Labor tensions flare at American Airlines over hundreds of canceled flights

Key Points
  • American Airlines this week won a ruling that orders its mechanics to not participate in any disruption to the airline.
  • The airline accused the unions of orchestrating a slowdown to have bigger sway in contract negotiations.
  • American's shares fell to a 3-year low of $26.31 on Wednesday.
Maintenance workers cover the engine of an American Airlines Group Inc. Boeing Co. 737 Max plane outside of a maintenance hangar at Tulsa International Airport (TUL) in Tulsa, Oklahoma, U.S., on Tuesday, May 14, 2019.
Patrick T. Fallon | Bloomberg | Getty Images

American Airlines has accused the unions representing its mechanics of a purposeful work slowdown to win leverage in contract talks, which it said caused more than 900 flight cancellations over the last two months. Now the airline wants compensation from the unions.

A U.S. federal court in Texas this week issued a permanent injunction against the mechanics unions for the slowdown that American alleged in a suit this spring. A day later, Fort Worth-based American Airlines, said it would seek damages from the unions — the Transport Workers Union of America and the International Association of Machinists and Aerospace Workers — saying they violated earlier court orders to resume usual work levels.

The unions, which represent the airline's more than 12,000 mechanics, have denied the allegations.

The unions have caused "enormous financial losses to American, and untold harm in lost customer good will," American said in its filing Tuesday. It said the amount would be determined at a hearing.

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The cancellations and more than 200 delays of over two hours are compounding operational challenges at American, which like Southwest and United, has canceled thousands of flights since its new Boeing 737 Max planes were grounded in mid-March after two fatal crashes.

American last month said the Max grounding, which is now in its six month, and the mechanics' dispute drove up its nonfuel costs in the second quarter by 5% from a year earlier.

The airline's stock has trailed its closest competitors this year, falling 18% on Wednesday to a three-year low. Delta is up close to 15%, Southwest has risen more than 3% and United is down close to 3%.

"It would make no sense to not comply" with the judge's orders to work at a regular pace, said TWU President John Samuelsen, adding that by complying "we will achieve contract justice for American Airlines workers."

Work groups across airlines are clamoring for higher wages and better working conditions as the industry, better known for boom-and-bust cycles, heads toward its 10th consecutive year of profits.

Earlier this year, Southwest had a similar dispute with its mechanics, but later reached a contract with the group, their first in more than six years, and a higher pay raise than Southwest offered in previous rounds of negotiations.

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