The parent of American Airlines is preparing to void union contracts through the bankruptcy process within one week unless there is a "profound change" in the unions' proposals, a lawyer for the company said.
Harvey Miller, who represents AMR, said at a bankruptcy court hearing in New York that there appeared to be no basis to expect "real forward movement" obtaining union concessions that would avoid the rejection of collective bargaining agreements. Talks are ongoing, he added.
"Each day AMR is unable to remedy its cost structure puts the company further behind its competitors," said Miller. "Time is of the essence."
AMR's official creditors' committee supported scrapping the contracts if a deal cannot be reached.
The third-largest US airline filed for Chapter 11 protection from creditors in November, citing uncompetitive labour costs after years of fruitless talks with its unions.
It has said it is looking to cut 13,000 jobs to trim costs by about USD$2 billion, and needs USD$1.25 billion in labour-related savings. The company also said earlier this month it will seek to freeze pension obligations, a softening of an earlier plan to terminate the pensions altogether.
The Association of Professional Flight Attendants, the bargaining agent for AMR's flight attendants, expressed little hope that a deal can be reached in time to avoid a termination motion.
In a statement on Thursday, the union said the change Miller alluded to cannot be realised without a willingness by AMR to compromise on concession demands that are "totally divorced" from market rates.
"New aircraft, lie-flat seating and elegant first-class meals do not an airline make," the union said in a statement on Thursday. "It takes 80,000 workers. Should American continue to forget that fundamental principle, it will be left with only the shell of a company."
Other unions said they preferred consensual deals as opposed to having terms imposed on workers by a court, as often happens in bankruptcy proceedings if the sides reach an impasse.
The Transport Workers Union of America, which represents thousands of ground workers at AMR, said its lawyers were preparing to defend its members in court, should that become necessary.
"We've always been prepared to fight for our members, either by reaching an agreement or going to court. We are prepared for either eventuality," James Little, president of the TWU, said in a statement.
The Allied Pilots Association is committed to reaching an agreement and would oppose a company move to use the bankruptcy court process to try to end union contracts, spokesman Gregg Overman said.
Labour cost cuts are typically a driving force in airline restructurings, where companies can save hundreds of millions of dollars through cutting or renegotiating union contracts and pension obligations.
On Wednesday, the company's regional carrier unit, American Eagle, said it would need to gain USD$75 million in labour-related savings, a target Eagle's flight attendant union in a statement called "outrageous."
A SEAT AT THE TABLE
Two labour factions seeking more active roles in AMR's bankruptcy agreed on Thursday to form an official committee to give them a voice in the case, an AMR spokesman said.
Non-profit advocate group the AMR Retirees Pension Protection Corporation will join an informal group of retired AMR passenger service agents on a committee to look out for retirees' needs, spokesman Adam Weiner said at Thursday's hearing.
The groups had initially sought separate committees, but agreed to form a single committee after negotiations with AMR, said Weiner.
Like all official committees in bankruptcy, the committee's fees will be paid by funds within AMR's bankruptcy estate, Weiner said.
Committee formations can sometimes be contentious issues in bankruptcy, as they are funded with money that could otherwise go toward creditor recoveries.
A group of AMR pilots earlier in March was denied its bid to form a committee in the face of opposition from AMR.
Separately at Thursday's hearing, the airline received the court's go-ahead to extend until September its exclusivity rights for proposing a restructuring plan. The extension means creditors and potential acquirers cannot pursue their own proposals for how to restructure the airline until the exclusive period has passed.