An American Airlines flight attendant forwarded me a change.org petition, which merits discussion from a perspective of legality and equity. Should flight attendants who accepted an early exit package receive the same favorable terms as their colleagues who held out longer? Or was the American Airlines VEOP package fair and final?
VEOP: 800 American Airlines Employees Acted Too Soon
In March, 800 flight attendants participated in a Voluntary Early Out Program (VEOP). This was in the early stages of the pandemic hitting the United States and as American Airlines saw revenue rapidly declining, it hastily prepared an offer to reduce its workforce.
Over a two-week period, in which the deadline was extended twice, employees were warned that this was the last and best final offer and that if they did not accept the termination package, their furlough packages would not be nearly as generous.
Two weeks later, though, American Airlines announced it would receive CARES Act funding and all employees would remain on the payroll through October 1, 2020. With a little bit of breathing room, American Airlines sat down with union officials and crafted a new VEOP that was far more generous than the first round, adding $100-150K in lifetime medical benefit and eight positive space tickets.
The petition, which appears on change.org, argues that as the beneficiary of government funding, AA should grandfather in the 800 employees into the same more generous package.
“We were the first to sign, hearing their plea, believing they had nothing more to offer. Now that they have received government help, we would like them to share it with our group. Delta and United Airlines have offered a very similar package to their flight attendants and have now grandfathered those who retired earlier in the year and we hope our airline will do the only right and ethical action and give the same medical reimbursement to us.”
Legal Vs. Equitable Remedies
Without reviewing the contract, it seems futile to make arguments based upon contract law principals. Maybe the employees could say the contract was entered into under fraudulent inducement. This occurs when a party tricks another party into signing a disadvantageous agreement by using fraudulent statements and representations. Since fraud negates the “meeting of the minds” at the heart of a valid contract, the injured party can terminate the contract or seek other damages.
But I don’t think American Airlines deliberately lied to employees in March. At the time, CARES Act funding was not a done deal and demand was rapidly collapsing. It would be difficult to prove that AA did not consider the exit package the last and final offer at the time.
But there are issues of equity at play here. I’m not even talking about the common law body of law known as equity, since equitable relief generally requires an adequate remedy at law.
Instead, I think there is something to the paragraph in the petition I quoted above. Some employees may have bailed early for selfish reasons, but many did so because they sincerely took AA at its word that it was insolvent, they would lose their job anyway, and this was the best way to help both parties.
CONCLUSION
The contract was fair, in the sense that both parties voluntarily entered into it at the time and received a bargained for exchange. I see no valid legal basis upon which to challenge the exit package. But if AA is willing to reward those who refused the call of duty and held out, I hope that it seriously considers offering the same benefits for those who chose to bow out earlier and now face a very uncertain new world. I signed the petition. It is worth asking.
image: American Airlines
Doug Parker addressed this wirh employees on Thursday. His response was AA cannot afford it. He says it would cost $100mm though I can’t make his math work.
$100mn for 800 employees?
800*$100K RHRA is 90==80 Million right there. 6400 round trip, flexible, upgradeable confirmed tickets + additional admin costs make $100m entirely believable, though probably on the high end of a reasonable estimate.
I’m a firm believer in as long as everybody gets what they agreed on originally, nobody is entitled to anything extra. Unfortunately, especially since these employees are now separated from the company, it makes zero business sense for AA to spend $100m (or whatever the actual number is) to enrich their retirement when they have no obligation to do so, and when their original VEOP was already a big step up from “typical” retirement benefits they would otherwise receive.
You go to the store, see an item you like on sale that’s discounted and marked final sale, like the price, and purchase it. You go back a week later and discover the item is still on sale, and the price is even lower than the week before! Would you feel obligated to a refund of the difference, even though you were perfectly happy with the price you initially paid? The parable of the workers in the vineyard comes to mind.
Of course in the anecdote above, the store may choose to honor the lower price and refund the difference as a customer service gesture for a regular customer that will continue to shop there in the future. But in AA’s case, for permanently separated employees, it makes zero sense and, for many active employees that are hoping to have as many jobs saved as possible, is a completely foolish way to squander away a big chunk of money when times are certainly lean.
I don’t imagine future potential health care spend gets booked at full value in the present?
Regardless, it’s a liability that needs to be factored in. Offering everybody 100-150K in RHRA obviously doesn’t cost that much up front, but it’s a significant liability that could play into how many of the current employees AA can afford and how AA’s balance sheets look in the coming months and years (which were already quite leveraged).
There were 2 offers in May…one offer was leaving May 1, 2020 and the other was remaining a active FA for 12 months, leaving May 1, 2021
Michael you need to shut up! You are a stupid junior employee that is getting things we fought for you little punk ! I can’t stand your generation because you don’t know anything about history!
If their union was capable, they would have addressed it during the negotiation for the new exit package.
Agree with this. Seems the union let them down more than the company. Why wasn’t this point of view presented by the wizards above, including Leff? Their brains have turned to mush during this thing. Too much time with masks on.
Gee..if you want to complain about AA contracts,go back to the TWA merger when American trashed retiree benefits and stapled TWA employees to the bottom of the seniority list.
Parker is a disgrace! He said to the employees in April “This is the best and final offer” for those wishing to accept early retirement. Within 3 months a better offer was made and now employees who accepted the April offer feel Parker lied to them.
When I makee a deal, sign a contract, buy a ticket, that’s it. Done.
Why special treatment for FA’s?
I don’t think it can be compelled, but I do think AA offered a bit of a bait and switch.
I think all Airline employees should be protected especially at American Airlines set American Airlines during this Care Act that they wanted kosher with JetBlue now and I don’t know what that’s about this changes the whole picture of all Airlines employees doing this
This article is not factual of what the actual events were. There were more than two changes over a few day period. You could’t Keep up with the changes. AA intentionally, in multiple emails to multiple people said multiple sentences saying this would be the best it would be and they doubted there would even be another offer. AA, in emails, also said if there was by chance another offer, they would revisit the May 1st offer. This was not a March offer.
Within hours of closing out the offer for May 1st, AA and the Union presented another offer where employees didn’t even have to come to work and they would pay them.
Deceptive to get employees to sign the May 1st offer is an understatement.
I’m happy to update with relevant details. Please provide specifics.
Most of the 800 flight attendants are still attached to the company for 1 year and are required to pay union dues. Wouldn’t you feel cheated?
I’m an AA Flight Attendant that signed May 2020 beliving that this was the final offer…the best offer and there would be no other offer! Let’s not forget the pay cuts we took years ago that lasted for years to save US Airways now American. Changing work rules…long days short nights etc the list goes on and on. We deserve to be grandfathered in. If United and Delta backdated to January of this year then why can’t American Airlines do the same for their Flight Attendants? We have been kicked to the curb after giving this company so much. Enough is enough Mr. Parker. We deserve better and you know it.
Sincerely,
Nedra Bottieri
Nedra This is what Parker does. With the last early retirement package (2014) many Flight Attendants were promised (in writing) if they accept the early retirement package they will continue with D2 travel. Parker came from USAIR and within 6 months downgraded this promised benefit. It has been said many before do not trust Parker. I wish you the best.
Sorry but no. Just no. Instead of signing some stupid petition maybe I’ll get out my violin. AA has some of the most surly bitchy FAs I have ever encounter who often abuse their power. What comes around goes around. Have fun finding another job.
Yeah nah.
Maybe there’s a moral/goodwill argument. If I was in their shoes I’d certainly fight for it. But those who took early package had some benefits that others might not get (Ie the Deal may go away, or the pandemic may have died down, and attendants could get a new job and keep the benefits). There was consideration for taking the early deal.
I have no love for them after the mask debacle. Sink or swim people. Maybe you guys should have done more for your customers when you had them, namely standing up for them in the face of new bs rules.
The comments about the flight attendants on here are very disappointing. Many of the flight attendants who took the voluntary exit have been flying for 20+ years. They’ve been with the airline through frequent and drastic changes like, bankruptcies, mergers, and huge pay cuts. And then of course the unfortunate events of 9/11 and COVID-19 and all of the changes that go with it.
With all of the crap they’ve had to deal with in their career, I think they at least deserve to walk away with something decent. I signed the petition and it look about 15 seconds. It couldn’t hurt, right?
Thank you 32 years here but only 52 but left because new flight attendants don’t know history of airlines and don’t know medical etc.. too busy on social media, but appreciate your comments
Do the right thing, Doug.