TEXT-S&P says American Airlines pilots union statement has no rating effect
Aug 23 - The Board of Directors of American Airlines Inc.'s (subsidiary of AMR Corp., both rated 'D') pilots' union said that it would ask members to authorize a strike if American moves to impose any terms of the airline's proposed labor contract. The statement, which media sources report as being in an e-mail to union members, is still several steps removed from any potential strike and has no implication for Standard & Poor's Ratings Services' issuer credit ratings on AMR and American (which are determined by the companies' bankruptcy status) or our ratings on specific debt issues. A strike cannot legally occur until the National Mediation Board (NMB) declares that the company and union are at an impasse in bargaining, which starts a 30-day period before any strike or lockout can occur. The NMB has not yet made such a determination, and that federal agency usually seeks to avoid a strike if at all possible. American has asked the bankruptcy court to give the airline permission to reject its pilot contract. Although the judge denied the first motion by American on Aug. 15, American re-filed the motion with changes intended to meet the shortcomings the judge identified, and it now appears to us that the judge will approve the revised motion after a scheduled Sept. 4 hearing. That would allow American to reject its pilot contract and impose its own proposed contract (which seeks to lower labor costs, mostly through work rule and benefit changes), although the two sides could still reach a negotiated resolution. We believe that the pilots' leadership statement is intended to influence American and the bankruptcy creditors' committee at a point when the union's bargaining leverage is dwindling because of the bankruptcy process and other American unions' acceptance of concessionary contracts.
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