AMR Asks for Permission to Terminate Labor Contracts

Article excerpt

AMR Corp. filed a motion seeking to reject contracts with its three unions on Tuesday.

Meanwhile, a union official in Tulsa said the company's move, while expected, still raises the tension level during negotiations.

AMR, the parent company of American Airlines, filed a Section 1113 motion with the court, asking U.S. Bankruptcy Judge Sean Lane, who is overseeing the proceedings, for the OK to cancel American's current collective bargaining agreements with its pilots, flight attendants, mechanics and support personnel, including more than 6,500 workers in Tulsa. The move would allow American to make necessary changes to restructure the business, according to an open letter to employees from CEO and Chairman Tom Horton. In Chapter 11 bankruptcy, labor contracts can be altered under Section 1113 of the U.S. Bankruptcy Code.

At the same time, AA continues to negotiate consensual agreements with its unions.

Company and union negotiators have been working long hours to agree on new labor contracts in the interest of making the company successful, Horton wrote in the letter.

"With losses mounting and oil prices rising, there is growing urgency to move more quickly," Horton said in the letter.

Starting at the top, Horton wrote, AA has reduced the top leadership team in size by nearly 30 percent and will continue the cuts through all levels of the organization.

The cuts are designed to save the company hundreds of millions of dollars. AMR announced on Nov. 29 plans to cut 2,100 jobs in Tulsa - or about a third of the workers at the Tulsa Maintenance Base - and 13,000 jobs companywide. The company has reported losing $10 billion over the past decade and more than $1 billion in 2011 alone.

Rick Mullings, Transport Workers Union Local 514 organizer in Tulsa, said the union expected American to file the papers rejecting the labor contracts.

"And this gets the clock started," he said. "We knew all along this was coming. We are more prepared for this than any other union ever has been. International (the AFL-CIO) knew this was something that could happen and has had its bankruptcy attorneys retained, analysts lined up, ready to argue in front of the judge. So, we have done our homework and are ready to fight them in court if that is what we have to do."

It's in the best interest of both sides to reach an agreement outside of court, Mullings said. …

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