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AA pilots fined $45.5M
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April 15, 1999: 11:04 p.m. ET
Judge orders pilots union to pay dearly for defying his back-to-work order
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DALLAS (CNN) - Saying it made him "sick to his stomach," a federal judge hit the American Airlines pilots union Thursday with a $45.5 million compensatory damage award for contempt in staging a sickout against the airline.
U.S. District Judge Joe Kendall held the Allied Pilots Association in contempt in February over the job action that led to the cancellation of nearly 6,700 American flights.
Union officials say they will appeal. If upheld, however, the $45.5 million fine could wipe out the union financially. APA officials claim the union is worth about $38 million.
"We're obviously disappointed by the judge's award," APA President Rich LaVoy said. "We think we're a long way from this being fully adjudicated."
American Airlines spokesperson Andrea Rader said the airline takes "no particular pleasure" in the verdict.
Kendall acknowledged his decision might wipe out the union financially.
"A lot of very fine people are going to be hurt and hurt badly by this ruling," Kendall said in handing down the decision.
During a hearing over two days this week, Kendall heard from the union and American over how much each side believed the incident cost the carrier.
About 2,500 pilots called in sick during the 11 days of the sickout that stemmed from a dispute over the integration of pilots from Reno Air. Reno pilots make about half of what American pilots earn.
American claimed the entire sickout cost the company more than $225 million.
The contempt hearing, however, focused on the two-day period that began with Kendall's Feb. 10 back-to-work order and ending when pilots were cited with contempt and returned to the cockpit by the thousands on Feb. 12.
The airline contends it could have resumed normal operations more quickly had pilots returned to their jobs soon after the judge ordered them to end the sickout.
"We would have recovered the airline two days earlier," said Tim Ahern, American's vice president for operations and scheduling.
Charts compiled by the airline showed that the number of pilots calling in sick actually increased after the back-to-work order.
American witnesses estimated losses for that two-day period at $50.96 million. Expert witnesses for the union put the losses at between $1 million and $4.5 million.
In handing down the fine, Kendall rejected union estimates as "unbelievable" and sided with American.
As part of his ruling, Judge Kendall ordered the union to put up an additional $10 million by 4 p.m. Monday as a down payment on the damages. The union was ordered in February to place $10 million with the court in preparation of a fine.
Lawyers for both sides were asked to submit briefs on how the remaining $25.5 million should be collected and whether union officials should be held personally liable for the money.
In earlier testimony, witnesses for the APA said pilot work rules and contractual agreements prevented pilots from returning to work more quickly. But Kendall frequently interrupted airline industry analyst Robert Mann Jr. and at one point told him Mann's comments and analysis were unclear.
The union contended that the sickout was a response to the stress of the labor dispute over Reno Air. Union officials say, however, the $45 million fine is not likely to prompt another job action. The issue remains unresolved.
We're very disappointed the judge would come up with this number," LaVoy said. "If we're going to go forward, this is not the way to resolve the problems. It is a shame that we've come to this."
Labor peace at American has long been an issue. American spokesperson Rader said she hoped the award ends the dispute, which inconvenienced an estimated 670,000 passengers.
"They're victims of this as are we," she said. "We went to court to get the sickout to stop. We want to close this chapter and get on with labor peace."
American is a unit of Fort Worth, Texas-based AMR Corp. (AMR), whose shares closed down 2-3/4 Thursday at 66-1/4.
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