After Thursday’s tense showdown between American Airlines CEO Robert Isom and the head of the airline’s flight attendant’s union, it may seem like the parties are farther apart than ever.
The union is asking the federal National Mediation Board for the right to strike. Negotiations have dragged on for years, and the labor head dropped her mic and headed off after reading Robert Isom the riot act in an employee meeting following the airline’s first quarter earnings call.
However read between the lines and it looks like a labor agreement is closer than ever, and a strike is unlikely. American is increasing its offer to the flight attendants. The union’s leadership has more room to maneuver, and has changed the rhetoric around what it is asking for – to get closer to what the airline could offer. While the parties could still mess this up, a deal is finally within reach.
And we haven’t been there before! American wants to pay at the top end of what other airlines pay. They’re not as profitable as their largest competitors, either. Yet American Airlines flight attendants had been demanding up to 50% raises and their union’s leadership couldn’t walk back the rhetoric. They wrote to members, “One area we are holding firm on is wages.” That’s why talk has been about a strike.
I’ve been writing for 18 months that:
- In order to come to a deal, union officers first had to get re-elected. If they agreed to move off of their demands before the officer election, they wouldn’t get re-elected since they’d appear weak. Re-election has happened.
- To get a better deal from the company, they needed to wait for another flight attendant work group to negotiate something better. Southwest Airlines got a better deal. Non-union Delta gave their flight attendants (and other non-union employees) a raise.
Flight Attendant Union Leaders Confront CEO Robert Isom At Employee Meeting, October 2023
This allows both parties to move. American is clear that they’ll match Delta pay rates. They’re offering the first flight attendant union contract ever that will include boarding pay (matching non-union Delta). Sara Nelson’s AFA-CWA has agreed to forego boarding pay even after Delta introduced it two years ago.
And it does seem that the parties are moving.
- American says it’s increasing its economyic offer, in light of Delta’s increase in wages. They said that during the airline’s earnings call and again in the employee meeting that followed.
They don’t want to bargain against Southwest’s contract. What that mostly means is they don’t want to make bonus payouts for ‘retro pay’ (all of the wage increases flight attendants would have gotten, back to 2019, for the time they’ve been without a new contract).
- The union says they want to bargain against the Southwest contract but that means they’re now looking at competitor contracts as a benchmark and have come off of pie in the sky asks like 50% raises (later reduced to 40% increases). They haven’t told their members they’ve reduced their demands, but their rhetoric has changed about what those demands are.
One of my favorite (apocryphal) Winston Churchill stories involves Churchill asking a British socialite if she’d sleep with him for a million pounds sterling? She agrees. Then he asks if she’d consider it for 50 pence? She’s appalled: “What kind of woman do you think I am?” Churchill replies, “We’ve already established that madam, now we’re just haggling over price.”
It seems we’ve finally reached a point where the parties are within a zone of possible agreement – and they’re haggling over price. Will it be Delta wages, or Delta wages plus 1%? American probably has to do some retro pay – not Southwest full retro pay and not zero.
The Straussian read of the conflict between American Airlines CEO Robert Isom and Flight attendants union head Julie Hedrick is that the two are closer to rapprochement than they’ve ever been. The fireworks were for the members.
A strike is getting tougher to do now, with American increasing its offer (suggests there’s no deadlock in negotiations) and with the election getting closer (since the President’s appointees are the majority of the mediation board, and a strike would be unpopular with voters). If the economy worsens, getting the current offer on the table becomes harder. Flight attendants can’t afford to go without pay from a strike, which is why the union has been talking about at most doing more limited job actions if released by the government anyway.
Even under current offer terms American’s flight attendants will see meaningful wage gains of about 25%, which is huge for the first and second years that are today eligible for food stamps. And the company will avoid a strike, while retaining flight attendant wage costs similar to those of their largest competitors.
Delta flight attendants will still be better off, though, because while American cabin crew will get a contract that offers the same profit sharing formula, American doesn’t earn as much profit – and has more employees to share the profit pool across.
Gary Leff