AMR makes case for concessions

American Airlines kicked off a weeklong court hearing on its bid to abandon union contracts, telling a judge on Monday its bankrupt parent, AMR Corp., cannot survive without major concessions from its labour force.

Hundreds of lawyers, airline workers and others filled the courtroom and two overflow rooms in U.S. Bankruptcy Court in Manhattan for the start of the hearing, as other unionized workers rallied outside the courthouse.

Cordoned off by police, the workers held signs and chanted for fairer work terms and against AMR’S plan to cut about 13,000 union jobs.

The hearing is AMR’S chance to convince Judge Sean Lane not only that the company desperately needs

labour concessions, but that its unions have unreasonably rejected prior attempts to negotiate those concessions. AMR filed for Chap

ter 11 in November, citing uncompetitive labour costs.

In opening statements, AMR lawyer Jack Gallagher said the company needs 20 per cent across-the-board reductions in employee costs, half of which must

come from medical benefits.

AMR spends three times as much annually on medical benefits as the aver

age lower-cost carrier, like Southwest Airlines, he said.

Edgar James, a lawyer for the Allied Pilots Associa

tion, which represents about 10,000 AMR pilots, said AMR’S proposed business plan is unfair, in part because AMR has not done enough to explore possible merger or consolidation options.