Negotiations Remain Stalled, Airline Says It Has No Other Options

American Airlines has made good on its threat to ask a judge to void its union contracts after extensive negotiations have failed to produce agreements in its bankruptcy proceedings.

The carrier had asked for some 13,000 job cuts and other concessions as it formulates a plan to emerge from Chapter 11 bankruptcy. The airline filed a motion Tuesday in U.S Bankruptcy Court in Manhattan that throw out its collective bargaining agreements with its pilots' union, as well as the flight attendants and members of the Transportation Workers union. The move makes American a target for takeover attempts, according to a report in Bloomberg Business Week, if a "white knight" comes in to offer a less austere package of concessions.

Among the possible suitors mentioned are US Airways Group, TPG Capital, and Delta Airlines.

In a news release, the Allied Pilots Association said voiding the contracts would not mean long-term success for the company. “The 10,000 pilots of American Airlines remain absolutely committed to our airline’s successful restructuring, and to reaching a consensual agreement with management,” said APA President Captain Dave Bates. “We are well aware that a financially healthy company is a prerequisite to enjoying full, rewarding careers.

“However, we’re extremely concerned that despite giving lip-service to the importance of reaching a consensual agreement with APA, American Airlines management appears intent on having the bankruptcy court reject our contract,” he said. “If the court decides to grant management’s 1113(c) motion, management would then be able to impose new terms of employment on our pilots. Taking this step—one that could be fairly described as running roughshod over our contract—will not foster long-term success for American Airlines.

“In recent bargaining sessions with APA, management has repeatedly stated that a consensual agreement will be ‘impossible’ if we continue making proposals designed to keep our working conditions at or near industry-standard levels. Just saying no to everything the APA leadership has proposed at the negotiating table does not constitute good-faith bargaining. It also does not bode well for our ability to work collaboratively to address the many other challenges confronting American Airlines.

“We therefore urge management to rethink their strategy and join us in committing to good-faith bargaining, with the goal of reaching a consensual agreement at the earliest possible opportunity,” Bates said. “The alternative course—rejection of our contract by the bankruptcy court—is not in the best interests of American Airlines’ stakeholders.

“As we await management’s response, we will be making our case to the bankruptcy court that management’s 1113(c) motion is premature. We do not believe that management has fulfilled the statutory requirements that must be met prior to filing an 1113(c) motion,” he said.

Attorney and St. John's University, Queens professor Anthony Sabino said the union's position left the airline with few options. "I don't see how they have a choice," he told Bloomberg.

FMI: www.nysb.uscourts.gov