Labor negotiations over pilot contracts have reached a boiling point at the nation's two largest airlines, with the unrest already forcing American Airlines to cancel flights and strand thousands of holiday travelers.
Federal mediators have scheduled meetings beginning Monday with both American Airlines Inc. and United Airlines Inc. and their two pilots unions in a stepped-up government effort to keep the disruptions from spreading.
Because of the peculiarities of federal transportation labor law, the dispute could linger on for months without resolution, making it impossible for travelers to anticipate when labor peace might return to the airlines.
Negotiators for both pilots unions have linked their demands to a contract agreed to last summer at Delta Air Lines Inc., the day before Iraq invaded Kuwait. The contract made pilots at Delta, the nation's third-largest airline, the best paid in the industry, with top salaries of more than $150,000.
But now, with the airline industry facing huge losses resulting from the recession and the increased cost of jet fuel, the terms of the Delta contract may be unobtainable by pilots at competing airlines. Jet fuel costs have soared since the Aug. 2 Iraqi invasion, and air travel remains soft.
Even so, "the cry now at American and United is Delta-plus," said Jerrold A. Glass of J. Glass & Associates, an airline labor relations consulting firm in Washington.
What the pilots at American and United like most about the Delta settlement is that it sets a quicker course for new hires to get full pay through the compression of the two-tier wage scale from five to three years.
Presently, Delta pilots on the bottom tier earn on average 30 percent more than their counterparts at American and United. At the end of the three years, these pilots will be earning 70 percent more than lower-tier pilots at the other two airlines.
American Airlines Chairman Robert L. Crandall, in a letter two weeks ago to employees, raised the possibility that the pilots unions at American and United may join forces to press their demands. One rumor spread recently is that the two unions might collaborate to significantly disrupt air service at Chicago's O'Hare Airport.
American's 8,800 pilots, represented by the independent Allied Pilots Association, already are under a temporary court order barring them from engaging in any effort to slow down service.
A hearing to make the order permanent is set for Jan. 17.
This week, American took the extraordinary step of taking out full-page newspaper ads to apologize to customers for delays and cancelations it said were caused by approximately 500 pilots calling in sick each day.
"Frankly, we did a rotten job for the public over the holidays as a consequence of the sickout," said Robert Baker, senior vice president at American. If the disruptions continue, Baker said, "the rest of our employees are going to suffer."
American said it would reduce its schedule by approximately 4 percent to make sure it has enough pilots for scheduled flights.
As part of that cutback, the airline announced late yesterday it was dropping its service on the highly competitive Los Angeles-to-San Francisco route.
Contract talks at United haven't produced any visible disruptions so far. Although relations between the Air Line Pilots Association and United Chairman Stephen M. Wolfe have been strained as a result of an unsuccessful union attempt to buy the airline, negotiations so far have not been particularly rancorous.
United's contract negotiations have only recently resumed after more than a year in which the airline's future was in doubt as various bidders -- including the pilots union -- tried and failed to buy the carrier.
First the pilots union bid for the airline, then the unions and management joined forces, then the unions bid again without management.
The buyout bids failed to find financing.
Since the aborted buyout attempts, however, United has been under pressure from Wall Street to restore financial stability by settling its labor contracts -- all of United's union contracts are currently under negotiation.
But a source close to the negotiations said yesterday that the moment for a quick resolution of United's labor problems might be passing as negotiations drag on.
Right after the buyout failed, "the company was very hungry" for a settlement, the source said, "but their hunger meter is dropping."
An indication of United's desire to win a contract settlement is that the company has offered to submit unresolved issues to binding arbitration.
"In the company's view nothing could be more fair or more equitable," said Lawrence Nagin, United's senior vice president.
Just as the two unions have a mutual interest in the outcome of negotiations, so too do the companies.
If either airline reaches a settlement even remotely resembling the Delta agreement, it will put incredible pressure on the other to match it, according to airline company executives.
And for both, that could be a dangerous proposition at a time when the industry is going through a major shakeout.
To avoid that fate, American is holding up various offers, including a groundbreaking proposal that would give its pilots profit-sharing similar to management's.
Last November, American offered the pilots a wage package tied to its return on investment.
If the bonus were paid, the company said, American pilots would earn an additional 11.5 percent per year and be the highest paid in the industry.
American's highest-paid pilots currently earn $145,000 a year. The top pilot salary at United is approximately the same.