American, unions work on side deal

BY D.R. STEWART World Staff Writer
Wednesday, April 25, 2012
4/25/12 at 2:28 AM

Read all coverage of American Airlines, including bankruptcy issues.

While its lawyers make a bankruptcy court case for rejecting its union collective bargaining agreements, American Airlines and the Transport Workers Union are refining language in the company's "last and best" contract offer, company and union representatives said Tuesday.

However, contrary to statements made by lawyers for AMR Corp., American's parent, American's final offer will not be ready for a ratification vote next week, TWU officials said.

American's "last and best" offer could be presented to 26,000 TWU-represented mechanics for a ratification vote by mid-May, TWU officials said.

"Our intent is to have our members see and vote on the company's last and final offer and have those results back prior to when TWU presents its side of the case in U.S. Bankruptcy Court in mid-May," said Jamie Horwitz, spokesman for TWU's International division.

American Airlines spokesman Bruce Hicks did not return calls for comment.

Rick Mullings, spokesman for TWU Local 514 in Tulsa, said union and company negotiators continue to work on restructured contract language.

"We are going to end up with a last best offer. We aren't going to end up with a tentative (contract) agreement," Mullings said. "We are going through the last best offer, making sure all the language is clear, making sure it's all correct.

"We might have a last best offer ready to present to the membership mid-May to the last of May."

A TWU vote to ratify the company's final offer could short-circuit the bankruptcy court TWU contract rejection process, officials said.

The Section 1113 trial would still proceed on the proposed rejection of the contracts of the pilots and flight attendants if no out-of-court agreements are reached, officials said.

AMR's lawyers in court documents, supported by witness testimony, are alleging that American must reject its collective bargaining agreements with 55,000 members of the TWU, the Allied Pilots Association and the Association of Professional Flight Attendants.

The company said it needs $990 million a year in wage and benefit cuts from the three unions, $2 billion a year overall in cost reductions, 13,000 job cuts and $1 billion a year in increased revenue to emerge from bankruptcy as a competitive network airline.

"At the end of last year, American's average compensation per employee was 20 percent higher than the average of other network carriers, and 36 percent higher than the average of the LCCs (lower cost carriers)," AMR said in court filings.

Although American's unions agreed to $1.62 billion a year in wage and benefit concessions in 2003 to help the company avert a bankruptcy filing, it was not enough, AMR said.

As AMR lost more than $10 billion over the last decade, its major airline competitors slashed employee wages and benefits even more than American through the bankruptcy reorganization process, AMR said.

AMR is expected to conclude its testimony supporting rejection of the contracts this week.

The court then will recess for two weeks while further contract negotiations continue.

The unions are expected to begin their case on May 14, company and union officials said.

U.S. Bankruptcy Judge Sean Lane has given AMR exclusive right to craft a bankruptcy restructuring plan at least until Sept. 28.

But US Airways complicated matters last week.

US Airways CEO Douglas Parker and the three American unions said they had reached contract agreements on a potential takeover bid by US Airways, the nation's fifth-largest carrier.

Parker said the Tempe, Ariz.-based carrier would preserve more than 6,000 jobs, American's planes and hubs, while union members would receive pay increases.

Industry analysts said US Airways hasn't been able to achieve peace among its unions seven years after it acquired America West.

American CEO Thomas Horton said American will pursue a stand-alone strategy, at least until it emerges from bankruptcy.

Day in court

Testimony scheduled Wednesday in AMR Corp.’s bankruptcy case

Motion by AMR to reject certain aircraft leases — Objections by HNB Investment Corp., Wilmington Trust Co., AT&T Credit Holdings Inc., et al

Motion by AMR to reject certain unexpired leases — No objections

Motion by AMR to reject certain aircraft and engine leases — Adjourned until May 10

Motion by AMR to reject certain executory contracts — Adjourned until May 10

Motion by Ad Hoc Committee of passenger service agents to restrain AMR from making unilateral changes in the terms and conditions of employment — Adjourned until May 10

Motion by the Pension Benefit Guaranty Corp. for an order directing production of documents by AMR Corp. and its affiliates and authorizing the issuance of subpoenas for testimony on AMR’s four definedbenefit pension plans — Adjourned until May 24

Sources: AMR Corp., U.S. Bankruptcy Court for the Southern District of New York

Original Print Headline: Side deal is in the works for American, its unions

D.R. Stewart 918-581-8451
don.stewart@tulsaworld.com