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American Airlines bankruptcy could void union contracts

Bill Zeeble Mar 26, 2012

Stacey Vanek Smith: Health care’s not the only one in court. AMR — the bankrupt parent of American Airlines — says it is going to court to void employee contracts if it can’t get more concessions from labor unions.

From KERA in Dallas, Bill Zeeble has more.

Bill Zeeble: American Airlines says the clock is ticking, Since filing for bankruptcy in November, it’s negotiated with employees, but without sufficient progress.

The company says it’s been flexible, but Greg Overman, with the Allied Pilots Association, says he wouldn’t use that word.

Greg Overman: To the contrary, what we have seen is pretty much along the lines of “take it or leave it.”

Overman and other unions say they’ll fight in court. But aerospace analyst Ray Neidl, with the Maxim Group, says history is not on the unions’ side. Other bankrupt airlines have requested, and received, a judge’s ok to kill contracts.

Ray Neidl: Emotions have to be set aside, there’s are too much emotions. If American is going to survive long term they’ve got to get the right cost structure, and they need those concessions.

American Airlines says it needs $1.25 billion worth of concessions. Industry expert Michael Boyd says the carrier will emerge from bankruptcy & may succeed in court, but then what?

Michael Boyd: The question is, can they come out as strong as they can be or are they going to come out with an employee force that really isn’t as motivated as it needs to be?

Boyd says unions are frustrated because they gave major concessions nine years ago, the last time American Airlines was in financial trouble.

In Dallas, I’m Bill Zeeble for Marketplace.

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