and providing hub capacity relief.
AMR intends to replace aging Eagle
turboprops with regional jets in order
to maintain market share, develop
new routes and strengthen the feeder
and connector systems already in
place. But regional jets capable of
carrying more passengers faster,
farther and more efficiently than
turboprops, could threaten the job
security of American Airlines pilots if
used for the development of routes by
the Eagles which otherwise would be
American routes. There could be a
resulting loss of American pilot
positions, and the shrinking of
American Airlines.”

The emergency board recom-
mended the parties adopt amend-
ments to their scope clause that were
accepted as part of the tentative
agreement reached in September
1996, plus a few other restrictions to
protect American Airlines’ pilots.
Under that tentative contract, the
parties had agreed to limit the use of
regional jets; restrict the expansion
of American Airlines’ commuter
service; forego any new comprehen-
sive marketing agreements,'° and
limit the carrier’s right to furlough
pilots. The new restrictions which
the emergency board recommended
were as follows:

¢ If American Airlines’ fleet
fatls below 628 aircraft, the
Eagles have to remove from
service one regional jet for
every two American Airlines’
aircraft below 628.

* If the number of American
Airlines’ pilots is between
7,300 and 8,342, the number
of turbo prop and regional jets
would be frozen; and if the
number falls below 7,300,
American Airlines would
terminate its commuter
affiliate arrangements.

© Eighty-five percent of all
regional jet departures must be

limited to no more than
1,000 nautical miles.

* Eight-five percent of all
departures must be into or out
of eight hubs/major airports
(DFW—Dallas/Fort Worth;
ORD—Chicago; MIA—
Miami; SJU—San Juan;
SFO-—San Francisco; LAX—
Los Angeles; and LGA and
JFK—New York).

* New contract language in the
scope clause that would permit
the union to enforce an
arbitration award through
injunctive relief.

Settlement

The parties reached an agreement
in principle several days before the
emergency board released its report,
following several days of contract
talks mediated by emergency board
chairman Robert O. Harris. The
parties then began meeting to work
out the final contract language so
that the agreement could be pre-
sented to the union’s executive board
on March 21.'! Tentative pact was
approved by the union’s 18-member
board on April 4. After a 2-week
“road show,” in which union leaders
explained the terms of the proposed
agreement, union members were sent
mail ballots, which were tabulated
on May 5. The rank-and-file
approved the tentative agreement by
a vote of 5,661 to 2,507.

Overall, the union received
several sweeteners in the negotiated
settlement compared to recom-
mended terms in the emergency
board’s report. These gains included
greater wage increases, more stock
options, and enhanced labor protec-
tion provisions.

Economic terms of the new 5-year
contract included a 9-percent wage
increase over the term of the

agreement; 5.75 million shares in
stock options at $83.7375 per share
($10 below market value on the date
of signing); and a phase-out of the
B-scale. Other terms called for the
maintenance of pension benefit
levels; restrictions on the carrier’s
tight to amend the pension plan; and
pay rates for flying new Boeing 737
and 777 aircraft.

The regional jet issue was
resolved, although it took about 20
contract pages on the scope of work
belonging to AA pilots to do so.
Following the emergency board
recommendations, regional jets will
be flown by American Bagle pilots
in exchange for American Airlines’
agreeing to several labor protection
provisions for American Airlines’
pilots.

Contract language governs
employment opportunities at
American Airlines for commuter
pilots and employment opportunities
at the Eagles for furloughed Ameri-
can Airlines’ pilots. Under terms of
the agreement, roughly 1 out of 2
new hires at American will be
offered to qualified captains flying
commuter jets. The contract also
contains a “flow-through” provision,
whereby furloughed American
Airlines’ pilots can displace captains
flying for the Eagles. The accord
includes additional labor protection
provisions, along the lines recom-
mended by the emergency board,
that restrict the number of regional
jet departures, the mileage of
regional flights (to 550 miles), and
the use of regional jets if the number
of active American pilots falls below
a certain level.

Other contract language makes
the agreement binding upon any
successor company; provides
protection in case of the sale of
“substantial” assets; and calls for
arbitration of any grievance alleging
a violation of the scope agreement
and enforcement through injunctive
relief. O

Compensation and Working Conditions Fall 1997 36



Procedures and “status quo" periods under the Railway Labor Act

PROCEDURES

"STATUS QUO” PERIODS
(IN ABSENCE OF

AGREEMENT)

FROM SECTION
6 NOTICE

(UNLESS 10
DAYS ELAPSE
FOLLOWING
TERMINATION
oF
NEGOTIATIONS
WITHOUT
REQUEST FOR
OR PROFFER
OF
MEDIATION)

To

30 DAYS
FOLLOWING
NMB
NOTICE TO
PARTIES THAT
MEDIATION
HAS
FAILED AND
ARBITRATION
WAS REFUSED

GOVERNMENT CARRIER(S) AND UNION(S) DISPOSITION
20 DAYS" NOTICE OF INTENDED
CHANGE IN AGREEMENT
AGREEMENT ON TIME AND PLACE
FOR BEGINNING CONFERENCES
DIRECT
NEGOTIATIONS = }-— — ——_—__—__ AGREEMENT
NATIONAL REQUEST BY EITHER PARTY FOR
MEDIATION MEDIATION, OR ITS PROFFER BY
BOARD NMB
— [- —>{_ASREEMENT
MEDIATION |
PROFFER OF |
ARBITRATION
L. _,] Aaeement to
BOARD OF [_ ARBITRATE
ARBITRATION
F y
7 ARBITRATION
ARBITRATION
HEARINGS REFUSED
PARTIES FREE
OF LEGAL
RESTRAINT
NMB NOTIFIES PRESIDENT OF
UNRESOLVED DISPUTE BINDING
THE PRESIDENT AWARD
PRESIDENT ESTABLISHES l
EMERGENCY BOARD EMERGENCY
EMERGENCY BOARD
BOARD INVESTIGATES
DISPUTE
REPORT TO PRESIDENT WITH
RECOMMENDATIONS
——»| AGREEMENT
KEY
_—__ Action which is required
when precedent action has been
taken

are discretionary

Possibilities for reaching
agreement and actions which

PARTIES FREE
OF LEGAL RESTRAINT

39 Compensation and Working Conditions Fall 1997

FROM
CREATION
OF BOARD

To

30 DAYS
FOLLOWING
EMERGENCY

BOARD

REPORT



ment of Transportation estimated a
strike would cost the U.S. economy
$200 million a day and strand up to
40,000 of American’s 200,000 daily
passengers.’

Except for a long-forgotten
dispute between Wien Air Alaska
and the Air Lines Pilots Association
in 1979, this was the first time an
airline emergency board had been
established in 31 years. White House
officials issued a statement explain-
ing that the decision to establish a
board was based solely on economic
reasons: American’s dominant
position in several major air markets
throughout the country, and the
timing of the dispute, i-e., it would
occur during one of the busiest travel
times of the year. Nor did the White
House want the action to appear to
set a precedent, whereby a President
would routinely intervene in labor
disputes. White House Counsel
Bruce R. Lindsey, who was the
President’s liaison with management
and union negotiators, said, “I don’t
want people to believe that an
impasse and the appointment of a
(presidential) board is a step along
the way of negotiations. It is really a
failure of labor negotiations, not a
step along the way.”7

The emergency board held closed
hearings on February 27 and 28,
March 3, 4, and 5, during which
time the panel heard testimony and
arguments and received briefs and
exhibits. After the hearings,
emergency board members met
informally with the parties to try to
resolve the dispute. Additional
meetings were held between Chair-
man Harris and the parties in an
effort to narrow the issues in dispute.

During the hearings, American
asked the emergency board to
recommend the following financial
terms: Wage increases of 3 percent
in 1997 and 2 percent in 1999; stock
options on 3 million shares at $10
below market value at the time of
signing, and an additional 2.75
million shares at market value on
August 31, 1998; continuation of the
B-scales; an emergency board-

recommended process for negotiat-
ing rates for new aircraft not yet in
service (Boeing 737 and 777), with
an interest arbitration provision; and
changes in the pension plans to
accommodate changes in pension
laws so as to protect pension benefit
levels.

The APA proposed wage in-
creases of 3 percent each in 1997,
1998, and 1999, and 2 percent in the
year 2000; stock options on 7.25
million shares at $10 below market
value in exchange for a pay freeze
from August 31, 1993 through
August 31, 1997; a 5-year gradual
phase-out of the B-scale; and the
negotiation of pay rates for new
aircraft not yet in service. In
addition, the union proposed work
rule concessions it valued at $212
million over 5 years.

As for the regional jet issue,
American proposed that the parties
adopt amendments to the scope
clause found in the tentative agree-
ment. (The scope clause establishes
the pilots’ contractual rights to
perform certain work.) The carrier
also agreed to:

* No furloughs for American
Airlines’ pilots on the seniority
list as of the date of contract
signing.

* Limitations on length of
commuter flights.

* Limitations on routes flown
and development of new
routes.

* Continued use of American
Airlines’ pilots to fly main line
(non-commuter) routes where
the carrier can make a fair
return on investment.

The union asked the emergency
board to recommend that American
Airlines’ pilots fly all jets operated
by either American or American
Eagle; that regional jets be used to
fly main line routes, rather than

35 Compensation and Working Conditions Fall 1997

commuter routes; and that the
number of regional jets be limited to
20 percent of American’s fleet. In
addition, the union proposed a
preferential hiring arrangement for
American Eagle pilots, whereby at
least 1 of every 2 pilot job openings
at American Airlines would be filled
by American Eagle pilots. They also
proposed that the parties adopt cost
neutral work rules; establish the
position of first officer on a regional
jet (or comparable aircraft) as the
new entry-level pilot position at
American Airlines; and use interest
arbitration as the final step in
negotiations for the first successor
agreement on regional jets."

Emergency board report

On March 19, the emergency
board released its report. Based
upon the record, the panel made the
following recommendations dealing
with compensation issues:

° Wage increases of 3 percent in
August 1997, 2 percent in
August 1998, and 1.5 percent
in August 1999.

* Stock options on 5 million
shares priced at $10 below
maket value.

* A phase-out of the B-scale.

* Negotiations over pay rates for
new equipment.

* A contract termination date of
August 31, 2000.

The question of who would fly
regional jets was a thorny issue, not
easily resolved. As the emergency
board stated in its report:

These aircraft are not regarded
simply as replacements for short-haut
commuter turboprops but rather,
because they have cruising ranges of
up to 2,000 nautical miles, as an
efficient and profitable commuter
alternative for such main line
purposes as accessing new markets


to

Appendix. Legal framework of the Railway Labor Act

Originally, the RLA, which was
passed in 1926, dealt only with labor
disputes in the railroad industry; but
a number of events during the mid-
1920s and the 1930s in the airline
industry resulted in its inclusion
under the act. The Air Mail Act of
1925 authorized the Postmaster
General to award air mail carrier
contracts; the Air Commerce Act of
1926 empowered the Department of
Commerce to encourage air com-
merce and to promote the growth of
airports, airways, and other facili-
ties; the Watres Act of 1930 autho-
rized the Postmaster General to
direct, combine, and strengthen the
U.S. air transportation system; and
the Air Mail Act of 1934 required
air carriers to comply with compen-
sation levels and working conditions
prescribed by National Labor Board
Decision No. 83 as a prerequisite for
securing air mail contracts.

Simultaneously, there were
industrial relations developments
which culminated in legislation in
1936. As technological changes
occurred during the 1931-33 period,
aircraft cruising speeds increased
substantially; thus, air carriers
sought a modification of their pilot’s
pay formula from a monthly base
plus mileage pay to a monthly base
plus hourly pay (flight hours flown).
Concerned about the wage and hours
issues, the Air Line Pilots Associa-
tion (ALPA), which represented the
carriers’ pilots, announced its
intention to strike. When the
carriers proceeded to institute the
new pay system, ALPA sought relief
from the National Labor Board
(NLB), then the Federal agency
responsible for resolving such
disputes. The NLB issued Decision
83 soon thereafter, incorporating the
proposals of both the carriers and the
union (base pay, hourly rates, and
mileage pay).'?

From its inception, ALPA had

attempted to persuade Congress to
include the air transportation
industry under the RLA. On April
10, 1936, Congress placed the
airlines within the scope of the RLA
by an amendment to the Act. (The
1934 Amendments to the Railway
Labor Act, Congress of the United
States, U.S. 48 States 1185, ch. 691,
73" Cong. (1934), Sec 2.)

Purposes of the act

The general purposes of the
Railway Labor Act, as contained in
section 2 of the act, are:

1) To avoid any interruptions to
(railroad and airline) commerce or
the operation of any carrier engaged
therein;

2) To forbid any limitation upon
freedom of association among
employees or any denial, as a
condition of employment or other-
wise, of the right of employees to
join a labor organization;

3) To provide for the complete
independence of carriers and of
employees in the matter of self-
organization to carry out the
purposes of the act;

4) To provide for the prompt and
orderly settlement of all disputes
concerning pay, rules, or working
conditions; and

5) To provide for the prompt and
orderly settlement of all disputes
growing out of grievances or the
interpretation or application of
agreements covering rates of pay,
rules, or working conditions.

Procedural aspects of the act
The RLA requires the parties to
follow step-by-step procedures that
govern their actions from the initial
notice of an intention to change the

37 Compensation and Working Conditions Fall 1997

terms of an agreement to the last
step which leaves the union free to
strike or the employer to institute a
lockout. The procedures are
complex and time consuming. (See
chart.) They are set in motion upon
the serving by either party of a
“Section 6” notice of intended
change in their collective bargaining
agreement. A “status quo” period
prohibits strikes, lockouts, or
changes in the terms and conditions
of employment until:

* The parties reach agreement,
or

* A period of 10 days has passed
after the termination of
discussions without a request
for or proffer of the NMB’s
assistance, or

* All requisite procedures of the
act have been exhausted.

The parties are expected to
negotiate until an agreement is
reached or an impasse develops. If
an impasse is reached, one or both
parties can request the mediatory
services of the NMB, or the Board
can proffer its services. If mediation
is unsuccessful in producing an
accord, the NMB may proffer
arbitration, which is voluntary but
binding if accepted by both parties.
If arbitration is refused by either
party, the Board is required to
formally notify them of its failure to
reconcile their differences. A “status
quo” period is in place, and no
unilateral alteration in the terms of
the collective bargaining agreement
is permissible for 30 days from the
date of notice unless, in the interim,
arbitration is again proffered and is
agreed upon or an emergency board
is established under Section 10 of
the act.


BY MICHAEL H. CIMINI

Michael H. Cimini is an economist in the Divi-
sion of Compensation Data Analysis and Plan-
ning, Bureau of Labor Statistics. Telephone
(202) 606-6275,

Profile of an Airline
Emergency Dispute

“Allied Pilots ground American Airlines; President Clinton creates
emergency board.” So read a headline in February 1997. What was
the authority the President used to create this Board, how did the Board
function, and what did it resolve? These are some of the questions

addressed in this article.

n February 15, 1997,

President Clinton estab-

lished an emergency board
to investigate an unresolved dispute
between American Airlines and the
Allied Pilots Association.'

The Allied Pilots (APA) repre-
sented American’s pilots. According
to press reports, three major issues
separated the parties at that time—
wages, stock options, and job
security issues:

* Wages—the union proposed an
11.1-percent increase in base
pay over 4 years, while the
carrier offered a 6.1-percent
increase over the term of the
contract.

* Stock options—the union
asked for options on 7.25
million shares of company
stock at $10 below market
value in lieu of retroactive pay
for the 3% years that the pilots
did not receive pay increases;
the carrier offered 5.75 million
shares at market value.

* Job security—the union

demanded that of the new 50-
or 70-passenger “regional” jet
aircraft that American Airlines
(AA) wanted to buy, all be
flown by its members. And the
union was willing to help; it
said it would agree to “com-
petitive” wage rates for flying
these planes. The carrier
insisted that up to 67 of the
new aircraft be flown by pilots
employed by its regional
subsidiary, American Eagle,
whose average pilot pay was
$40,000 compared to $120,000
for American Airlines’ pilots.

Parties to the dispute

American Airlines, a unit of
ARM Corp., is the Nation’s second
largest air carrier, with scheduled
service to 189 cities, mostly through-
out North America, the Caribbean,
Latin America, Europe, and the
Pacific. Coupled with its regional
affiliate, American Eagle, the carrier
serves 350 cities, with a workforce of
90,000 employees and a fleet of 845
aircraft. American Airlines alone
has 2,200 daily departures, and
averages daily revenues of $44.4

Compensation and Working Conditions Fall 1997 32



Action under this section is taken
if, in the opinion of the NMB, an
actual or imminent strike/lockout
arising out of an unresolved dispute
“threatens to substantially interrupt
interstate commerce.” The Board
notifies the President who may
establish, as a last resort under the
act, an emergency board to examine

' His authority for taking this action rests with
Section 10 of the Railway Labor Act (RLA) of
1926, as amended. (See the appendix.)

2 American Airlines’ press releases, February
14-17, 1997, and Sun Sentinel, February 15,
1997, p. 12A.

> Report to the President by Emergency
Board No. 233, Washington, DC, March 19,
1997, p. 18.

* The Wall Street Journal, February 18, 1997,
p.A2.

5 The Washington Post, February 15, 1997,
p.Al6.

“George P. Schultz, Secretary of Labor in the
Nixon administration, has been credited with es-

the nature of and to make recom-
mendations to resolve the issues in
dispute. Again, a status quo period
is in effect from the time the emer-
Bency board is appointed until 30
days after it releases its report.
Generally, emergency boards
delay the issuance of a formal report
as long as voluntary settlements are

—ENDNOTES—

tablishing the labor policy in 1969 that Presidents
should not establish emergency boards for single-
carrier airline disputes. (See Cullen, Donald E.,
“Bmergency Boards under the Railway Labor
Act,” chapter VI in The Railway Labor Act at 50,
ed, Charles M. Rhemus, Washington, DC: Na-
tional Mediation Board, 1997, p. 174.) Except
for the Wien Air Alaska emergency board, which
was really mandated by Section 44 of the Deregu-
lation Act of 1978, future Presidents held firmly
to this policy.

7 The Wall Street Journal, February 18, 1997,
pp. A2, A24,

" Interest arbitration is arbitration of a dispute
over the renegotiation of the terms of a contract.

impending or probable. Beyond
that, the emergency boards may
prolong the emergency procedures to
resolve the disputes by means of
mediation. Even after the recom-
mendations are made public, the
NMB, under Section 5 of the act,
may reenter the case and extend the
use of its mediatory services.

* Report to the President, pp. \7-18.

" An American Airlines’ comprehensive mar-
keting agreement includes at least three elements:
(1) Any American Airlines frequent flyer program;
(2) a joint marketing arrangement: and (3) the
Jease of transfer of gates from American Airtines
or one of its affiliates toa domestic air carvier (other
than a commuter airline) that began operations
after the Deregulation Act of 1978 was passed.

"The supplemental agreement covering scope
was signed by American Airlines, the APA, Ameri-
can Eagle carriers, and the Air Line Pilots Associa-
tion, which represented the American Eagle pilots.

"? National Labor Board, Decisions, Pt. 11.
1934, p. 20.

Compensation and Working Conditions Fall 1997 38



million. Its major hubs are located
at Dallas-Fort Worth, Chicago,
Miami, and San Juan.

The American Eagle system is
really four commuter airlines,
known collectively as the “Eagles”:
Executive Airlines, Inc.; Flagship
Airlines, Inc.; Simmons Airlines,
Inc.; and Wings West Airlines, Inc.
These small regional carriers operate
208 turbo prop aircraft and feed
passengers and cargo to American
Airlines’ hub cities from 160 cities
which cannot support large jet
aircraft. ?

The Allied Pilots Association is
an independent union representing
American Airlines’ 9,430 pilots,
who fly as captains, first officers,
and second officers. The union was
founded in 1963 and is headquar-
tered in Arlington, Texas. The APA
has bargained for AA pilots since
July 9, 1963, when it was certified to
represent them.

History of the dispute

At the time of negotiations, there
was “bad blood” between American
Airlines and the Allied Pilots as a
result of problems that had been
brewing for more than 10 years.
These problems began in 1983,
when the carrier talked the Allied
Pilots into agreeing to a lower pay
scale (“B-scale”) for newly-hired
pilots. American pledged, in return,
that employment opportunities
would abound. And they did, until
the 1991 recession and the Gulf War
forced the carrier to furlough
hundreds of pilots.

Then, although a strike was
averted in 1991 when the parties
agreed to arbitrate several thorny,
unresolved issues, AMR Corp.
angered pilots when it accused them
of conducting a sick-out in an
advertisement (open letter of
apology) run in several newspapers
across the country. Unrest increased
when the carrier closed hubs in San
Jose and Raleigh-Durham, and made
joint marketing agreements with
low-cost carriers that gave them
access to American Airlines’ gates.

The parties’ relationship was further
strained during the flight attendants’
5-day strike in 1993.

American Airlines and the Allied
Pilots exchanged initial contract
proposals on June 30 and July 1,
1994. They began contract talks 1
day later. As part of its strategy to
remain competitive, American asked
its pilots to accept work rule and pay
concessions totaling $300 million
annually. During negotiations, the
carrier convinced APA’s then
president, Richard LaVoy, to agree to
arbitrate any issues remaining
unresolved after 120 days of contract
talks. The union’s executive board,
however, rejected the agreement, and
LaVoy was voted out of office.

These events set the stage for a
contentious round of bargaining. As
a result, contract talks dragged on
for 18 months, during which time
the parties only reached agreement
on a number of minor issues, such as
alcohol testing. On January 16,
1996, the union requested the medi-
atory services of the National Media-
tion Board (NMB), the Federal
agency that administers the Railway
Labor Act. A few days later, the
NMB placed the request in its docket
and assigned a Federal mediator to
handle the dispute. Mediation
sessions began on February 12.

On September 2, the parties
reached a tentative 4-year agreement
that would have permitted American
Eagle pilots to fly newly purchased
regional jets in exchange for several
job protection features. According to
the carrier, the pact guaranteed that
no American Airlines’ pilots would
be furloughed. It also limited the
number of regional jets (capped at
67) that American Eagle could fly,
and restricted the total amount of
flying that American Eagle could
perform. Other terms provided wage
increases of 3 percent in August
1997 and 2 percent in August 1999,
plus options on 3 million shares of
stock at $10 below market value at
the time of signing and an additional
2.75 million shares at market value
in August 1998; strengthened

33 Compensation and Working Conditions Fall 1997

successor and asset sale restrictions;
and expedited arbitration procedures.

On January 8, 1997, the union
announced that its members had
rejected the tentative contract, even
though top union officials and the
bargaining team recommended that
the pact be accepted. The rank-and-
file cited deficiencies in terms
relating to the economic package,
including the continuation of the “B-
scale” wage rates, and job security as
the major reasons for the vote.

Sixty-one percent of pilots voted
against the tentative agreement.
This stunning defeat was orches-
trated through a sophisticated
grassroots campaign led by dis-
gruntled pilots based in Miami, who
conducted a high-tech rebellion
against the tentative agreement and
the union bargaining committee
using modern communication
techniques—the Internet and fax-to
present their views to their fellow
union members. They also devel-
oped their own World Wide Web
site, with elaborate charts designed
to illustrate why the tentative
agreement should be rejected. The
dissident pilots feared that they
would lose their jobs if American
Airlines purchased regional jets and
turned over trips as long as 1,000
miles to its commuter affiliate,
whose pilots were represented by
another union and who were paid a
lower wage.

In its report, the emergency board
captured the derailment of the
contract, as follows:

The issue of regional jets gained
momentum within pilot ranks after
the tentative agreement was negoti-
ated when the Chairman of AMR
wrote a letter to a Miami pilot which,
to the pilots, seemed to imply that
neither the Chairman nor American’s
chief negotiator cared who flew the
small jets so long as the costs were
Eagle-equivalent costs, not American
costs. The pilots concluded from the
letter that an exclusive right to fly the
small jets was obtainable in bargain-
ing if APA pressed hard enough. The
team that had negotiated the tentative
agreement received a vote of ‘no
confidence’ and was replaced.>



Emergency Board No. 233 was established.

Major Contract Issues At A Glance

Major issues in the contract dispute between AA and APA as reported by the parties just before

Offered 5.75 million shares at market value.

American Airlines Allied Pilots Association
‘WAGES WAGES
Offered increase of 3 percent in 1997, and 2 percent Asked for increases of 3 percent in each of the first
in 1999, 3 years and 2 percent in the last year.
JOB SECURITY JOB SECURITY
Proposed buying 67 small jets to be flown by American | Wanted to have American Airlines’ pilots fly all commuter
Eagle pilots. jets.
STOCK OPTIONS STOCK OPTIONS

Asked for 7.25 million shares at $10 below market value.

As a result of the contract
rejection, the union placed a new set
of demands on the table, and the
carrier said all issues that had been
tentatively settled were now open.

On January 10, having reached
an impasse in mediated negotiations,
the NMB proffered arbitration,
which was rejected by the carrier.
The NMB then formally notified the
parties that its mediatory efforts were
unsuccessful and formally released
them from mediation, triggering a
30-day “status quo” period, during
which the union was barred from
striking and the carrier from locking
out the pilots or making changes in
the terms and conditions of employ-
ment.

Given the gravity of the dispute,
the NMB wanted the parties to
continue negotiations during the
cooling-off period. Pursuant to
Section 5 of the Act, the NMB re-
entered the case on February 10, and
began conducting “public interest”
mediation. These mediation
sessions involved both single-party
and joint meetings, often with the
mediators shuttling back and forth
between the parties in an effort to
find consensus. After 4 days of
marathon bargaining with very little
progress, the union called a strike

for 12:01 a.m., February 15.

In the final hours of the meetings,
a mediator’s proposal for settlement
of the dispute was lost in the rhetoric
of strike talk. The “hypothetical
deal” suggested by the mediator
would have allowed American Eagle
pilots to fly the regional jets in
exchange for labor protective
provisions for American Airlines’
pilots, plus modest “sweeteners” in
wages and stock options. The
proposed pact contained, among
other items, labor protective provi-
sions specifying that 85 percent of
all regional jet flights be shorter than
1,000 miles, and 85 percent of
flights operate into or out of an
American hub or major airport,
ensuring that these flights would
feed passengers to larger jet aircraft.
The proposal also would have
required American to cut growth of
its commuter affiliate if the number
of American Airlines’ pilots fell
below 8,500, and would have set an
absolute floor at 7,300 positions. In
addition, the deal would have
continued the B-scale, but would
have granted pilots wage increases
totaling 6.6 percent over the term of
the agreement, plus options on 5
million shares of stock at $10 below
market value at the time of the

signing and an additional | million
at market value in August 2,000.

Creation of the emergency
board

Just minutes after union President
James Sovich instructed local strike
leaders to shut down the carrier,
President Clinton signed an execu-
tive order creating the emergency
board. The President appointed
Robert O. Harris and Helen M. Witt,
former chairpersons of the National
Mediation Board, and Anthony V.
Sinicropi, a University of lowa
professor and arbitrator, as board
members.

American Airlines and lawmak-
ers from several States throughout
the country reportedly had lobbied
hard for the establishment of an
emergency board.* American
Airlines’ President Donald J. Carty
said, “The prospect of a strike, with
all of its devastating consequences,
was very real, and we congratulate
the President for recognizing this
and using the powers of his office to
erase the strike threat and impanel
an Emergency Board.” The carrier
had publicly released an internal
study that estimated the effect of a
60-day strike on the U.S. economy
at $4.75 billion. The U.S. Depart-

Compensation and Working Conditions Fall 1997 34