AMR says it will kill contracts

Unions must give back, court told

NEW YORK – The parent of American Airlines is preparing to void union contracts through the bankruptcy process within one week unless there is a “profound change” in the unions’ labour proposals, a lawyer for the company said on Thursday.

Harvey Miller, who represents AMR Corp., said at a bankruptcy court hearing in New York that there appeared to be no basis to expect “real forward movement” obtaining union concessions that would avoid the rejection of collective bargaining agreements.

“Each day AMR is unable to remedy its cost structure puts the company further behind its competitors,” said Miller.

AMR’S official creditors’ committee supported scrapping the contracts if a deal cannot be reached.

The third-largest U.S. airline filed for Chapter 11 protection from creditors in November, citing uncompetitive labour costs.

It has said it is looking to cut as many as 13,000 jobs to trim costs by some $2 billion, and needs $1.25 billion in labour-related savings. The company also said earlier this month it will seek to freeze pension obligations.

The Association of Professional Flight Attendants, the bargaining agent for AMR’S flight attendants, expressed little hope that a deal can be reached in time to avoid a termination motion.

In a statement on Thursday, the union said the change Miller alluded to cannot be realized without a willingness by AMR to compromise on concession demands that are “totally divorced” from market rates.

“New aircraft, lie-flat seating and elegant firstclass meals do not an airline make,” the union said in a statement on Thursday.

“It takes 80,000 workers. Should American continue to forget that fundamental principle, it will be left with only the shell of a company.”

Other unions said they preferred consensual deals as opposed to having terms imposed on workers by a court, as often happens in bankruptcy proceedings if the sides reach an impasse.

The Transport Workers Union of America, which represents thousands of ground workers at AMR, said its lawyers were preparing to defend its members in court, should that become necessary.

The Allied Pilots Association is committed to reaching an agreement and would oppose a company move to use the bankruptcy court process to try to end union contracts, spokesperson Gregg Overman said.