American says it lost $59 million after pilots defied ruling
Judge gives union 60 days before he sets fine
February 17, 1999
Web posted at: 2:16 p.m. EST (1916 GMT)
FORT WORTH, Texas (CNN) -- American Airlines told a federal judge
Wednesday it lost nearly $59 million after its pilots' union ignored a court order to end a sickout, and the judge granted the union close to 60 days to come up with its own cost estimate before he sets the amount the union must pay in damages.
Doug Herring, vice president-controller of the airline, said the 10-day
sickout, which began February 6, resulted in overall lost revenue of $150 million.
For the three-day period in which U.S. District Judge Joseph Kendall
found the Allied Pilots Association in contempt of his back to work order,
damages amounted to $58.7 million, Herring said.
That assessment factored in fuel and food cost savings by the airline
because of thousands of flight cancellations, but it did not include overtime
costs incurred by reservation agents and others because of the chaos resulting
from the job action, Herring said.
During the hearing Wednesday in federal court, the judge delayed setting a fine against the pilots' union for nearly two months. The union had asked for a 90-day continuance to give it time to make its own calculations of sickout-related costs to the airline, but Kendall shortened that to less than 60 days, scheduling union arguments and the airline's rebuttal for April 12.
In the interim, the two sides can exchange scheduling information and
other documents, and the union must provide American with a list of witnesses,
Kendall said.
"I don't want to take a bad situation and make it worse," Kendall said.
"The planes are back in the air now. It's time to cool down and
take the loaded guns away from each other's heads."
The judge had ordered the union to post $10 million with the court until he
decides how much to fine it for failing to clearly notify its pilots to end
their job action after he ordered it to do so. The union complied with the order on Tuesday.
Kendall also ordered union President Rich LaVoy to deposit $10,000 with the court and Vice President Brian Mayhew to deposit $5,000, to go toward fines.
The sickout forced the airline to cancel more than 7,000 flights and
disrupted travel for more than a half-million passengers.
American announced no new cancellations Wednesday for the first time
since the job action began.
The airline said it would resume negotiations with the union later Wednesday in an attempt to settle the dispute, which centers on the lower salaries of 300 pilots for Reno Air, a western regional carrier acquired by American's parent company, AMR Corp., in December.
The Reno pilots are paid about $75,000 -- half the average salary of
American's 9,200 pilots. The union wants one pay and seniority scale for all
pilots. The company has agreed to integrate the Reno Air pilots into
American's system in a gradual process.
The airline's most recent offer, announced Tuesday, was to increase the salaries of Reno pilots by 50 percent immediately. The union is concerned that American is trying to build in a two-tier pay scale that ultimately would erode the salaries of American pilots with higher seniority and possibly threaten their jobs.
Kendall noted that if the United States could make its two World War II
enemies -- Japan and Germany -- its biggest post-war trading partners and the
Cold War could end in a heap with the fall of the Berlin Wall, "Surely the two
sides (in this dispute) ought to be able to sit down and get this behind you."
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