AMR looks to reject nine union contracts, save $990 million annually

By Caroline Salls

Pittsburgh, March 27 - AMR Corp. requested court approval to reject nine of its collective bargaining agreements with the Allied Pilots Association, the Association of Professional Flight Attendants and the Transport Workers Union of America, AFL-CIO, according to a Tuesday filing with the U.S. Bankruptcy Court for the Southern District of New York.

The company said the Transport Workers Union contracts cover fleet service employees, dispatch, ground school and simulator instructors, and simulator technicians, as well as mechanics and related employees, stock clerks and maintenance control technicians.

"Collectively, American's collective bargaining agreements with the unions saddle the company with the highest labor costs in the industry," the company said in court documents.

"Those agreements tie the company to compensation rules that are among the most expensive in the industry and to the richest active and retiree benefit package, by far, among American's peers.

"Together, these CBAs generate a competitive headwind that the company cannot overcome."

In addition to imposing higher direct labor costs, the company said American's CBAs "contain an array of archaic rules and other restrictions that constrain American's ability to generate revenues and shackle it to operations that cannot be economically justified."

AMR said the pilot agreement limits the fleet American Airlines can use and restricts its ability to code-share with other airlines, the mechanics' contract places restrictions on the use of manpower and the fleet service workers' contract puts restrictions on part-time employment.

In addition, the company said the flight attendant contract requires that flight attendants work just 420 hours per year to accrue vacation, sick time, and health benefits and has no minimum requirement whatsoever to continue to hold their place on the seniority list.

AMR said the flight attendants can also manipulate their work and vacation schedules in order to turn a two-week vacation into a month off with pay.

"If American is to survive - if it is to continue to provide its employees with good jobs - it must be allowed to deploy its people and its other assets rationally, as its competitors do now and as businesses in nearly every other industry take for granted," the company said.

"American's labor agreements currently burden it with operations it cannot afford, require it to perform work in irrational, inefficient ways, and obligate it to continue to do work in-house that other airlines have long ago outsourced."

AMR said it must reduce annual costs by $2.1 billion by 2017, with $1.5 billion of those savings to come from reducing employee costs.

This cost reduction includes $990 million in annual costs arising from the collective bargaining agreements the company is looking to reject, the company said.

A hearing is scheduled for April 10.

AMR, the Fort Worth-based parent of American Airlines, filed for bankruptcy on Nov. 29. Its Chapter 11 case number is 11-15463.

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