Ruling on American Airlines’ Union Contracts Expected Tomorrow

  • Joe Wertz

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The pilots’ union on Wednesday rejected American Airlines’ latest contract offer, and a bankruptcy judge is expected to decide Friday whether the airline can void its labor contracts and impose its own terms.

AMR Corp., the airline’s parent company, filed for bankruptcy in November, and wants to save $1.25 billion in labor cost-cutting — which includes layoffs. About 7,000 people work at American’s Tulsa maintenance base.

Deutsche Bank analyst Mike Linenberg expects the judge to let the airline void its contracts, reports The Street’s Ted Reed. Linenberg said the pilots’ contract rejection brings American and U.S. Airways closer to a merger, which AMR officials say they are against until the airline has emerged from bankruptcy restructuring.

From Bloomberg‘s Mary Schlangenstein:

Members of five work groups represented by the TWU at American approved the company’s last contract offer on May 15, meaning they aren’t included in the continued efforts to toss out existing agreements. Those groups included baggage handlers and other airport ramp workers.

Representatives of bankrupt American Airlines and two units of its TWU concluded two days of mediated contract negotiations in New York on Tuesday without reaching agreement on a new contract, company executives said.