AMR Seeks to Reject Union Contracts in Bankruptcy Court

[Julian Englis]

Source: Business Week

AMR Corp.’s American Airlines (AMR) plans next week to start a bankruptcy-court process for rejecting union contracts after failing to reach a deal to cut labor costs.

American will ask for court approval to void the contracts unless there is a “profound change” in negotiations with unions, AMR’s bankruptcy attorney Harvey Miller said at a court hearing yesterday in Manhattan.

“We must start the process if we are going to bring these cases to a successful conclusion within a reasonable period of time,” Miller told U.S. Bankruptcy Judge Sean Lane.

The plan escalates AMR’s efforts to win lower labor costs in contract talks that began in 2006. AMR is now seeking $1.25 billion in annual labor savings, including 13,000 job cuts, as it reorganizes in bankruptcy.

“A deadline will focus the union leadership teams,” said Jeff Straebler, an independent airline analyst in Stamford, Connecticut. “It will come down to their making a choice of getting the best deal in negotiations or rolling the dice with the judge.”

Read more: http://www.businessweek.com/news/2012-03-23/amr-seeks-to-reject-union-contracts-in-bankruptcy-court

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American Airlines is working hard to break the unions.

[Populist_Prole]

1. Which is doubtless the entire reason for them going Chapter 11 BK.

The use by companies of corporate facism to bad faith bargain with their employees is all the rage these days.

[cstanleytech]

2. Are you sure they bargained in bad faith though or are you assuming they did?

Personally I dont know if they did or didnt but for the sake of argument lets assume they didnt bargain in bad faith, if the company needs the workers to make concessions to survive then the workers need to do it or their gonna be out of a job totally.
On the other hand if the workers are being asked to make a concessions then its only fair that executives make some hard ones as well like massive pay and benefit cuts themselves as well as cuts to severance, hiring and retirement packages they may have had and the only way the executives can get a raise isnt by shareholder vote but rather a company wide vote of the workers.

[cpamomfromtexas]

3. Pilots gave avg of 40 percent in 2003

to "save" the company. They were at industry lagging rates at the time, that is why their pay rates right now are at at 1992 levels. They've now been negotiating for over 5 years and have not yet gotten a contract. Why? Because the Railway Labor Act is tilted toward management and rewards management for stalling contract talks.

This could be fixed overnight if the RLA gave unions the right to strike just like every other union.

[Populist_Prole]

4. Not "sure" in the sense I'm privvy to their inner strategem, basing it on BK's over the past years

Companies have been using it to avoid bargaining, and outright break agreements they've already made. Since Bankruptcy is no longer the scarlet letter it once was it's used more as a tool now. Getting the courts ( who rarely give labor an even break ) to do the "bargaining" the company has no patience for. The judge will either rule to keep the contracts or null them. I don't recall any judges ruling on the lowering of the executive compensation.

[cstanleytech]

5. If a judge can void a union contract in bankruptcy then they can void an executives as well.

Which if I were the union I would be pushing for hard, after all nothing quiet makes the upper executives squeal like the fear over losing their own compensation and or having their own pay and benefits cut.

[cpamomfromtexas]

6. Totally agree. Will be interesting. Judge Lane was appointed by President Obama

The problem under the RLA is there is not a time limit set on negotiations, so management draws them out until employees are damn near starving.

He should make sure no bonuses, stock, or pay raises for executives (actually, cut them 40% like they did the pilots) until employees are restored.

Once they come out of BK, he should make a requirement that they have 3 months to get a contract with the pilots union and then they can be released to strike. Right now the NMB releases and they rarely do. How can negotiations be for 5 years so far and the pilots not have a contract?

Because there is about to be a massive shortage of pilots worldwide, that is how over 30 AA pilots took jobs with Chinese airlines in the last month alone!