Wrong for American Workers – Wrong for America

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January 7, 2012

Last week, AMR executives revealed their proposal for bankruptcy reorganization. They decided to hit their employees at American Airlines and American Eagle with a hammer, slashing 13,000 jobs and dumping pension plans on the PBGC. They’re aiming for a 20 percent reduction in labor costs.

From everything we can tell, this plan is wrong for American and wrong for America. The same management team that took hundreds of millions of dollars in bonuses while the airline was losing money now wants workers to pay a high price for their mistakes.

If AMR executives get their way, good-paying American jobs will be outsourced and off-shored, and communities all across this nation will suffer. While job and benefit cuts are real, the supposed revenue increases in AMR’s reorganization proposal are “pie in the sky.”

TWU members approach this crisis as a union with a demonstrated track record of finding business savvy ways to partner with our employer.   Since 2003, we’ve given back over $600 million from our paychecks – about 30% of our pay and benefits – so we could keep American’s planes in the air. And we lead the U.S. aviation industry in joint insourcing projects, generating billions in corporate revenues for AMR while saving thousands of jobs.

The Transport Workers Union has assembled a top-flight team of legal and financial experts to review AMR’s proposals. We’re going to ask hard questions, demand real answers – and be as transparent as possible with our members and the public.

The American public – and our representatives in Congress – should follow this case very closely.   Some key points:

 · Whom does bankruptcy law protect? After paying themselves huge bonuses for years, AMR executives filed for Chapter 11 with $4 billion in the bank and $13 billion in credit for buying new planes. Former CEO Gerald Arpey thought the decision was so wrong-headed that he immediately resigned. Congress must re-examine our bankruptcy laws, to ensure they protect workers, debtors and creditors – not sketchy financial maneuvers by overpaid executives.

· Who pays for abandoned pension plans? AMR wants to dump $10 billion in liabilities on the PBGC, which insures defined-benefit pensions for more than 75 million workers. The agency is funded by employer-paid premiums, but it’s already running a $26 billion deficit. PBGC director Josh Gotbaum says AMR has not proven it needs to kill its pension plans to successfully reorganize.   Other airlines, like Northwest, have emerged from bankruptcy with pension plans intact.

· Who’s fixing your plane? AMR wants to ax thousands of mechanic and other maintenance jobs, by closing an overhaul facility in Dallas and cutting back sharply in Tulsa. The company plans to join the industry trend of outsourcing aircraft maintenance. Due to a loophole in U.S. air safety laws, much of this work winds up in overseas facilities that are not secure and not staffed by certified mechanics.

Instead of the federal government acting as enablers, these safety and security loopholes need to be closed and closed now — while FAA reauthorization is under consideration by Congress. It’s both absurd and potentially dangerous that passengers are scanned and frisked before entering a commercial airliner, while an unlicensed mechanic who fixes that same plane in China, Singapore or El Salvador never walks through an x-ray machine, never has his toolbox inspected and never receives a background check or a drug test.

This is not hypothetical; in 2003 a member of Al Qaeda was discovered working in a maintenance facility in Singapore. The PBS series Frontline and investigative reports by NPR have documented the dangers of overseas aircraft maintenance. In the current FAA reauthorization, Congress must close this safety and security loophole – before, not after, a disaster occurs in the sky. This fix would not cost the U.S. Treasury a dime.

The AMR bankruptcy is a microcosm of what is wrong with America. High stakes games are being played for the benefit of financial elites. Meanwhile, good jobs flow to overseas low-wage unregulated destinations, endangering the public and hurting our economy.  Like I said, wrong for American, wrong for America.

James C. Little, International President

Transporter Workers Union



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