by Adam Bryant - 02/05/97 - The New York Times Late Edition - Final - Page 4, Column 2
With a week and a half to go before a possible strike by pilots at American Airlines, the war of words - or, more accurately, numbers, heated up yesterday between the company and the pilots union.
In a presentation to Wall Street analysts, leaders of the union, the Allied Pilots Association, drew a clear line in the sand. The pilots said they were willing to make work-rule concessions worth $212 million in savings to the company over five years. The pilots' proposal also includes a 3 percent raise this year as well as in 1998 and 1999, and a 2 percent raise in 2000.
The also want 7.25 million stock options granted to them at $10 below market value, and to prohibit the company's American Eagle subsidiary -- at which pilots are represented by a different union and now fly only turboprops -- from flying small jets. The union said such a shift would cost their members jobs.
The pilots said their proposal would increase American's total pilot compensation costs by 8.9 percent by the year 2001.
The cost of giving them what they want, the pilots said, will most likely be exceeded by the loss of business American is going to suffer even if there is no strike; the threat alone is prompting many travelers to book on other airlines. "If American's profit slows, it won't be the result of this contract," said Adam Blumenthal, a financial adviser to the union.
The leader of American's pilots union tentatively agreed to a contract last fall, but it was voted down by members last month. If American accepted their new proposal, it would cost the company an additional $285 million, the union said.
Chris Chiames, a spokesman for American Airlines, said yesterday that the company had not had time to study the pilots' analysis.
But, he said, "no matter how you add the numbers, the contract that they rejected, by their own admission, would have maintained their status as the best-paid pilots in the industry.
Although American and its parent company, the AMR Corporation, have generated strong profits of late, the airline has a lot of ground to make up, Mr. Chiames said. Since 1990, the company's net profit totaled $136 million, while pilots received $136 million in profit sharing, he said.
"Their talk of not sharing the fruits of a good year is just overshadowed by the realities of their compensation and our very generous profit sharing," Mr. Chiames said. The airline also said yesterday that according to a study it had conducted, a 60-day strike would cost the United States economy $5 billion.
Kevin C. Murphy, an airline analyst with Morgan Stanley, said he saw some flaws in the pilots analysis. For example, he said, their comparisons with other airlines did not account for the savings and flexibility that airlines like United and Delta enjoy from their United Shuttle and Delta Express divisions.
Shares of AMR dropped $1.25 yesterday, to $80.50, on the New York Stock Exchange, on a day he stocks of other carriers also fell.
Efforts to predict the likelihood of a strike occurring are little more than guesses at this point. The pilots plan to make their presentation to the airline on Thursday. The two sides then go into so-called super-mediation talks on Monday. Under deadlines that govern such labor disputes, a strike could happen as early as Saturday, February 15.
"The atmosphere is one of mistrust on both sides," Mr. Murphy of Morgan Stanley said. "Unfortunately, that is the kind of atmosphere that forments a strike."
