An appeals court panel ruled that a lower court had jurisdiction to block unionized pilots at cargo and passenger airline Atlas Air Worldwide Holdings (NASDAQ:AAWW) and its Polar Air Cargo unit from engaging in work slowdowns, taking excessive sick days on short notice, and refusing to work overtime shifts during talks aimed at amending a collective bargaining agreement between Atlas and its pilots.
The unanimous July 5 ruling by a three-judge panel of the U.S. Court of Appeals for the District of Columbia Circuit is a setback for the union, which has said that Atlas, which flies cargo and passenger aircraft for e-tailer Amazon.com, Inc. (NASDAQ:AMZN), transport and logistics provider DHL, the U.S. military and a multitude of airlines, pushes its pilots to their physical limits in part because of the demands imposed by e-commerce delivery requirements. Atlas mostly operates what are known as “ACMI” services for its customers, meaning it provides the aircraft, crew, maintenance and insurance.
The pilots, represented by Local 1224 of the Teamsters union, argued that the federal district court had no power to enjoin the union in a 2017 ruling because the matter was a “minor” dispute under the Railway Labor Act, the 1926 federal law that governs airline and railroad labor relations. The appellate court judges disagreed with the union’s interpretation, however. They ruled that the process of amending a contract constitutes a “major” dispute under the Act, that the operational “status quo” must remain in effect until the process is completed, and that as a result the district court acted properly to block the union’s efforts.
Edward Gleason, a Teamsters attorney, said in a statement that the union was “surprised and deeply disappointed” by the panel’s ruling, and said it would seek a rehearing before the full appeals court. The panel “affirmed a status quo injunction without ever identifying the status quo that the union is said to have violated,” Gleason said. “That is the same fundamental mistake that the district court made, and it is one that we believe warrants reconsideration and reversal by the court.”
“It is unfortunate that we were compelled to take this extraordinary step of seeking the underlying injunction, but we needed to do so to protect the best interests of our customers, our employees and our company,” said Atlas Air President and Chief Executive Officer William J. Flynn, who will retire on January 1, 2020 and will become chairman on that date. John W. Dietrich, executive vice president and chief operating officer, becomes president and COO immediately, and will become president and CEO on January 1, according to Purchase, New York-based Atlas.
The dispute’s roots date back to 2011 when Atlas and the Teamsters reached a collective bargaining agreement. In the intervening years, Atlas’ business model and staffing demands changed significantly because of the growth of e-commerce, the panel noted. Its business, which since its inception in 1992 had mostly served international routes, began to focus more on domestic U.S. operations.
According to the panel’s ruling, the union, rather than holding Atlas accountable to the precise language of the contract, tried working with the company to relieve the “growing pains” caused by the shift in business. However, the pilots, increasingly frustrated that Atlas was manipulating the agreement with impunity, elected in January 2015 a new head of their executive committee, Capt. Robert Kirchner, who ran on a platform of strict contract compliance.
In early 2016, the union notified Atlas that it would seek to amend the existing agreement. Around that time, pilots were instructed to “fly to the contract,” airline labor lingo for strict adherence to the agreement. Pilots were encouraged to “think more carefully” before calling in sick or accepting overtime work. In addition, pilots were told to push back from the gate right on time, rather than at least 15 minutes early, or even earlier, as Atlas had wanted, according to the opinion.
Atlas viewed these actions as a deliberate effort to orchestrate a work slowdown to pressure the company into caving on contract talks. When Atlas couldn’t convince the union to cease the behavior, it sought an injunction from the district court.