American Renews Push To Void Pilot Contracts

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Published: August 18, 2012

The parent of American Airlines on Friday renewed its push to void its collective bargaining agreement with its pilots’ union, two days after a federal bankruptcy judge rejected an earlier effort.

US Bankruptcy Judge Sean Lane in Manhattan, who oversees the Chapter 11 proceedings of American Airlines’ parent AMR, had objected to what he called the carrier’s proposed “unfettered discretion” under its earlier proposal to temporarily lay off pilots and engage in code-sharing.

AMR said its revised plan addresses these concerns by retaining current contractual limits on furloughs/layoffs, and setting restrictions on the ability of the airline to enter code-sharing relationships.

“We believe both of those changes properly address the court’s concern,” and will help AMR “keep moving forward to achieve the savings and flexibility needed for our successful restructuring,” AMR spokesman Bruce Hicks said in a statement.

Dennis Tajer, a spokesman for the Allied Pilots Association, said that group will review the changes.

A hearing on the revised plan is scheduled for September 4.

Lane’s decision on Wednesday was unexpected, and set back AMR in its effort to save more than USD$ 1 billion a year in staff costs, including USD$ 315 million from the pilots union.

The new code-sharing proposal would let AMR enter new relationships with other US carriers and their regional partners, subject to limits based on seating and distance flown.

It also would allow restricted code-sharing relationships with Alaska Airlines and Hawaiian Airlines.

“American has taken heed of the court’s decision as to the deficiencies of its previously open-ended domestic code-sharing proposal and has made a revised proposal that imposes real limits,” Todd Duffield, a lawyer for AMR, said in a filing.

AMR’s creditors committee has supported the carrier’s bid to abandon union contracts, and has said it would not be difficult for the carrier to address the judge’s concerns.

Lane on Wednesday also said “significant” concessions from the pilots were needed before AMR could emerge from Chapter 11, though he rejected an argument by unions that AMR must consider a merger with smaller rival US Airways.

The pilots’ union had last week overwhelmingly rejected AMR’s best and final contract offer.

AMR’s flight attendants union is scheduled on Sunday to finish voting on their own final contract offer from management.

The carrier has already reached consensual terms with the Transport Workers Union, which represents ground workers.

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