BizWorthy: Does New American Airlines Labor Agreement Signal Improved Rankings?
After four years of fighting and strike threats, American Airlines and the union representing its mechanics last week reached an agreement on a new labor deal. The union calls the raises that range between 4% and 18%, signing bonuses, job security and other benefits under the agreement “the richest in the industry.”'
The agreement comes at a time when American, Charlotte’s largest carrier, ranks poorly in performance and customer satisfaction. For more on this and other business news we’re joined now by Tony Mecia of the Charlotte Ledger Business Newsletter for our segment BizWorthy.
Marshall Terry: Tony, several publications, including The Wall Street Journal, rank American at the bottom or near the bottom of carriers. With his new labor agreements, a big question is, will we start to see that ranking improve? And that's what you asked one industry analyst. And what did he have to say?
Tony Mecia: Well, he said that American's problems run a little bit deeper than just the problem it has had with its mechanics union. You might recall, Marshall, that over the summer there are a bunch of troubles that American had with its union -- they accused the union of staging slowdowns and a federal judge agreed, put in an injunction to stop union members from intentionally slowing down flights and that sort of thing. So it was a pretty rough summer and the performance measures over the summer were pretty dismal. A lot of delayed flights, missing bags, that kind of thing.
Since the judge's injunction in the fall, American has turned around the operation a little bit. It's still in the lower half of the performance measures when you judge it against some of its peers like United and Delta. But now with this labor agreement, I think there's a little bit of hope that maybe that will kind of continue. But the analyst I spoke with said, "Look, American's problems are deep-seated. They've been going on for more than a decade. And it's not going to turnaround overnight just because you have a labor agreement with your mechanics."
Terry: What kinds of problems did the analyst say American has had for so long in and how to fix them?
Mecia: Well, he said a lot of it has to do with management, a lot with scheduling. And so, it's a very complicated problem. You can't just kind of come in there and snap your fingers. You know, it involves really the buy-in of a lot of different employee groups. American will be turning toward negotiating now with its pilots. And so, you know, you have all these labor groups that are involved in it, and the management question ... So it's a complicated problem and one that American hasn't really been able to fix, really, to everybody's satisfaction.
Terry: Earth Fare, the Asheville-based grocery store chain with seven locations in the Charlotte area, has announced it's closing all of its stores. Now, this surprised many because up until very recently, Earth Fare seemed to be doing well, even opening its 50th location just last year in Charlotte's Steele Creek area. So what happened?
Mecia: You know, obviously, there's a lot of competition in the grocery industry, Marshall. For a long time Earth Fare, it had natural foods, organic food -- but that's a really popular area, and a lot of grocers are getting into that. You go to pretty much any grocery store and they now have a pretty good selection of organics, maybe not as wide as Earth Fare. At the same time, you have online companies, you can order some of these things online. You don't actually have to go to a physical store. That hurt. They also had, Earth Fare said in its bankruptcy filing this week, a lot of debt. They took on about $65 million in debt. Couldn't repay it. Obviously, you can't repay your debt, that's a huge problem.
And some analysts have said that maybe they grew too fast, that maybe they should have stuck to being a single grocery store or a small chain, maybe around Asheville, keep some of that local feeling, some that local flavor, instead of going into some of these markets like Charlotte that are very competitive.
Terry: Let's go now to Ballantyne, where a developer faced a huge backlash during a community meeting last week over plans for a townhome project. Why are people so upset?
Mecia: Yeah, the townhomes would be off of Blakeney Heath Road, which is behind Community House Middle School, kind of near the Morrison YMCA. You know, a lot of this has been building, I think, in Ballantyne and other areas of town, frankly, for a number of years. But I think especially in south Charlotte, there are a lot of concerns about the schools. And gosh, if you build 164 townhomes and you have a bunch of kids in there that are zoned for Ardrey Kell or Community House Middle School, those are those are schools that are already, parents say, that are bursting at the seams.
The traffic is another part of it on Blakeney Heath Road. The neighbors there said there were huge backups trying to turn off of Blakeney Heath at rush hour. And then there are also concerns about, you know, it's near a historic property, a historic farmhouse. Neighbors also say there are slave graves back there, possibly some Indian artifacts.
So there's all sorts of concerns just about some of the growth in that area and what adding 164 townhomes might mean.
Terry: Not far away, there's a much bigger project in the works to convert the golf course at the Ballantyne Hotel into apartments, shops and restaurants. But there doesn't seem to be much resistance to that. Why not?
Mecia: Yeah, it is a little bit curious that, you know, there's some opposition, pretty fierce opposition to this community meeting to 164 townhomes off Blakeney Heath Road. But Northwood Office is talking about putting in 1,000 apartments and 300,000 square feet of retail space in its first phase at what's currently the golf course behind the Ballantyne Hotel. Not as much opposition to that.
I spoke to a bunch of residents and they said they don't like the idea of a whole bunch more cars on the road and people, more parents with kids in school. But they do like the idea of some of the amenities in that project that include an amphitheater where you might have live music, more restaurants, more shopping, more things to do. So I think that sort of smooths over a little bit of opposition.
Terry: So it sounds like more amenities are OK, but just don't want more people living down there.
Mecia: Yeah, I think they would be happy to have all that stuff with no additional people. But it's a mixed-use development that's been proposed, that's moving its way through the city rezoning process. And I think signs look pretty good for that.