I have written previously about dissatisfied American Airlines employees, recently the mechanics have made the most noise. Now, the results of their actions have begun to show.
American Airlines Management Doesn’t Like Delays
A target for American Airlines management has been a policy called “D0” for Departure “0” meaning on-time no matter what. This is in direct contradiction to United’s new strategy of intentionally delaying some flights in an attempt to avoid missed connections. According to United, 90% of those flights delayed for connecting passengers arrive on-time which is what most customers really care about.
Mechanics have indicated that after years of working without a contract as negotiations have further stalled, they will utilize worker slowdowns through fixing safety issues at inopportune times. This has been mostly informal as opposed to an in-your-face strike.
Preliminary Data Reflects Abnormal Delays
Last week I mentioned that we would have to wait through the end of June to see the real effects of the slowdown. I’d postulate that the lasting effects will come at the close of the quarter on the earnings call with investors when the costs of delays are evident.
Gary Leff from View From The Wing found a preliminary report which shows that the airline is already feeling the effect with substandard departures and delays across the system. On-time departures are down 8% to just over half (57.2%) and turn time is down 6% from target.
Think about that for a moment… American Airlines customers could flip a coin June 7-13th on whether their American Airlines flight would depart on time. That’s a pretty damning effect, especially when the mechanics aren’t even on a formal strike.
Why The Court Ordered Injunction Means Nothing
Some have commented that a court order against the Mechanics will end the delays. This is toothless, to say the least. One of the court orders includes mechanics not turning down overtime hours. Unfortunately, it is impossible to enforce workers accepting overtime work because, by its very nature, it has not been agreed.
Additionally, mechanics that find genuine safety issues have a duty to report them. They could be small issues that only taken an extra 20 minutes to resolve or larger issues that take hours. Compound that with workers declining overtime and the problem is exacerbated.
American Airlines Management Needs A Solution
Despite American Airlines CEO, Doug Parker, stating that the carrier will never again be unprofitable again, he might be forced to once again eat his words. It’s not just pride on the line for Parker and co. The entire management team has dug their heels in against their customers with a lack of award space and variable pricing – unofficial as it may be – and against their mechanics, citing an out-of-contract, no strings attached raise given years ago (which apparently, in fact, had strings.)
During the first quarter of the year, the airline lost money flying passengers; the sale of points to banking clients made them profitable ($300 million.) Flight attendants aren’t happy, litigation is already in the works for union negotiation wrangling outside of the official merger talks and the airline hasn’t been run well. The public is starting to notice and so will investors.
While I am sure that Parker and his team believe they are doing what is best for the long term viability of the airline, workers are rising up, subtle as it may seem. Management has tabled the issue for far too long and will need to focus on making employees and customers happy. That could take a long time to rebuild, time that may be running out for Doug Parker and his executive team.
What do you think about the mechanics’ action at American Airlines? Will it get worse before it gets better? When will they get a contract? Is there something more to the story that I am missing?