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American Air's Flight-Attendant Accord Will End 2-Tier Wage Carrier Pioneered

American Air's Flight-Attendant Accord
Will End 2-Tier Wage Carrier Pioneered
By Francis C. Brown III | The Wall Street Journal | December 24, 1987

FORT WORTH, Texas--American Airlines' surprise last-minute contract settlement with its flight attendants union eventually abolishes the two-tier wage scale that American pioneered.

The tentative pact between American, a unit of AMR Corp., and the Association of Professional Flight Attendants was reached only three hours before the flight attendants were set to walk off the job in a two-day "solidarity" strike early yesterday morning, which threatened to disrupt travel plans for thousands of fliers during the busy Christmas season.

The new pact ends one of the most bitter labor battles in the company's history and marks a significant victory for Patt A. Gibbs, the feisty union leader whom American insisted had lost the support of most of the union's 12,000 members.

Both sides said they wouldn't release specific details of the agreement until next week, when they finalize the language of the new contract.

The five-year agreement still must be approved by the union's board and ratified by its members. Ms. Gibbs said the board has given the contract an "unofficial unanimous vote" and said she is confident it will be ratified in balloting next month.

Ms. Gibbs yesterday claimed victory in her more than yearlong battle to abolish the company's two-tier wage scale, which pays flight attendants hired since 1983 significantly less than senior flight attendants.

Under the new pact, flight attendants hired at the lower scale will jump to the higher scale in the ninth year. Ms. Gibbs had been seeking a five-year merger of the scales.

The contract that American unilaterally imposed on its flight attendants June 1 merged the scales in the 15th year, but Ms. Gibbs had termed that merger of the scales "illusory." The contract also will give attendants lump-sum payments or percentage increases, or both, and will eventually evolve into a single-scale contract, Ms. Gibbs said. "That was our primary goal," she said.

American was the first airline to establish a two-tier wage scale in 1983 as a way of bringing its labor costs more in line with low-cost carriers such as Continental Airlines, a unit of Texas Air Corp. The idea was widely copied by other airlines, but has begun to crumble in the industry's recent contract renegotiations.

Since American, the pioneer of the idea, wasn't able to hold the line on a strictly two-tier system with either its pilots or its flight attendants, experts predict that other carriers might also be forced to move back toward a single pay scale in upcoming negotiations.

Both sides said they were "very pleased" with the agreement, although they continued to sharply disagree over how many flight attendants would have supported a walkout.

American had predicted less than 10% of its flight attendants would walk off the job, while Ms. Gibbs insists that more than 50% were prepared to support the walkout. She said the company made last-minute concessions on merging the two scales as well as on retirement benefits and work-rule changes, in the hopes of averting a strike.

American, however, insisted it was prepared to take a strike and staff its flights with replacement flight attendants. "We didn't cave in," an American spokesman said. "There was some movement on both sides."

In composite trading on the New York Stock Exchange yesterday. AMR shares fell 50 cents to close at S37.375.