Damned if you don’t.  American’s labor woes are getting in the way of both the company and labor moving forward.  It’s a Mexican stand-off at this point.  Management has the argument that any higher labor costs would result in the company losing money again and potentially failing.  If it runs close to the line of failing, it’s either a liquidation (unlikely) or a bankruptcy reorgnization (very likely) or a purchase (somewhat likely).  In any of those situations, labor stands to lose and lose big.

Labor, on the other hand, has a knife to the throat(s) of current management.  If they win big gains, it’s the end of the current regime.  If any of the unions (particularly cabin crew or pilots) win the right to “self help” aka a strike, it’s the end of the current regime.  And the the end of the current regime may mean a reorgnization ultimately as well. 

Neither side can necessarily afford to stick with their current leadership.  AA’s management has allowed this to fester for a very long time and, I think, has gone past the time that would be regarded as “reasonable” to come to some agreement that would allow the company to move forward.  At least in the eyes of many shareholders.  Likewise, the unions don’t have a deal and don’t have a prospect of a deal and with the stance of “all or nothing”, stand to harm their memberships far more than help them. 

We’ve already seen the pilot’s leadership change to a more reasonable president but I see no evidence of that potentially happening among the other groups.  Not right now. 

If the brinksmanship continues, look for a regime change at AA.  If there is a regime change at AA that does not result in movement in the agreements, look for regime change of the leadership of flight attendants.  Then sit back and wait for the bankruptcy filing for reorgnization.

What seems even more dismal is this question:  Who wants to buy AA or American Eagle?

Filed under: Airline News by ajax