3.09.12 – (LAA) – APFA Asks the NMB to Recomment Final and Binding Arbitration to Resolve Collective Bargaining Dispute

NEGOTIATIONS UPDATE

In the following letter APFA asked the National Mediation Board to recommend to the parties final and binding arbitration to resolve the collective bargaining dispute. APA and TWU sent very similar letters. All three unions stated that they would agree to arbitration if offered by the Board. This is not a proffer under Section 5 of the Railway Labor Act (RLA) which could trigger a 30-day cooling off period but rather a recommendation as provided for in Section 7 of the RLA.

Why arbitration and why now?

Binding arbitration ìoffers finality and an expedition resolution.î† It is a method that has been successfully used in the airline industry time and time again. Experienced labor arbitrators assess all the outstanding issues, issue a determination, and the matter is settled completely with neither party having the right to challenge the decision or escape its binding effect.

In comparison Section 1113 can leave the contract dispute unresolved indefinitely. In our case American has made clear that its proposal of $230m in additional concessions is its first and final offer. Only in bankruptcy would a company ever consider, no less actually invoke a “take it or leave it” approach to bargaining. If we don’t yield to this demand American will file a Section 1113 motion in which it will ask the court for authority to reject our collective bargaining agreement.

The most prominent risk of an 1113 motion is that the judge has to make an all or nothing decision and our membership would have to live under – what will in all likelihood would be painful terms and conditions of employment – for what may be a very long time.

Yet even if the Company’s motion is granted, it is a victory of questionable value. A rejected contract does not deliver finality to the contract dispute. In fact the law compels the Debtor to continue to negotiate with the unions. As long as that bargaining goes on without a resolution, the Debtors will be deprived of the certainty that is essential to a successful reorganization.†† This may explain why no airline has ever emerged from bankruptcy without consensual agreements in place with all its unions.

As our letter states, we are at a critical juncture. Assuming the NMB makes the proffer of arbitration, American will have a very clear choice. It can continue to believe that it can unilaterally force its workers to endure a $1.25b cut in their wages, working conditions and benefits. †It can pursue an illusory solution that offers no certainty and breeds only resentment among its employees.

Or it can recognize that the morale of its workers is invaluable. It can realize that what it achieves in bankruptcy is less important than how it is attained. If it does so, it will readily accept binding arbitration as the method for reaching a fair and final settlement.† †We hope that Tom Horton and his team make the right choice.