Judge Delays Ruling On Union Contracts At AMR

June 22, 2012

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A judge has postponed a ruling on whether to throw out contracts covering thousands of workers at bankrupt American Airlines, giving unions and management an extra week to agree deals to save the company money.

Judge Sean Lane of the New York bankruptcy court was set to rule on Friday on the airline's motion to abrogate terms covering pilots, flight attendants, and certain ground workers at the carrier.

But American said Lane postponed his decision until June 29, averting for now the possibility of management imposing work rules and other terms until long-term agreement could be reached.

American sought bankruptcy in November, partly blaming high union labour costs for losing its competitive edge versus rivals who restructured in court several years ago and then strengthened themselves further through mergers.

American is seeking USD$1.25 billion in labour savings, mainly from unionised workers, who are pressuring the company to merge with US Airways as the most viable restructuring option.

AMR, American's parent, has said it would consider consolidation but is focusing first on emerging as a standalone entity later this year.

In any airline restructuring, the response of pilots can be crucial in convincing other workers that management's proposals are viable.

Leadership of the pilots' union at American, the Allied Pilots Association, said on Wednesday it could not send management's last offer to its members for a vote, citing a lack of specifics "in various areas" and the need for more time to analyse contract provisions and related language.

Management called it a "good competitive proposal."

A document laying out key provisions showed a nearly 15 percent pay increase over five years, no layoffs, and a 17 percent reduction in overall costs.

A key sticking point for pilots has been scheduling.

American spokesman Bruce Hicks said the extension would not change the company's final offer to its pilots, but would give the union's board more time to "understand our proposal and make a decision" that is in the "best interests" of those workers.

Regarding stalled negotiations with other unionised employees, Hicks said the airline was willing to sit down with flight attendants and ground workers to "resume good faith" talks at any time.

"It's vital we close this chapter and move toward agreements that support a new American Airlines," Hicks said.

Flight attendants stopped negotiating earlier this month and said they would take their chances with Lane.

The union representing ground workers has been split. Five of its seven work groups voted last month to accept a deal, while two voted it down and remain in talks.