It was an interesting weekend in the American Airlines bankruptcy arena with AA pointing fingers at its unions with the message that they need to speed things up asap and the unions countering with AA isn’t bargaining in good faith.  As with almost all things having to do with labor and airlines, the truth lies somewhere in between.

I think AA is making a calculated play that if they press hard enough and get nothing but pushback, a bankruptcy judge will throw out the agreements in place presently and dictate terms to the unions.  Maybe.  Maybe not.  AA wants the deal that Delta, Northwest & United got which is basically getting the terms tossed and dictating new terms.  Well, the law has changed some in that respect since those bankruptcies.  The stakeholders all have a lot to lose and I don’t think the courts are going to just lay down and do what AA wants them to do. 

Actually, I think the judge is going to make them bargain a while and he should. 

As for the unions, I think their responses to the airline have been somewhat unrealistic in that preserving what you have at all costs for as many members as possible without making offers that truly do raise productivity significantly just makes you look stubborn and unwilling. 

The way to win this battle is to put something real on the table and be the first to do it.  Neither side has so far. 

Not for nothing, AA’s grand plan calls for massive labor savings and massive cost savings in other areas such as aircraft and still offers little reality in how it is going to increase revenues.  Stakeholders in this bankruptcy who are outside the AA family already know that that idea has flaws and I suspect that will get communicated in court with a massive reality check for the new management. 

In short, I think that AA and its management is going to be made to get real with itself and I think the board is going to experience some of that reality very soon as well.  I expect some board members to change and Chairman Horton is going to have to figure out how to really work a deal with labor while offering far more granularity on how he and his team will boost revenues.  Absent that answer, I expect a takeover for the company to materialize and, no, it won’t be a “merger of equals” from US Airways.  There won’t be any takeovers where there are equals.  Someone will take AA over, shake it out and make it perform appropriately.

The bad news is that if the latter happens, I expect labor to do worse in that situation rather than better.  That’s why I say it’s worthwhile for either side to get a real proposal on the table now and win rather than bicker at each other for an additional 6 months which likely results in a lot of that leadership looking for new jobs.

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