Bloomberg News

AMR Unions Seek Arbitration in Bankruptcy Concession Talks

March 09, 2012

American Airlines (AMR) pilots, flight attendants, mechanics and baggage handlers asked U.S. mediators to intervene in talks with management as the carrier seeks $1.25 billion in labor concessions, including 13,000 job cuts, in bankruptcy.

The unions’ requests late yesterday added new complexity to American’s effort to win givebacks in union bargaining instead of asking a judge for authority to scrap existing contracts and impose new terms. American said last week that time is running out for consensual accords at the third-largest U.S. airline.

“All efforts to reach voluntary agreements through direct negotiations were exhausted,” Jim Little, Transport Workers Union international president, told members in a message. TWU, American’s biggest union, has been in talks with the Fort Worth, Texas-based carrier since 2006.

American, a unit of AMR Corp., is awaiting a request for a response from the mediation board, Bruce Hicks, a spokesman, said in an e-mailed statement today.

“In the meantime, we must stay focused on reaching consensual agreements that allow the company to restructure successfully,” he said.

The TWU, Allied Pilots Association and Association of Professional Flight Attendants disclosed the arbitration requests in updates posted on their websites.

Arbitration Process

The unions asked the U.S. National Mediation Board to make an offer of binding arbitration to both sides. Each would be asked to accept contract terms set by neutral arbitrators, with no ability to challenge decisions.

The pilots union sued American last month, challenging the airline’s right to seek bankruptcy court authority to dump the group’s contract if givebacks can’t be negotiated. The airline earlier rejected early retirement proposals offered by the TWU and flight attendants’ union to help reduce job cuts.

“We need to recognize that bargaining a consensual agreement may not prove to be possible, and that management may eventually seek to have our contract rejected in bankruptcy court,” APA President David Bates told members in APA’s website statement.

The NMB declined to comment or confirm it received the requests from American’s unions, said spokesman Don West.

The mediation board assists unions and companies in trying to reach labor agreements. In the airline industry, it also oversees a series of required steps leading to any strike or lockout.

American’s unions are seeking the board’s involvement because they were in contract talks when the airline sought court protection. The board generally hasn’t been involved in talks on concessions during bankruptcies.

AMR filed for Chapter 11 bankruptcy in November, listing $24.7 billion in assets and $29.6 billion in debt.

The case is In re AMR Corp., 11-15463, U.S. Bankruptcy Court, Southern District of New York (Manhattan).

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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