American Airlines Brings CFM56-5B Services In-House.jpg American Airlines

TWU Seeks To Limit American Airlines Outsourcing

TWU and American Airlines are also in contract negotiations over pay, healthcare and 401(k) contributions.

Negotiations between The Transport Workers Union and American Airlines over mechanic compensation continue. Most TWU objectives seem at least roughly in line with packages at other airlines. The union is also seeking to limit outsourcing and offshoring at American, which historically has done a great share of its maintenance inhouse. 

TWU says its last contract for mechanics at American expired on Sept. 12, 2018, and there have been no general raises since that expiration. TWU is now seeking a new contract with pay increases retroactive from September 2018. American is proposing raises beginning with the date of signing a new contract.

For the future, TWU wants annual pay increases of 3%, (a real increase of about 1% annually). “That is what [AA CEO] Doug Parker publicly promised non-union employees annually,” says TWU spokesperson Denise Romano. Alternatively, TWU seeks pay rates that are 1% higher than those prevailing at Delta Air Lines, United or Southwest for each TWU contract work unit.

The airline says that when Southwest raised pay rates in its new contract earlier in 2019, it matched those rates for similar workers in its offer as of the date of signing. “All other groups have industry-leading wages in our offer compared to equivalent employees at other airlines,” American spokesman Joshua Freed says.

TWU is also seeking healthcare plans that are competitive with and have costs similar to plans for mechanics at United and Southwest. One aspect of this comparison is how much sick time can be used to pay for pre-retirement health insurance. At United and Southwest, mechanics can use the sick-time hours they accumulate in one year to pay for six months of medical benefits. But under management’s proposal, American mechanics would get only a half month of benefits for a full year of sick-time hours.

Freed says American is offering the same health care plan that applies to 90,000 of its 100,000 employees. Mechanics “would continue to have the same health care benefits they have today.”

And TWU aims to have American increase its employer contribution to mechanics’ 401(k) plans, to reflect the airline’s smaller profit sharing plan, compared to the plans of Delta, United and Southwest. Freed calls the airline’s 401(k) offer “very competitive.”

That leaves one final area of possible disagreement. “The major point of contention is scope!” Romano says. ”We are not going to voluntarily agree to the elimination, outsourcing and offshoring of U.S.-based union work at a rate greater than today’s, which was achieved through bankruptcy.”

The airline came out of bankruptcy in 2013, and since then all American’s outsourced maintenance has been roughly stable at 38-39%, according to FAA data.

That level is higher than American’s pre-bankruptcy outsourcing of 30-35%, but well below the outsourcing share of most  U.S. network and low-cost carriers. For example, Delta and United are now outsourcing more than half of their maintenance, Southwest nearly half and several other LCCs well over half. Freed stresses that American does more maintenance and fleet service work inhouse than any other U.S. airline, and this practice would continue under its contract proposal.

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