American executive says market will dictate wages, benefits

Mar 9, 2010 — Fort Worth Star-Telegram

Andrea Ahles

Mar. 9, 2010 (McClatchy-Tribune Regional News delivered by Newstex) -- When asked about its current labor negotiations, American Airlines (NYSE:AMR) ' chief financial officer Tom Horton said eventually the market will dictate what labor wages and benefits are.

Speaking at the J.P. Morgan (NYSE:JPM) Aviation, Transportation and Defense Conference, Horton said American's objective is to have competitive costs after this round of contract negotiations. He was asked two labor questions by analysts, who wondered what the timeline might be in labor negotiations, particularly with the flight attendants union which has made noise about wanting release from mediation, the first step towards a possible strike.

Here are some of Horton's comments:

"Our objective as we have said to all of our union groups is to ensure when all of the dust settles from this negotiations that our costs are competitive because that is in the interest of all of our stakeholders including our employees."

"We have three major work groups, the pilots, the flight attendants and the Transport Workers Union who represent our mechanics and our fleet services people among others. Each of those is in various stages but each of those are in mediation which is normal in the labor negotiation process. Mediation takes a long time. If you look back at the history of labor agreements in the industry, it takes two to three years to get a contract. We have been at this since 2008. The contracts all became amendable in May of '08 and so they are in various stages."

"With respect to the pilots union, I think we have stated our view, our objective is to have a competitive cost structure when we come out of the other side of this round of negotiations. It's fair to say we're far apart with the pilots union."

"With the flight attendants, we have negotiated some aspects of the contract but there are other aspects that have yet to be negotiated. And the same really goes for the Transport Workers Union.

"It's a process that is under the purview of the mediation board at this point and we'll have to wait and see how that plays out...We are negotiating in good faith...It is our objective to see our people fairly compensated and well-compensated but also that the company is competitive and strong for the long term."

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