American, Pilots Await Contract Ruling

October 10, 2012

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The judge overseeing American Airlines' bankruptcy declined to rule on a pilots' appeal to preserve their old agreement, meaning the airline can continue making work changes while the two sides continue contract talks.

US Bankruptcy Judge Sean Lane ruled last month that the airline could reject the previous agreement, which had been under negotiation since 2006.

The union appealed the decision and it has asked the court to stop the airline from making changes while the appeal is pending, arguing that the changes cause "irreparable harm" to members.

At a hearing on Tuesday, Judge Lane declined to rule on the union's motion to suspend and did not set a date for a ruling on the issue.

AMR has been in bankruptcy since November, and through that process aims to find cost savings the airline says it needs to survive.

The airline says most of the changes in terms are based on a tentative agreement that the union leaders and the airline reached earlier, but members rejected.

"The vast majority of the old contract never changed," said an American Airlines spokesman. "Of the things we have changed, a significant majority came from the tentative agreement that was reached with the union board in June, but not ratified by membership."

But the Allied Pilots Association, the union representing 10,000 American pilots, said the new terms would among other things eliminate an 11 percent retirement fund contribution pilots received annually and cuts compensation by USD$55 million over the six-year life of the contract.

"The pilots are incensed by the new terms," said Dennis Tajer, an APA spokesman. "It's an overreach by management. It puts us well below the industry standard and that's why we're fighting."

Hicks said the airline had deferred a number of changes to October, including the planned elimination of night pay and changes to premiums paid for international flights.

"We are committed to working with the APA to secure a new pilot agreement that works for the pilots and allows American to successfully restructure, and we're pleased that we have jointly agreed to resume negotiations immediately," Hicks said.

Tajer said the APA also is "continuing to focus on negotiations."