* Pilots seeking industry standard on pay rates, outsourcing
* Union acknowledges progress being made
* Union still supports merger with US Airways
By Nick Brown
NEW YORK, Oct 30 The pilots union at American
Airlines said on Tuesday that a labor deal could be close if the
bankrupt airline is willing to make certain key concessions.
The union, locked in years of tense contract negotiations
with the AMR Corp unit, said in a statement that it
wants a contract on par with other major carriers, namely Delta
Air Lines, on issues such as pay.
"There is potential for an agreement with AMR in the days
ahead, but it all comes down to a number of moves management
will need to make on key deal points to bring us into the realm
of industry standard," the union said.
A spokesman for AMR had no immediate comment on ongoing
AMR declared bankruptcy last November, in part to reduce
labor costs. While it has reached new contracts with its flight
attendants' and ground workers' unions, it remains at odds with
the Allied Pilots' Association.
The pilots' union announced on Oct. 21 that AMR had agreed
to certain concessions, including improvements to disability
plans and a one-year moratorium on closing pilot bases.
But major items remain unresolved, most notably pay rates
and outsourcing work to pilots not represented by the union,
Dennis Tajer, the pilots' spokesman, told Reuters on Tuesday.
In its statement, the pilots' union said getting a deal
would guarantee it a 13.5 percent equity stake in a reorganized
AMR. It also said labor peace would give the union more
influence in talks between AMR and its creditors over how the
airline would emerge from bankruptcy.
AMR has said it wants to emerge as a standalone entity, but
smaller competitor US Airways Group Inc is making an
aggressive push to acquire the company in bankruptcy. The
pilots' union, along with the rest of AMR's unionized labor
force, supports a merger.
But while Tuesday's statement acknowledged the benefits of a
deal, the union is not eager to sign a new contract at any
"While there is progress being made, it will only continue
if it results in an industry-standard contract," Tajer told
The union must balance its demands against economic
realities. It stressed in the statement that a deal must be
economically feasible for AMR because it will require support
from AMR's creditors and approval by its bankruptcy court.
The sides have been in talks on a labor deal since 2006. The
union voted down a tentative agreement in August, but its board
went back to the negotiating table earlier this month after
September flight cancellations and delays that American blamed
on a slowdown campaign by pilots.
Incidents in which seats came unbolted from the floor on
American flights also raised concerns about safety at the
airline and made it the butt of late-night talk show jokes.
AMR is in merger talks with US Airways, although it has said
it would prefer to consider a tie-up only after leaving
bankruptcy. Some bondholders have expressed interest in funding
a plan that would bring AMR out of bankruptcy on its own.
Power struggles can arise between creditor constituencies
with differing ideas on how a company should exit bankruptcy.
One of the most powerful constituencies in AMR's case is its
unsecured creditors committee, which advocates for all of the
airline's unsecured creditors. The unions, which have lost faith
in AMR management, including Chief Executive Officer Tom Horton,
have seats on that committee and would prefer a US Airways
takeover sooner rather than later. But labor discord with pilots
could add uncertainty to the prospect of a smooth merger.
Tajer said on Tuesday that the union will continue to
support a merger even if it signs a new contract.
A deal would save the union from having to endure
unilateral work terms designed to cut costs, which AMR earlier
won court approval to impose.
The case is In re AMR Corp et al, U.S. Bankruptcy Court,
Southern District of New York, No. 11-15463.