A growing group of American Airlines flight attendants is backing a request to the US Department of Justice for an investigation into secret meetings, collusion and nepotism which they claim defrauded flight attendants; cheating them out of their pension contributions, retiree health benefits and profit sharing.
Candlelight Dinners and Private Jet Flights
We had published a story a few months back describing how APFA President Laura Glading had betrayed her membership and an investigation by the DOJ could finally uncover more details of a very sinister pattern.
The Letter to the DOJ:
(The letter was written by a group of American Airlines flight attendants and is being sent to the DOJ with signatures collected in-person and ONLINE)
William J. Baer, Esq, Assistant Attorney General, Antitrust Division
Dear Mr. Baer,
I am writing you today as a flight attendant with American Airlines represented by the Association of Professional Flight Attendants (APFA) with the intent of filing a complaint.
As you know, American Airlines merged with U.S. Airways last year. As part of that merger, APFA President Laura Glading agreed to an expedited negotiations process with U.S. Airways CEO Doug Parker to reach a single-carrier contract with the newly formed airline. That agreement, initially referred to as the “Bridge Agreement,” was later called the Conditional Labor Agreement (CLA), and it outlined how the APFA would negotiate with the newly merged airline. Last December the CLA’s resulting tentative agreement failed to ratify because it fell short on the promises made by American’s newly elected chairman, Doug Parker. It was touted as being “industry leading,” but fell far short of that mark.
What flight attendants didn’t realize at the time was that the CLA was the result of a secret meeting hosted by U.S. Airways Treasurer Tom Weir at a restaurant in Manhattan. Why this matters is because Mr. Weir is Laura Glading’s cousin. The dinner meeting included Doug Parker, U.S. Airways President Scott Kirby, Tom Weir, Laura Glading, and two of Ms. Glading’s advisors. Why this is of importance is because Tom Horton, as president of AMR, was having merger talks with Doug Parker prior to AMR’s bankruptcy filing in November of 2011. These merger talks continued when Mr. Horton ascended to the position of CEO and continued even though Doug Parker was negotiating with American’s unions.
The reason I’m contacting the DOJ is because I strongly believe that Tom Weir created a conflict of interest when he brokered a meeting that led to an agreement that placed fixed labor costs on American’s flight attendants by denying flight attendants the opportunity to negotiate a fair and equitable contract based on (1) American’s performance, and (2) competition in the open marketplace. In essence what Tom Weir did was guarantee Doug Parker that he would have the lowest flight attendant labor costs amongst his industry peers. As a result, Mr. Weir would witness the expansion of his own position as treasurer at U.S. Airways to that of treasurer at American Airlines Group — a company three times in size.
The APFA would have members believe that Laura Glading’s cousin, Tom Weir, was an insignificant player in the deal that created the world’s largest airline. But as you can see from this photo, Mr. Weir is a significant player in the industry. Here he is discussing European bank debt at the 2012 ISTAT Americas Conference held in Scottsdale, Arizona. From the Aviation International News story “Euro Debt Crisis Limits Airline Finance Options.”
It’s important to note that the CLA violated APFA’s union constitution because the Constitution mandates that APFA’s representational bargaining authority is between American Airlines flight attendants and their “employer.” Laura Glading made an agreement with Doug Parker, the CEO of U.S. Airways, a non-employer, and therefore had no constitutional authority to do so.
The CLA also violated the APFA Constitution because it (1) made changes to rates of pay, benefits and work rules, which required membership ratification, and (2) denied members the right to vote on changes to rates of pay, benefits and work rules that would take effect under the agreement reached through binding arbitration. This will be the second time in eleven years that American’s flight attendants have been denied the right to ratify their collective bargaining agreement — the first being in 2003.
In summary, what I allege is that Tom Horton, Doug Parker, Scott Kirby, Tom Weir and Laura Glading created a form of price-fixing by setting fixed labor costs on American’s flight attendants by means other than traditional negotiations. They did this by deceiving the flight attendants at American by telling them repeatedly that they had no real choice in the matter other than to support Tom Horton’s reorganization offer for fear of a worse consequence if they didn’t. The tactic closely resembles “Boulwarism,” only in this instance the company and union were BOTH promoting the take-it-or-leave-it option using the threat of a worse outcome if flight attendants said NO. This would be the third time American and APFA used this tactic on flight attendants — 2003, 2012 and 2014 — and in 2003 and 2014 the flight attendants were denied ratification. The last uninfluenced contract ratification was 2001.
It wasn’t until after the failed ratification that American’s flight attendants truly became aware of Mr. Weir’s involvement or of his family relationship with Laura Glading. Had Mr. Horton and Mr. Parker discussed ticket prices, this would have been a clear cut violation of antitrust and would have led to a DOJ investigation and possible fines. Because it was labor costs, the issue seems to have gotten lost in translation. The question I ask is: How can two airline CEOs collaborate on ways to create fixed labor costs in an effort to undermine the competition and not discuss ways to set fixed ticket prices in an effort to do the same?
American and APFA both initially asserted that the binding arbitration clause was meant to protect flight attendants in the event the company stalled at the negotiating table. As the voting commenced and members began questioning why the contract was far from being “industry leading,” the company and union both began touting binding arbitration as a detriment rather than the protective layer it had been hailed as only weeks prior. They literally did a one-eighty! Now the company and union both claimed that a NO vote would guarantee flight attendants a contract valued at $81 million (42%) less than the contract that was negotiated. This is the only example I know of where arbitration led to significantly less wages than was offered by the employer originally.
Apparently the company and union never envisioned a NO vote, and both felt that by using the threat of members getting less that this would motivate members into voting YES. When threats and intimidation failed, the company agreed to throw in the additional $81 million that both the company and union adamantly asserted would be lost due to a NO vote. This gesture was done simply because the company and union had no other option for cleaning up the mess. To rephrase, the constitutional violations that led members to a new contract would have been deemed moot once members ratified the end result. When ratification failed, the company and union scrambled to hide the fact that the members’ rights were trampled and hoped that no one noticed by offering flight attendants money that theoretically wasn’t negotiated.
To make matters worse, American had to throw in an additional 4% because they realized that the 1/15/15 pay check was going to be virtually the same as the 12/15/14 pay check when the rise in benefit costs were factored in. Simply put, the raise would have been zilch and the members would have been angry. Knowing that this entire dilemma was the result of collusion and nepotism, the company and union faced a quagmire which could only be solved by offering flight attendants money that wasn’t negotiated. Oddly enough, the 4% raise only applied to unionized employees who had a new contract — the flight attendants — pilots, mechanics, ground workers and agents were without a new contract and got nothing. In twenty-five years with American, I’ve never seen management offer employees money that wasn’t negotiated. This was an absolute first.
It is my firm belief that these collusive actions along with the violations to the members’ union constitution gave American an unfair advantage over United and Delta because they placed artificial labor costs on American’s flight attendants and forced them to accept a non-ratified contract for an unspecified duration while forcing United and Delta to have to compete with American’s flight attendant costs through traditional channels of negotiations. One could argue that Delta can impose wages and benefits as they see fit, but the argument to that would be that in doing so it would drive the members to organize — something Delta just doesn’t want.
The fact that Delta flight attendants are nonunion — an anomaly in the industry — stems from the fact that Delta management pays their flight attendants above their unionized counterparts. Yes, Delta and American share similar wages. But this means nothing when we consider that a top wage Delta flight attendant received $9,000 in profit sharing whereas American’s top wage flight attendant received ZERO. (I should note here that Tom Horton gave flight attendants profit sharing as part of their reorganization contract (LBFO), but Laura Glading singlehandedly gave it away during her secret meetings with Doug Parker (again, a non-employer).
In closure, I am calling on the DOJ to investigate whether the process by which the CLA and subsequent single-carrier contract were reached in violation of antitrust. While flight attendants are certainly excited about the historical success of the newly merged airline, that success should include them, not marginalize them by means of a strategy designed to place them at a complete disadvantage at the negotiating table — nepotism and collusion.
To simplify my complaint, these are the bullet points of the key issues to help your office in its review:
* Summer of 2011: AMR President Tom Horton and U.S. Airways CEO Doug Parker were having merger talks prior to AMR’s November 2011 bankruptcy filing
* CEO Gerard Arpey hires bankruptcy counsel and then announces bankruptcy.
* President Horton rises to Chairman as Gerard Arpey steps down and merger talks with Doug Parker continue.
* U.S. Airways Treasurer Tom Weir arranges a dinner meeting between Laura Glading, Doug Parker and Scott Kirby at Oceana Restaurant in Manhattan.
* At the meeting, Doug Parker and Laura Glading agree that Ms. Glading will accept Tom Horton’s reorganization proposal to the flight attendants as dictated, and also agree to expedited negotiations once Mr. Parker becomes CEO of American Airlines Group. They also agree that in the event of an impasse or failed ratification that the parties would submit to binding arbitration with the economic ceiling for the resulting contract to be placed at the “industry aggregate” of United Airlines and Delta Airlines and that the aggregate would be determined by the company.
* Laura Glading accepts Tom Horton’s reorganization proposal as dictated telling flight attendants that if they vote NO that they’ll be forced to work under the 1113 Term Sheet. Ms. Glading then urges flight attendants to ratify Tom Horton’s offer based on alleged promises made by Doug Parker (a non-employer) that their losses would be recouped in a post-merger contract.
* Flight attendants accept Tom Horton’s reorganization proposal referred to as the “Last, Best & Final Offer” (LBFO) because they’re told they have no choice other than the 1113 Term Sheet.
* Laura Glading agrees to forgo profit sharing as part of the new contract in an agreement made with Doug Parker (a non-employer).
* The pilots vote NO on their LBFO and go back to the negotiating table whereby they negotiate an enhanced offer — the LBBFO.
* The flight attendants learn of the secret meeting hosted by Ms. Glading’s cousin, Tom Weir, by reading an interview with Ms. Glading in the Dallas News.
* The flight attendants fail to ratify the tentative agreement reached through the process outlined in the CLA.
* American tells flight attendants that they must go to binding arbitration even as the company extends negotiations with the pilots two times in an effort to avoid binding arbitration.
* Binding arbitration delivers a contract valued at $81 million less than the contract offered by American.
* Doug Parker agrees to give the flight attendants the $81 million.
* Doug Parker offers an additional 4% wage increase to unionized employees with a new contract (just the flight attendants).
* Flight attendants wonder how they could be so shortchanged in the face of historical profits.
Your prompt attention in this matter is most appreciated.