Wednesday, February 12, 1997

American continue talks with mediator

By KATIE FAIRBANK / AP Business Writer

WASHINGTON (AP) - As American Airlines and its pilots' union kept up negotiations aimed at heading off a weekend strike, some veteran pilots were considering early retirement to avoid the turmoil of a shutdown.

The Allied Pilots Association and American's parent company, AMR Corp., met separately with a federal mediator Tuesday; little progress was reported.

"To date, we don't know what the company's response is on anything," said union president Jim Sovich. "We're sitting here dancing in the dark, trying to ferret out what they want."

The company declined to comment on the negotiations.

If an agreement is not reached by midnight Friday, the end of a federally mandated cooling-off period, the pilots say they will strike and the airline says it will shut down, putting about 90,000 employees on unpaid furlough and grounding its fleet.

As the deadline approaches, pilots close to the mandatory retirement age of 60 have been calling the company, the union and financial planners to consider their options. At the same time, federal investigators are examining threats made against the pilots.

No one has been harmed.

Pilots walking informational picket lines passed around copies of a threatening letter they said had been placed in an airplane log book. The letter, loaded with misspellings, told pilots to keep a close watch on their families.

"There hasn't been a lot," Sovich said about the threats. "But it only takes one bad one."

Sovich said he notified the FBI and the Federal Aviation Administration. The FAA stepped up its scrutiny of American late last month, when a strike appeared likely.

The company also reported an increase in maintenance problems, which is typical in a labor disagreement. American spokesman John Hotard said two aircraft were taken out of service Monday at JFK Airport in New York because of scratches made on cockpit windows.

"Things happen, but they are not safety related," Hotard said. "We don't condone these things. I don't think anyone will do anything to affect the airworthiness of an aircraft."

Sources familiar with the dissent, speaking on condition of anonymity, said much of it is coming from among about 27,000 mechanics, fleet service clerks, dispatchers and other employees who could be furloughed by a strike.

A little more than a year ago, those unionized workers agreed to a six-year contract freezing their wage scales for three years in exchange for job security.

Some pilots are also unhappy. The company said at least 35 pilots who are nearing the mandatory retirement age of 60 will retire instead of face a strike. Many others are considering retirement.

"That's not necessarily sound financially, but it's an emotional decision," said Neal Tourdo of the investment firm Pritchard, Hubble and Herr Inc., which specializes in handling airline pilots' money.

He said the thinking is, "If you're sitting on a nest egg why go through the stress?"

The airline's retirement package is considered the best in the industry. Between a fund to which they contribute themselves and their pension plan, the average lump-sum payout to a pilot who retired in 1996 was $1.9 million.

Union spokesman Wally Pitts played down the possibility of early retirements, saying they were driven by the soaring stock market, not the labor situation.

"People have been retiring early all fall," Pitts said.

Retirement pay has not been one of the primary contract points.

American and the union, which represents 9,300 pilots, have been arguing over pay and who will fly a proposed small jet service.

The pilots, who have not had a basic wage increase since 1993, are asking for raises more than double what the company offered in a tentative contract, voted down by the union last month.

American Airlines pilots earns an average $120,000 a year.