Bloomberg News

AMR Pilot Talks May Stop for Two Weeks as Sides ‘Far Apart’

November 30, 2011

(Updates with delay in TWU talks in ninth paragraph.)

Nov. 17 (Bloomberg) -- American Airlines’ talks with pilots to fashion a new, cost-cutting contract may not resume for two weeks as the sides remain split by differences over compensation and other issues.

Feedback from Allied Pilots Association members “clearly” indicated that American’s Nov. 14 contract offer would fail if put to a rank-and-file vote, a union spokesman, Tom Hoban, said yesterday. He said negotiations might restart on Nov. 28, while American didn’t give a timeline.

Talks recessed on Nov. 14, before the union’s board began meeting the next day and directors of American parent AMR Corp. convened yesterday. AMR is headed for a fourth straight annual loss, has the industry’s highest labor expenses and has been bargaining with pilots, a bellwether work group, since 2006.

“The positions are pretty far apart right now,” said Robert W. Mann, a former American executive who is now an aviation consultant in Port Washington, New York. “It would clearly take some real movement, probably on both sides, to get to a position where both could live with the outcome.”

Hoban said the APA’s board wasn’t voting on the contract offer from Fort Worth, Texas-based American because of members’ opposition. Pilots were among the union employees agreeing to $1.6 billion in annual concessions to keep AMR out of bankruptcy in 2003.

‘Wide Disparity’

With the “wide disparity” between APA and American over what a new agreement must provide, and with three months needed to put an accord into contract form and complete an election, the union’s board preferred that the time be spent in talks, Hoban said in an interview.

“We will resume negotiations with the APA and are awaiting a more detailed response on what we believe to be fair and reasonable proposals that are in the best interests of our pilots and the airline,” Missy Cousino, an American spokeswoman, said in an e-mailed statement.

AMR fell 7.1 percent to $1.69 at 1:48 p.m. in New York. The shares, which plunged 77 percent this year through yesterday, closed for the past two days at the lowest price since March 2003, when the stock sank before givebacks by union workers and other employees averted a Chapter 11 filing.

Mechanics Talks

Separately, American and the union for 11,000 mechanics and aircraft technicians agreed to delay the resumption of contract talks until next month, Jamie Horwitz, a Transport Workers Union spokesman, said today. Bargaining had been set to resume today between the two sides, which last met on Oct. 7, according to American’s labor website.

The TWU is overseeing voting next month by flight dispatchers and baggage handlers on tentative agreements with the airline.

Cousino said AMR wouldn’t comment on yesterday’s board meeting. Gregg Overman, a pilot union spokesman, told members in a hotline message that the APA board discussed the labor negotiations at its session yesterday, and would gather again at 10 a.m. New York time today.

American, the third-largest U.S. carrier, has been focusing on winning an agreement with the 8,700 APA-represented pilots as a spur to new union accords with flight attendants and mechanics.

New labor contracts are the last piece of a turnaround strategy under way since 2009, according to American, which has focused flights on five U.S. cities important to business travelers, completed joint business agreements with overseas carriers to capture more international passengers and ordered 460 new, more-efficient jets.

--Editors: Ed Dufner, Stephen West

To contact the reporter on this story: Mary Schlangenstein in Dallas at maryc.s@bloomberg.net

To contact the editor responsible for this story: Ed Dufner at edufner@bloomberg.net


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