Section Fivean economic nature but also some were related to perceptions
that engineers were not treated well by the company’s
management.^47 In addition, one strike and one “sick out” by the
pilots at American Airlines also were related to their perceptions
of an unsatisfactory labor relations environment, a
confrontational management style by the previous CEO, and
perceptions that management was attempting to outsource
routes that should be flown by American Airlines pilots.^48
Although the first strike lasted only a matter of minutes before
it was stopped by U.S. presidential action, the second “sick out”
was very costly for the company and for passengers whose
travel arrangements were disrupted by the strike. (Airlines are
covered by the Railway Labor Act of 1926, which has a number
of provisions that limit efficient conflict resolution.) It is
instructive to consider the following: “In contrast to American
and its long history of strikes, Southwest has never lost an hour
of flying time to a labor dispute even though its work force is
the industry’s most unionized.”^49 It seems reasonable to
conclude that failure to invest in good labor relations practices
has negative financial consequences for firms.
While poor labor relations practices set the stage for poor
financial performance, some conflict with unions may be
unavoidable. In many instances, labor difficulties such as
strikes are not representative of the quality of a firm’s labor
relations practices. In some cases, a firm may be struck