May 19 (Bloomberg) -- American Airlines flight attendants authorized their union leaders today to call a strike against the second-largest U.S. carrier if they are freed from further negotiations.
About 97 percent of those voting cast ballots to support a walkout, Association of Professional Flight Attendants President Laura Glading told members in a recorded message. Discussions are proceeding today between Fort Worth, Texas-based American and the group, which represents 16,550 of its active attendants.
The vote is a signal that the attendants will push toward a strike unless contract issues including compensation and retiree benefits are resolved with the airline, whose parent AMR Corp. has reported two years of straight losses. A walkout can’t occur until the union and American complete several additional steps required under a federal law governing airline labor talks.
“American has the highest labor costs of the legacy carriers,” Jim Corridore, a Standard & Poor’s equity analyst in New York, said in an interview. “I don’t see circumstances under which the company can provide a pay raise. There has to be some sort of productivity offset to any kind of pay increase.”
Corridore recommends holding AMR shares.
American is ready to move forward “with any proposal that makes good economic and operational sense,” Missy Latham, a company spokeswoman, said in an e-mail. “It is unfortunate the APFA chose to make this announcement while we are in mediated sessions this week.”
AMR fell 8 cents, or 1.1 percent, to $7.01 at 4:15 p.m. in New York Stock Exchange composite trading. The shares have declined 9.3 percent this year.
Contract discussions resumed yesterday, about a month after the National Mediation Board ordered the two sides back to the bargaining table. Flight attendants had asked the board to find talks at an impasse and trigger a 30-day cooling off period that must come before a strike.
“With this vote, the company now knows without a doubt we are unified and willing to do whatever is necessary to get the contract we deserve,” Glading said.
Flight attendants last struck in 1993 for four days. Ninety percent of them voted today, a record turnout.
“That historic turnout and result provide APFA with unprecedented leverage and intent to follow-through, though tempered by remaining in mediation,” said Robert Mann, head of R.W. Mann & Co., an airline and labor consultant in Port Washington, New York.
Talks began in June 2008 and agreements have been reached on 73 percent of the issues in the contract. Flight attendants are seeking to recover $340 million in jobs, pay and benefits given up in 2003 to keep the airline out of bankruptcy. American employees agreed to $1.8 billion total in such concessions.
American has an annual labor “cost disadvantage” of $600 million, which is the difference between its labor expenses and what those costs would be under the contracts of competitors, Chief Executive Officer Gerard Armey told shareholders at the company’s annual meeting today in New York.
Other airlines, including United and Delta, lowered their labor costs during bankruptcy reorganizations.
American is trying to balance the interests of employees with its need to be competitive on a cost basis, Armey said.
American has reached tentative contracts with its mechanics and two smaller groups of workers represented by the Transport Workers Union. Those agreements must be approved by members. The airline remains in talks with ramp workers, dispatchers and flight school instructors, and with its pilots.
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