American’s CEO sides with airline workers against wall street

In the three years since he merged US Airways with American Airlines, CEO Doug Parker has been a preacher of sorts, arguing that it’s a new world order for US carriers and that the bad old days are over. Airline investors, which now include billionaire Warren Buffett, have been leery of this optimism, given the industry’s history of good times begetting bad behavior on worker wages and flight capacity. The latest battle between labour and capital is in Texas, with American Airlines spooking Wall Street yet again by increasing pilot and flight attendant salaries an average of 6.5%, or by a total of $930m through 2019. “This is a seminal event, and represents the first, credible potential blow to our long-held ‘it’s different this time’ investment thesis,” JPMorgan Chase & Co. analyst Jamie Baker wrote Thursday, calling himself “troubled” by the airline’s “wealth transfer of nearly $1b” to labor groups. Responding to skeptical analysts the day after the pay raise, Parker described the higher wages as a correction to years of “incredibly difficult times” for airline employees. He also adopted a different twist in his long debate with investors: Every bad thing airline owners have feared since the Great Recession has actually happened and profits are still strong. “All the things that I think people were worried about, we’ve done, and we still have a business that is producing returns like it’s never seen before,” Parker said Thursday, citing a glut of new flying that occurred when fuel prices plunged in 2015, labor wage hikes, and volatility in fuel prices, which began rising last year.<br/>