* Former TWA pilots had sought own bankruptcy committee
* Had said pilots union would not serve its interests
* Two more committee requests tabled until March. 22
By Nick Brown
March 6 A bankruptcy judge on Tuesday
denied a bid by a group of American Airlines pilots to form its
own committee to speak for it in the bankruptcy of the carrier's
parent, AMR Corp.
An official creditors' committee already includes a
representative of the pilots' union to vouch for the group's
interests, Judge Sean Lane ruled at a hearing in U.S. Bankruptcy
Court in Manhattan.
The group, comprised of former TWA Inc pilots who joined AMR
in 2001, had asked to form its own committee, saying the pilots'
union, the Allied Pilots Association, harbored ongoing
"hostility" toward the group and that the creditors' committee
would therefore not represent the group's interests.
In court papers, the TWA group said ongoing tension between
it and its union stemmed from AMR's 2001 purchase of TWA's
assets, in which disputes arose over the seniority of TWA pilots
being integrated into AMR's ranks.
It went as far as to accuse the pilots' union of unfairly
ousting some of its members from official union positions, a
charge the union denied.
Judge Lane said the group did not make a convincing enough
argument to justify the "rare" step of forming a separate
"The official creditors' committee that's been appointed
here already includes the (pilots union), and there's been no
demonstration of inadequate representation" of the TWA group's
interests, Judge Lane said. "With nothing on the record on this
important factual point, that's fatal."
The group includes around 700 pilots. It was
well-represented in court on Tuesday, where a smattering of its
members turned out in uniform to hear the day's arguments.
The pilots' union represents roughly all of American's
10,000 pilots, including the TWA group.
A spokesman for the union told Reuters last week that the
TWA group, called the American Independent Cockpit Alliance,
carries the "stated goal" of discrediting and destabilizing the
Judge Lane acknowledged that the shaky relationship between
the sides has "a lot of history," but said appointing a
bankruptcy committee was inappropriate. Bankrupt entities
typically must foot the bills for official committee fees.
Two other factions -- AMR retirees and a group of passenger
service agents -- have also asked to form committees. Those
requests were slated to be heard on Tuesday, but the sides
agreed to push the matters off until a March 22 hearing.
Labor has been a contentious issue in the bankruptcy since
AMR told its unions it needs $1.25 billion in labor-related
savings and must cut 13,000 jobs. Bankrupt airlines have
traditionally saved hundreds of millions of dollars through
labor concessions and are allowed to reject labor agreements.
Separately at Tuesday's hearing, Judge Lane approved an
agreement that will give Citibank the right to assert
certain claims against AMR if its current collateral decreases
Citibank had asked for added protection in the form of liens
on AMR assets, saying it feared the value of its current
collateral, including airport space and take-off and landing
authority, is diminishing. The request was met with objections
from AMR and other parties.
Judge Lane last week rejected a similar request from
Wilmington Trust Co and US Bank NA, but said Citibank's place in
the capital structure was different.
He said he was "satisfied" with the parties' compromise,
which grants Citibank the right to make claims but does not
grant outright liens.
"It resolves an issue I don't think was going away," the
The case is In re AMR Corp et al, U.S. Bankruptcy Court,
Southern District of New York, No. 11-15463.