AMR Needs Staff Deals In "Matter Of Weeks"

February 25, 2012

Bookmark and Share

AMR, the bankrupt parent of American Airlines, needs concessions from its labour groups in a matter of weeks, not months, in order to emerge from Chapter 11 in the near term, the company said on Friday.

In a strongly worded negotiations update, American said it must make major changes to its contracts and that it does have the "luxury of time."

"As the company laid out in its February 1 restructuring announcement, we must make major changes to our labour agreements. And we need those changes in a matter of weeks," the carrier said.

AMR filed for Chapter 11 protection on November 29, citing uncompetitive labour costs after years of fruitless talks with its unions. The carrier says it must cut 13,000 jobs as part of a plan to trim costs by USD$2 billion.

The carrier dismissed requests for buyouts from unions representing its flight attendants and many ground workers, saying the proposals "represent a significant cost to the company and could not be accepted on their terms."

Unlike its major rivals United Airlines and Delta Air Lines, AMR did not restructure in bankruptcy in the last 10 years. Instead, it reorganised out of court, relying on its workers for voluntary concessions.

United and Delta, however, emerged stronger from bankruptcy, later found merger partners and leapfrogged AMR in size. Those airlines are profitable now while AMR is not. AMR posted a net loss of USD$1.1 billion for the fourth quarter.

The president of the Transport Workers Union said earlier this month that it will offer alternatives to some of the job cuts and concessions the company says it needs to survive and that the union needs more details on how AMR arrived at its cost-savings targets.

AMR said in its update late on Friday it still hopes to reach consensual deals with its labour groups, rather than have terms imposed on them by the court. Talks with its unions were set to resume next week.