American Airlines has filed a motion in federal court in New York to get the airline’s current pilots contract thrown out by the U.S. bankruptcy judge.
American’s parent company AMR filed the motion Friday afternoon after making changes to its labor proposals to hopefully satisfy the courts in their favor. If American were to win, it could save the airline as much as $300 million annually on its costs in pilot compensation and benefits.
‘AMR now proposes to limit possible furloughs to about 1,750 or less than one-fourth of its pilots, a ceiling set in the pilots’ current contract. It seeks to greatly expand code-sharing but not on all routes. Pilots view code-sharing as potential outsourcing of their jobs.
Under federal bankruptcy law, companies can nullify union contracts if they convince a judge that the move is necessary for a successful turnaround. American claims that its labor costs are higher than competitors, and it is seeking to impose cost-cutting measures that pilots rejected in the vote last week.’
A hearing on AMR’s new proposal is scheduled for September 4th.
American filed for bankruptcy on November 29th of last year.
UPDATE – August 21, 2012:
U.S. Bankruptcy Judge Sean Lane has rejected American Airlines motion to reject its existing labor contracts with the Allied Pilots Association.
‘The Court concludes that American’s proposed changes to furlough and codesharing
have not been justified by either reference to the Business Plan or the practices of American’s competitors. Given the significance of these two provisions collectively to American’s proposal, the Court finds that American has not shown that the proposal is necessary as required by Section 1113.’
Judge Lane said American could re-file its request to abrogate the contracts if it can correct the problems with the furlough and code sharing clauses.
American Airlines plans to re-file…
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