American’s Pilot Leaders Approve Member Vote on New Deal

American Airlines pilot union leaders decided to let its 8,000 members vote on a tentative contract that may help the carrier exit bankruptcy.

The Allied Pilots Association board voted 12-4 to allow the balloting, according to a message today to members. The union already has a conditional contract with potential suitor US Airways Group Inc. (LCC), should the two carriers merge.

The pilots at AMR Corp. (AAMRQ)’s American are the lone labor group to reject concessions negotiated to reduce employee costs that the carrier said helped push it into bankruptcy. The Fort Worth, Texas-based airline wants a pilot contract before leaving court protection to assure creditors about future labor expenses.

The agreement “addresses the priorities identified by APA as most important to our pilots, while staying within the same cost savings target that we required from all other employee groups,” said Bruce Hicks, an American spokesman. The carrier’s goal for such reductions was 17 percent a year.

Pilots will vote on the agreement from Nov. 23 through Dec. 7, said Tom Hoban, a union spokesman.

Separately, Laura Glading, president of the Association of Professional Flight Attendants, said AMR’s unsecured creditors committee still is examining both a possible merger and American’s stand-alone business plan. Glading sits on the panel that represents some groups owed money by AMR and has a voice in major decisions in the bankruptcy.

Creditors Committee

“I can only say that progress is being made,” Glading said today in a message to flight attendants. Committee members are bound by a confidentiality agreement, and the lack of information “has caused a great deal of frustration for our membership,” she said.

American retains the exclusive right to file a reorganization plan through Jan. 28 and could seek additional time, she said. As a result, a date for the carrier’s emergence from bankruptcy can’t be estimated, she said.

American imposed cost cuts on the pilots to trim spending by $315 million a year after they rejected an earlier accord in August. The two sides reached the latest agreement on Nov. 9 after ending a stalemate over pay, protection against layoffs and the size of jets that can be flown at regional partners.

Six-Year Contract

The proposed six-year contract would raise pay 4 percent when it’s signed, with subsequent 2 percent annual increases. It also calls for a “mid-contract adjustment” to bring pilots to an industry-standard pay rate, and would provide furlough protection for current employees.

Pilots would work more hours and have to pay more for medical benefits, and the agreement would let regional partners fly more jets of as many as 76 seats. American would be allowed to expand a marketing agreement known as code-sharing with Alaska Airlines and establish one with JetBlue Airways Corp. (JBLU)

American pilots also would get a 13.5 percent equity stake in the restructured post-bankruptcy company.

The airline and APA had failed to reach a contract agreement in talks that began more than five years before the carrier sought bankruptcy protection on Nov. 29.

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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