AMR drops pilot furlough proposal
Aug 18, 2012 (Menafn - Tulsa World - McClatchy-Tribune Information Services via COMTEX) --AMR Corp., the bankrupt parent of American Airlines, has dropped its proposal for expanded pilot furloughs and will limit its shared flying with partner airlines, the company said in court documents filed Friday.
AMR also filed a renewed motion to cancel its contract with the Allied Pilots Association, which rejected a tentative contract last week.
U.S. Bankruptcy Judge Sean Lane scheduled a hearing Sept. 4 to review arguments for and against AMR's proposed cancellation of its collective bargaining agreement with its 10,000 pilots.
On Wednesday, Lane rejected AMR's motion to void the pilots' contract because the company sought to remove all restrictions on its ability to furlough pilots and to code-share, or fly cooperatively, with other airlines. Lane said the company had not shown the economic necessity of unrestricted furloughs and code-sharing.
American spokesman Bruce Hicks said the company amended its motion and will seek to nullify the contract with APA.
"To keep moving forward to achieve the savings and flexibility needed for our successful restructuring, we filed our renewed Section 1113 motion with Judge Lane today, along with the revised terms provided to the APA on Thursday, and the court has scheduled a hearing date of Sept. 4," Hicks said. "The revisions address only the two narrow points that Judge Lane said in his ruling needed to be modified -- the amount of code-sharing, and the inclusion of some limit on the number of potential pilot furloughs."
In its proposal to the pilots on Thursday and in court filings, American withdrew its proposal on unrestricted furloughs.
The existing pilot contract, however, gives American discretion to furlough significant numbers of pilots, company and union executives said.
"They can furlough close to 27 percent of pilots," said APA spokesman Tom Hoban. "It's not unlimited. If they don't grow the airline, those jobs will go away through attrition or furloughs."
On code-sharing, the bankruptcy judge said the company needed some flexibility to respond to business conditions -- more flexibility than is permitted under the existing pilot contract, Lane said -- but not unlimited code-sharing.
American's new proposal would permit it to code-share, with some limitations, with present partners Hawaiian Airlines and Alaska Airlines.
The new proposal also would allow American to enter new code-sharing relationships with other domestic airlines and their regional partners, but only if the total seating capacity of all partner airline aircraft does not exceed 50 percent of American's domestic seating capacity.
"The new proposal does what the court indicated was necessary to comply with (U.S. Bankruptcy Code) Section 1113; it acknowledges APA's concern about alleged "outsourcing" while giving American the "flexibility (it will need) in the future to compete," American said in court documents.
American's 18,000-member Association of Professional Flight Attendants is voting until 10 a.m. CDT Sunday on a tentative contract agreement.
In a posting on APFA's website, union leaders said Lane's conditional endorsement of American's proposal to the pilots leaves flight attendants with stark alternatives.
"It is more clear today than ever before that the best path for our membership is to accept the LBFO (last best final offer) and continue to work towards achieving a merger with US Airways," APFA said. "We can now say with certainty that the Section 1113 process will leave flight attendants worse off than the LBFO. There is little doubt that the end result, should we reject, will be 2,000 furloughed flight attendants and many many more on reserve."
American says it needs layoffs of at least 10,400 workers companywide, including 2,400 mechanics, and reduced wages and benefits to reorganize and emerge from bankruptcy.
The committee of unsecured creditors in AMR's bankruptcy issued a statement on Thursday that endorses AMR's effort to trim 1.06 billion a year in labor costs to compete successfully in the airline industry.
"Consensual deals or abrogation of unresolved CBAs (collective bargaining agreements) is necessary to AMR's successful reorganization so that the company can validate the assumptions in AMR's stand-alone business plan and continue to explore strategic alternatives in close collaboration with the committee to compare against the stand-alone plan," the committee said. "The committee's hope and desire is that consensual labor agreements will be achieved with all labor organizations.
"Such a result (is) in the best interests of all stakeholders and the actions taken by the committee ... are intended to help achieve that outcome."
Two Transport Workers Union work groups -- mechanics & related and stock clerks -- approved their contracts by a narrow vote last week.
The mechanics, including more than 5,000 workers at American's Tulsa maintenance base, will receive 15 percent wage increases over six years, while the stock clerks approved a contract with 10.5 percent wage increases over the same period.
In April, American's pilots, flight attendants and mechanics agreed to contracts with US Airways that would be effective following a merger between American and US Airways.
US Airways CEO Doug Parker has sought a merger of the two carriers because the combination would create the largest U.S. airline and be competitive with now-dominant Delta Air Lines and United Airlines.
D.R. Stewart 918-581-8451
don.stewart@tulsaworld.com
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