On the Call: AMR CEO Gerard Arpey

By The Associated Press

Executives at American Airlines say labor costs help explain why their company is still losing money while other airlines are profitable. Delta, United and US Airways earned a combined $1 billion for the second quarter while American parent AMR Corp. lost $11 million.

AMR CEO Gerard Arpey said Wednesday that his airline pays $600 million a year more than it would if it had the same labor contracts as airlines that cut wages during bankruptcy proceedings in the last decade. He said this gives other airlines an advantage to charge lower fares.

QUESTION: Explain how AMR will benefit if other airlines face higher labor costs.

ANSWER: Other airlines are now negotiating post-bankruptcy contracts, and "The market will determine wages and benefits in this industry just like it largely does in other industries. I think the extension of that is that carriers aren't then competing on the basis of whether they've got bankrupt labor rates or not."