Two on American Airlines Bankruptcy


After closing arguments, bankruptcy judge advises
American to make a deal

By MARIA RECIO

The Miami Herald

Posted on Fri, May. 25, 2012

http://www.miamiherald.com/2012/05/25/2817515/after-closing-arguments-bankruptcy.html


As American Airlines made its final stand Friday in
U.S. bankruptcy court, the judge finished the lengthy
hearing on a surprising note by telling the courtroom
that the airline and its unions need to work toward a
deal.

In American Airlines' closing arguments after three
weeks of testimony, the company said its labor
contracts must be terminated for it to survive and
dismissed its unions' calls for a merger with US
Airways Group Inc. as "smoke and mirrors."

But U.S. Bankruptcy Court Judge Sean Lane said that
though he was prepared to rule by the June 22 deadline,
he would prefer not to.

"The only thing I have in front of me," he said of the
so-called Section 1113 hearing, "is whether to reject a
collective bargaining agreement. You're all still stuck
with each other. You still have to negotiate new
agreements."

Even if Lane abrogated agreements with the pilots,
flight attendants and transport workers, American would
still have to come to agreement with its unions.

"I urge, and I cannot urge this any more strongly, that
the parties resolve this where they need to resolve
this - the negotiating table," said Lane. "Regardless
of what I do, you're going to have to do it anyway."

Mediation is scheduled to start next week with the
labor groups before another judge of the bankruptcy
court, and Lane would like a resolution that does not
require him to make a decision. "I'll do it even if I'm
reluctant to do it," he said.

The trial has exposed the deep-seated distrust between
labor and management.

The carrier's parent, Fort Worth, Texas-based AMR
Corp., filed for bankruptcy in November and now is
trying to persuade the court to reduce its labor costs
as it moves to reorganize as a standalone company.
American's pilots, flight attendants and transport
workers counter that a prospective merger with U.S.
Airways, with which they have reached initial labor
agreements, is the viable solution.

American has been walking a fine line on the merger
issue, saying that it is irrelevant to the labor
contract hearing, but at the same time saying that the
carrier will consider consolidation as part of its
business strategy.

On Friday, however, the focus was on the short term -
the June 22 deadline as the carrier hemorrhages money.

"We don't know if consolidation is in the future," said
American Airlines attorney Jack Gallagher. "What we do
need is to get out of bankruptcy. We need a competitive
labor structure."

Saying that there was no concrete business plan that
involved a merger, he told Lane that the "term sheets"
the unions had agreed to with U.S. Airways did not
amount to a deal. "We think that's more smoke and
mirrors. It's a distraction. It's a red herring. It's
not really something before you."

American got a strong boost from the Unsecured
Creditors Committee, which represents the company's
nine largest creditors, when its attorney, Jack Butler,
said, "There's only one business plan before you." A
deal with U.S. Airways is "completely speculative," he
said.

The unions countered that it is also an issue of
timing, since American may wait until it has a more
favorable cost structure and then seek U.S. Airways as
a partner. Ed James, attorney for the Allied Pilots
Association, which represents American's pilots, said
terminating the contracts was permanent and could not
be undone. Sharon Levine, a lawyer for the Transport
Workers Union, said that the unions should not be used
"as bait" for a future merger.

American - which Gallagher said has lost $10 billion
over the past 10 years and in the first quarter of this
year lost $80 million a month - is seeking $1 billion a
year in labor savings from its unions.



May 25, 2012 APA president Bates lays out rationale for its labor deal with US Airways

Andrea Ahles

SkyTalk

Read more here: http://blogs.star-telegram.com/sky_talk/2012/05/apa-president-bates-lays-out-rationale-for-its-labor-deal-with-us-airways.html#storylink=cpy

It appears that not all of American Airlines' pilots
are pleased with the union's agreement to support a US
Airways bid.

In a long message sent to pilots on Friday afternoon,
Allied Pilots Association president Dave Bates provided
details on how the union came to its "conditional labor
agreement" with US Airways, even though the Tempe-based
carrier has not yet officially launched a takeover bid
of American.

"In vivid contrast to the wood chipper that AMR
management had in mind for us, it became clear that
there was a better path for our future. Beginning with
the first discussions we had with US Airways, we
delineated key prerequisites that would be required to
gain APA's support for a merger with US Airways. These
priority items include, but are not limited to: a
viable business plan and a strong capital structure;
furlough and pay protection for all active pilots;
support for a pension freeze with an industry-standard
defined-contribution retirement plan; pay scales that
would quickly exceed the current rates at Delta and
United; and scope protections that would protect AA
pilot jobs. Few if any of these items could be obtained
from AMR management," Bates wrote.

Bates noted that there were some "naysayers" who are
urging members to contest the US Airways agreement and
that simply plays into American's hands.

"While our market-based CLA with US Airways management
is not the "industry-leading contract" we would all
prefer, we believe that the final contract we are now
negotiating with US Airways is supportable in
bankruptcy court, enhances our case and will be
significantly better than what AMR management has in
mind for us. In comparison to what other legacy airline
pilots experienced in bankruptcy, APA did much better
than any before us. Most of our CBA is preserved and we
have stopped the downward spiral that typifies
bankruptcy. The alternative to a consolidation with US
Airways is to have our contract gutted and to continue
to suffer under the failed leadership at AMR under a
business model that few believe can succeed," the
letter said.

Keep reading for the full text of Bates letters to the pilots.


The Path to the US Airways Conditional Labor Agreement

The APA leadership has received a number of member
queries in recent days regarding the conditional labor
agreement (CLA) we reached with US Airways.

To understand the path to our agreement with US Airways
management, we must acknowledge the reality of our
current situation. It's sometimes necessary to point
out the obvious-- negotiations in bankruptcy are not the
same as bargaining with a profitable company. Without
the ability to compel AMR management to bargain in good
faith--actually, to even bargain at all-- in Chapter 11,
we are facing massive displacements, more furloughs and
drastic changes to our benefits and quality of life. In
short, AMR's failed cornerstone strategy (sometimes
referred to as the "Tombstone Plan") has put American
financially at the very bottom of the industry--not the
best conditions for us to negotiate contractual gains.
Sadly, the legal process in bankruptcy heavily favors
American Airlines' management, with minimal safeguards
to preserve contractual provisions that define our
compensation, benefits and working conditions.


For the rest of the letter go to:
 http://blogs.star-telegram.com/sky_talk/2012/05/apa-president-bates-lays-out-rationale-for-its-labor-deal-with-us-airways.html#storylink=cpy



Read more here: http://blogs.star-telegram.com/sky_talk/2012/05/apa-president-bates-lays-out-rationale-for-its-labor-deal-with-us-airways.html#storylink=cpy


Read more here:
http://blogs.star-telegram.com/sky_talk/2012/05/apa-
president-bates-lays-out-rationale-for-its-labor-deal-
with-us-airways.html#storylink=cpy

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