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American Airlines Pilots Sue AMR Seeking to Prevent Rejection of Contract

American Airlines was sued by its pilots’ union, which is seeking to block the airline from rejecting a labor agreement and forcing new employment terms on the union because the contract has expired.

American parent AMR Corp. (AAMRQ) can’t use its bankruptcy case to reject the collective bargaining agreement because the contract expired in 2008, the Allied Pilots Association said in a complaint filed yesterday in U.S. Bankruptcy Court in New York.

American, based in Fort Worth, Texas, filed for bankruptcy in November, saying its cost structure wasn’t competitive with other airlines. Companies can use bankruptcy to reject labor contracts with unions to cut costs.

“It is unfortunate that APA has resorted so quickly to litigation rather than focusing on the bargaining table where there are pressing economic issues to be resolved,” Bruce Hicks, an American Airlines (AMR) spokesman, said in a statement.

The union said in its court filing that it wants to continue negotiations with American under a National Mediation Board process.

The pilots’ suit is Allied Pilots Association v. AMR Corp., 12-01094, and the full bankruptcy 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: David McLaughlin in New York at dmclaughlin9@bloomberg.net.

To contact the editor responsible for this story: John Pickering at jpickering@bloomberg.net.

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