Sept. 13-- A bankruptcy judge Wednesday approved AMR Corp.'s motions to enter into collective bargaining agreements with its mechanics, stock clerks and flight attendants, providing labor cost savings that will make the company competitive in the airline industry, officials said.
U.S. Bankruptcy Judge Sean Lane said AMR, the parent of American Airlines, provided evidence supporting its need to alter work rules and working conditions for members of the Transport Workers Union and the Association of Professional Flight Attendants.
Lane said the changes proposed in AMR's Section 1113 motion are necessary to the success of American's business plan, which includes labor cost savings of $1.06 billion a year and overall cost reductions of $2 billion annually.
American Chairman and CEO Tom Horton said the judge's order signals "the next important phase of our journey back to industry leadership."
In a letter to American employees Wednesday, Horton said the new contracts with the TWU and the APFA will give the airline the financial flexibility it needs.
"Our competitors used the restructuring process to completely reshape their operations," Horton said. "They got better and stronger, growing revenues and lowering costs across the board. We have made great progress reducing debt and renegotiating leases and contracts, and now these new agreements -- combined with the changes across the rest of our team -- will make a huge difference in making us more competitive."
The TWU contracts, which cover mechanics, stock clerks and five other work groups, include 15 percent wage increases over six years, improved health care coverage compared with previous offers, market wage readjustment -- based on industry compensation -- after 36 months and the ability to reopen full contract negotiations after four years.
The M&R contract also permits the company to outsource up to 35 percent of aircraft maintenance now performed in house, to close its maintenance base at Fort Worth Alliance Airport, where 1,700 people are employed, and to lay off at least 800 mechanics at its Tulsa maintenance base, where 7,000 people work today.
TWU members who are at least 45 years old with 15 years at American also are eligible for an early retirement program that includes nearly $40,000 in severance pay.
More than 400 mechanics at American's Tulsa maintenance base have signed up for the early-out program, officials said.
The election window for the TWU's early-retirement program closes Sept. 25.
The APFA contract provides flight attendants with a $1,500 day-of-signing bonus, 9.5 percent pay increases over six years, and some medical and retirement benefits.
Flight attendants with at least 15 years' service with American also are eligible for the early-out program and up to $40,000 in severance pay.
As of Monday, 901 flight attendants have signed up for the early-retirement program, APFA officers said.
The election window closes Sept. 20 for the APFA early-retirement option, officials said.
American's 10,000-member Allied Pilots Association is the only work group that rejected the company's tentative contract.
Lane approved American's motion to reject the APA's collective bargaining agreement, and the company is negotiating with the pilots on new work rules and conditions, officials said.
"We are committed to continuing to work with the APA to explore paths to a consensual deal that addresses our pilots' priorities within the economic parameters outlined by the creditors committee, while beginning to put in place changes that are necessary for our restructuring," Horton said in his letter to employees. "We all respect and appreciate what our pilots do each day and hope to achieve an agreement that will fortify our competitive position and create more security and opportunity for pilots and for all of our people."
In a meeting Monday, the APA's board directed strike authorization balloting of union membership and approved a 300 percent increase to the Strike Preparedness Committee budget to "accommodate an anticipated increase in union activity."
AMR Corp.'s bankruptcy court motions granted Wednesday
--Authorization to enter collective bargaining agreements, settlement letters and letters of memorandum with the Transport Workers Union
--Authorization to enter collective bargaining agreements, settlement letters and letters of agreement with the Association of Professional Flight Attendants
Source: U.S. Bankruptcy Court for the Southern District of New York
D.R. Stewart 918-581-8451
Copyright 2012 - Tulsa World, Okla.
