What American Airlines’ Bankruptcy Means For the People Who Fix Your Planes
Follow @GretchenMargFebruary 2, 2012, 3:28 pm ET
Yesterday, American Airlines’ parent company, AMR Corp., outlined its plan to cut about 13,000 jobs — or 16 percent of its workforce — as part of a restructuring plan following its November bankruptcy filing. The company says it wants to reduce employee costs by 20 percent.
The cuts will affect all types of employees, from pilots to flight attendants. A key sector that’s set to lose about 4,600 jobs is maintenance — the people who fix your planes. One facility at Alliance Airport in Fort Worth will be shut down entirely, leaving 1,200 mechanics out of work.
Until the bankruptcy filing, American was the last legacy carrier that did the bulk of its maintenance in-house: Its mechanics are employees of the airline as opposed to employees at independent maintenance, repair and overhaul facilities [known as MROs]. As other airlines, including Delta, United and US Airways, filed for bankruptcy over the last decade, they shifted more of their work to these less-costly facilities.
Since then, the economic landscape of airline maintenance has irreversibly changed. One-third of heavy maintenance was outsourced in 2003; by 2007 the number grew to be about three-quarters.
American Airlines said in a letter that it plans on “outsourcing a portion of our aircraft maintenance work,” though the details — where and how much of this work will occur — are unclear.
But for a time, “American was very actively bucking an industry-wide trend,” Bill McGee, a consumer advocate and writer, told FRONTLINE in a phone interview a few weeks ago. He says that American’s reluctance to follow the industry trend “all went back to one person,” former CEO Gerald Arpey. McGee, who visited American’s maintenance facility in Tulsa for his upcoming book Attention All Passengers, says that the faith employees had in Arpey was striking. He writes about one Tulsa employee who said he was praying for Aprey’s health,”since it was widely known that the head of American felt strongly about keeping maintenance in-house.”
But employees’ optimism shifted when Arpey abruptly retired because he was opposed to the bankruptcy filing. He felt he had made certain commitments to his employees and shareholders, but acknowledged that his position made it difficult for his company to compete: “Our bankrupt colleagues all made net profits, good net profits last year, and we didn’t. And you can mathematically pinpoint that to termination of pensions, termination of retiree medical benefits, changes of work rules, changes in the labor contracts. That puts a lot of pressure on our company, not to be ignored.”
Thomas Horton, who succeeded Arpey as CEO, said after the bankruptcy filing in November that reductions in jobs and flights were likely. At the time of the filing, American had about 22 in-house maintenance employees per aircraft in 2007-08; Delta was at 12; JetBlue at 3.4; and Northwest at .8. At that time, American employed about 15,000 maintenance workers, compared to JetBlue’s 471.
But there’s a key difference between American’s mechanics and those at some independent MROs: Airframe and Powerplant licenses. Many of American’s current mechanics have them, and they’re the FAA standard for fixing planes. For example, according to McGee,about 4,700 mechanics at one facility with more than 6,000 employees in Tulsa, Okla. are FAA licensed.
As FRONTLINE found in our report Flying Cheaper, the number of workers with this type of license tends to decrease at independent facilities. At ST Aerospace Mobile in Alabama, for example, we discovered that about two-thirds of its nearly 1,200 mechanics are unlicensed. Under FAA requirements, the person who signs off on the work must be licensed, but the people doing it don’t have to be. The numbers are even more dismal overseas: Fewer than 4 percent of the mechanics hold a FAA license of any kind — although their mechanics may substitute sufficient training or expertise for an FAA license.
Whistleblowers at ST Aerospace Mobile told us about numerous safety issues at the plant, ranging from incomplete work to mechanics with a limited knowledge of English. A recent report from WFAA out of Dallas/Fort Worth, echoed some of our findings.
It’s important to note, however, that American’s move to get out of the red comes at a time when air travel is remarkably safe. “2011 was among the safest years we’ve had in aviation,” William Swelbar, a research engineer at the Massachusetts Institute of Technology’s International Center for Air Transportation, told FRONTLINE. And this is “at a time when more work is outsourced than ever.”
If American’s proposed plan goes forward — the unions have vowed to fight it — some communities will likely feel the impact right away. While any cuts will first affect the actual employees, areas where there’s been heavy investment in maintenance facilities will also shoulder the burden, according to James C. Little, the president of the Transport Workers Union, which represents American’s airline mechanics and other skilled workers. In the Tulsa area, for example, American Airlines is the second-largest non-government employer. It’s estimated that facility will lose 2,100 jobs, which is about 31 percent of its workforce.
“I’d hate to see our skilled workforce be diminished in the U.S.,” said Little last week in a phone interview. “The professionals in the air are only as good as the professionals on the ground.”
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