Labor Problems Overshadows Financial Surge for American Airlines (NASDAQ:AAL), Delta Air Lines (NYSE:DAL) and Southwest Airlines (NYSE:LUV)
American Airlines (NASDAQ:AAL), Delta Air Lines (NYSE:DAL) and Southwest Airlines(NYSE:LUV)recorded great profits in their respective posted earnings, marking a golden era in the history of U.S airlines. On the other hand tension is brewing up amidst workers at the airlines and management. Workers are looking forward to pay increases and work rule improvements because they have been sacrificing on both ends from the past 10-15 years.just about to seal a contract with its employees, a contract which was deemed very lucrative. Delta Air Lines (NYSE:DAL) announced
The bitterness became evident when the workers rejected a good offer from the airline companies.Delta Air Lines (NYSE:DAL) were offering its employees early profit sharing because of the profitability, along with 3-4 percent raise for all front-line employees. At the same time American Airlines (NASDAQ:AAL) was the raise in pay coincidentally along with American Airlines (NASDAQ:AAL) contract negotiations.
What happened then was that The Association of Professional Flight Attendants went back to the American Airlines (NASDAQ:AAL) and asked it to tweak the contract to match the Delta Air Lines (NYSE:DAL) pay raise. American Airlines (NASDAQ:AAL) were perplexed, since the airline’s deal was a lot better than Delta’s. But since the voting inside the association had gone against American Airlines (NASDAQ:AAL), it had to oblige.
What is incomprehensible is the fact that the Association of Professional Flight Attendants settled for the industry standard contract which is mediocre when compared to the contract offered by American Airlines (NASDAQ:AAL). Americana airlines would have to pay less. It was decided long ago between the two parties that if the vote fell against the contract, there would be a quick arbitration process in which both the parties would settle for an amount, much less than the original contract.
It really is unwise on the association’s part to reject such a lucrative contract for reasons which, quite frankly, are simply incomprehensible to us.What we can forecast from here is that the association won’t settle for a mediocre contract. A strike is imminent and a wave of bad relations between the employees and management is on its way. If the association voted against the proposed contract, it means that they are expecting something better rather than worse.
If both the parties settle for the arbitration process, the employees will turn bitter in the long run. One way or another, the whole issue will be blown out of proportion. It is best for the airline companies to redefine the contracts if they want to avoid any hassle in the future. Union problems can be a pain in the neck if they start persisting. One sympathizes with the Association of Professional Flight Attendants which is obviously looking forward to an improved contract after the increased profits.
You can’t blame American Airlines (NASDAQ:AAL); the contract offered by it was just as good as contracts go. But it seems that won’t be enough.