American Airlines, pilots union report progress in talks

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Oct. 18--Progress has been made in contract talks between American Airlines and its pilots union after a weekend of negotiations, but no tentative agreement has been reached.

Talks broke off Monday so union negotiators can meet today with the Allied Pilots Association's board of directors, which is meeting in Fort Worth. But both sides are optimistic that a tentative contract can be reached and expect that negotiating sessions will reconvene this week.

"The company has made some big moves. We've made some moves on issues. We've closed the gaps on a lot of things, but there is still a lot of work that's left to be done," said Capt. Sam Mayer, a union spokesman.

The two sides met through the weekend near Lake Texoma with the goal of having a tentative agreement by Monday, said American spokeswoman Missy Cousino. She added that significant progress was made on "scope, work rules, benefits and other outstanding items," and said she believes that "there is a path to an agreement."

"The company and the [Allied Pilots Association] will continue to build on the momentum of this progress and plan to reconvene midweek after the APA has an opportunity to brief their board [today]," Cousino said.

Shares of AMR, the Fort Worth-based airline's parent company, sank in early trading Monday after no deal was announced. Trading was temporarily halted as the stock fell by 10 percent, triggering an automatic circuit breaker around 10 a.m. It resumed a few minutes later, and by the end of the day AMR stock closed at $2.76, down 18 cents, or about 6 percent.

Mayer said the pilots union does not feel like it has been pressured to meet any "artificial deadlines" and is working "carefully and methodically" to reach an agreement in the best interest of its members.

Some analysts had speculated that a tentative agreement might be reached by Wednesday, when AMR is scheduled to report its third-quarter earnings.

"We expect an exciting earnings season, with the potential for another landmark announcement from AMR -- a tentative agreement on a new pilot contract," Wolfe Trahan analyst Hunter Keay wrote in a note to investors Friday.

Wall Street analysts are predicting that AMR will lose $117 million, or 35 cents a share, while many of its competitors, such as Delta Air Lines and United Continental, are expected to post significant profits.

Ray Neidl, an analyst with Maxim Group, said if the pilots group reaches an agreement, other unions at American may soon follow. In a research note Friday, Neidl said the recent talk of a possible bankruptcy filing likely sped up negotiations between AMR and the pilots union.

"Just because there are intense talks does not necessarily mean that they will reach an agreement (since we believe the differences remain substantial), much less a contract that has a large cost savings agreement," Neidl wrote. "I rate the chances of a successful contract by [this] week no greater than one in three."

Andrea Ahles, 817-390-7631