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Spring Thaw: American's Pilots Turn Toward Reconciliation with Management

It looks like the pilots at American Airlines (AMR) have decided to soften their stance against management. The last few years have been full of conflict and confrontation as pilot leader Lloyd Hill refused to talk to management without a full restoration of previous pay and benefit levels. That was an unqualified failure, and the newly-elected pilot leader is taking a softer tone that must give everyone involved at least a glimmer of hope for resolution. I'm still not holding my breath.

Hill came in at a time of great anger at the company. After making concessions to help American narrowly avoid bankruptcy in 2003, a firestorm erupted when it was revealed top managers were raking in tons of cash as part of a share-price-based incentive plan. American's share price may have gone up but it was still losing a ton of money. CEO Gerard Arpey stuck to his guns and refused to address the problem. The top managers took their bonuses. The pilots, along with all the other labor groups, were furious, and really, rightly so. The whole "shared sacrifice" thing rang hollow.

American had spent a great deal of time cultivating a better, open relationship with labor and it was working. But that disappeared completely in a flash, and the airline continues to suffer from that today. It was easily the biggest mistake Arpey made in the last decade, and I've always been skeptical that labor relations would recover under his management.

When Lloyd Hill came in three years ago, he brought with him fire and brimstone. He said the pilots would settle for nothing less than full restoration of pay even though the American pilots already are paid better than their competitors. There was no way they were going to get that, but they fought at every turn. It was a giant mistake, but the union leadership dug in.

The pilots took out billboards against the company, picketed against the biggest clients of the airline, and opposed every single thing the company supported, even if it made little to no sense for the pilots themselves to do so. That cost them a lot of money and got them no closer to a contract.

That should come as no surprise to anyone. That sort of hardline stance was unlikely to get them anything. Instead of trying to join the conversation, the pilots wanted to dictate it completely. They got absolutely nothing out of that. This ill-advised strategy led Lloyd Hill to not even seek re-election. Those who campaigned to take over were all fighting to go against what had happened over the last few years.

So now the pilots will try a different tack. They're still fighting for raises and all that, but the new leader David Bates is taking a more conciliatory tone. Granted, anything is a more conciliatory tone than what Lloyd Hill espoused, but this does give American an opportunity.

Bates has said he'll sit with management to get details on the airline's financial situation. This is a great opportunity for American to re-build the shattered relationship and start explaining why things are the way they are. Management needs to be on its best behavior here. No insane bonuses or other missteps or the whole thing falls apart.

When it comes to management-labor relations, the pendulum is always swinging back and forth. It has swung as close to harmony as its going to get. That's not very close, but it's the best shot management has to develop a strong, lasting relationship based on facts over emotion. I'm hoping that David Bates is sincere about this and that management doesn't blow it.