all such work be done in America, just the work for the American-based airlines.

      In the end, it probably won't matter that much as peak oil is going to destroy the airline industry.

    2. I think there have been enought damning evidence brought forward to show that most aviation maintenance facilities are indeed now run like sweat shops, with employees under the gun, and counterfeit parts being used all the time. I agree they may not be morons but they are in some cases not able to read the manuals, and are constantly being pushed to speed up the turn around time. Globalization at its finest, once again.

  5. The U.S government is applying it's seal of approval on all of this bull crap. The FAA regulates maintenance procedures, and the knowledge proficiency of those who want to become licensed to perform such maintenance. They have no authority overseas therefore, they had to agree to turn their head to such atrocities. If the planes are not repaired and maintained by FAA licensed mechanics then they should not be allowed to traverse over US airspace except to coastal international airports.