Commentary: American: Why Bill Didn't Need To Butt In

At first glance, President Clinton's Feb. 15 intervention in the dispute between American Airlines Inc. and its 9,300 pilots was a dramatic rescue that saved the country from a potentially devastating transport strike. And with the rare appointment of a three-member Presidential Emergency Board (PEB)--providing the advice of outsiders and 60 days of breathing room--the antagonists may finally break the deadlock.

The bad news is that Clinton's move--welcomed by passengers and politicians alike--may, in fact, needlessly prolong the agony of these contract talks. Sources on both sides believe American and its pilots were close to a deal as the 11th hour loomed. But like cameras in the courtroom, the threat of Presidential involvement may have changed the way participants behaved.

EASY OUT? Union sources say some Allied Pilots Assn. (APA) board members rejected a final compromise crafted by the federal mediator precisely because they believed there was little risk in doing so: The PEB, they reasoned, would halt a strike that was going to be costly to the company and to pilots. Union board members could avoid the carnage--and escape the heat for bringing back a contract that fell short of demands by hard-liners in their ranks. "They thought Clinton would save their bacon," says one union leader.

American also had reason to hang back. Some labor experts believe the airline will find a more favorable forum in the PEB, which American lobbied so hard to get. Says Brian A.Mayhew, chairman of the union's negotiating committee: "It was clear the company wasn't going to do any good-faith bargaining." American denies the charge.

The trick now is for the two sides to go back to the compromises that they were so close to making. The thorniest issue: the union's demand that only APA pilots fly new small jets that American wants to add to AMR Eagle Inc., its commuter-plane operation. Those pilots are represented by a different union. American insists that it can't operate the small jets economically outside of Eagle, where all employees are paid less than at American. If it doesn't order the new planes, American could fall behind the competition in the latest airline strategy: using small jets to serve thinly traveled routes.

Some union negotiators became convinced that American wouldn't yield on the small-jet issue--even with a strike. And they weren't likely to win the point before the PEB. So they began to consider other job-security tactics, including setting a floor on the number of American pilots. That idea froze when the clock ran out. But since American contends that the small jets would strengthen the main airline and it's willing to increase restrictions on how they'd be used, a job-security compromise should be close.

As the Feb. 15 deadline loomed, American also offered a 6.5% raise over four years and more stock options up front. That was short of APA's demands, but few believe that the pilots would strike over a pay-and-benefits package that's the best in the industry.

Whether American can avoid another 30-day countdown to a strike after the PEB issues its report in mid-March is uncertain. There's a risk that a divided union, with some leaders soon facing reelection, will only frustrate negotiations. But the divisions could help American, too. Already, some APA board members say they'll push to allow the membership to vote on the PEB's report. They and the company believe the majority of pilots would accept a compromise.

But there's another threat that should give American and its pilots pause before they squander the 60-day cooling-off period. If they can't resolve their differences in that time, Congress could step in and legislate a solution. Key lawmakers pushed for the President's involvement, and they could act again to avoid the wrath of the flying public. So the two sides ought to find a deal they can live with before they get one crammed down their throats.