AMR Pilots to Vote on Contract Paring Cuts in Bankruptcy

American Airlines pilots will vote on a revised contract proposal paring bankrupt AMR Corp. (AAMRQ)’s bid for concessions, and the carrier said a judge would delay ruling on a request to void contracts with its biggest unions.

The Allied Pilots Association board agreed today to hold an election on the latest accord, which calls for shrinking AMR’s demand for labor savings by 15 percent, to $315 million. That step came just before the deadline set by U.S. Bankruptcy Judge Sean Lane in New York.

The move marks progress in Fort Worth, Texas-based AMR’s effort to win $1.25 billion in annual labor savings. While five employee groups in the Transport Workers Union have approved givebacks, two other TWU groups held out. Neither the pilots nor flight attendants unions have accepted demands from AMR, which has asked Lane to cancel its existing agreements.

Lane will postpone his decision “on all the unions’ contracts pending the outcome of the pilots’ vote,” Bruce Hicks, an American spokesman, said in an e-mailed statement. “We must use the additional time wisely to reach agreements” with APA, TWU and attendants, he said.

That means a ruling won’t come until Aug. 8 while pilots vote, according to a hotline message to APA members from a spokesman, Tom Hoban, on the union’s website. The APA board agreed by a 9-7 vote to put the proposal out for rank-and-file balloting, according to a union e-mail.

US Airways

In the background is US Airways Group Inc. (LCC), whose interest in a merger with AMR has led to provisional contract agreements with pilots, TWU and the Association of Professional Flight Attendants. AMR is resisting the overtures, saying it wants to leave Chapter 11 as a stand-alone airline.

US Airways, which is based in Tempe, Arizona, hasn’t made a formal bid.

Voiding contracts would allow AMR to change wages and work rules immediately, and would put the unions’ bankruptcy claims at risk. The airline and labor groups still would have to negotiate for longer-term contracts that would remain in place once the carrier leaves court protection.

A pilots’ contract never has been abrogated by a U.S. bankruptcy court, Hoban said.

“We are confident our pilots will carefully consider the tentative agreement,” American’s Hicks said in the statement. “This is a critical step in American’s restructuring.”

Hoban, the pilot spokesman, didn’t comment on the agreement in the union’s website hotline. He told members that APA President Dave Bates would comment soon, “discussing issues associated with the tentative agreements and next steps.”

Flight attendants and TWU-represented mechanics and aircraft stock clerks are set to resume talks with American next week.

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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