* Union says has reached tentative "industry-standard" deal
* Pilots would gain 13.5 percent equity stake in company
* Union members must still vote on contract
By Nick Brown
Nov 9 Bankrupt AMR Corp, parent of
American Airlines, has agreed with its pilots' union on language
for a new labor deal to be voted on by union members, the union
announced on Friday.
AMR has been in talks with the Allied Pilots Association as
it tries to reduce labor costs and emerge from bankruptcy.
The APA's board on Friday presented a "counter-proposal" to
offers from AMR management, which the company accepted,
according to the statement. The contract must be ratified by the
union's roughly 7,500 pilots, who rejected a previous labor
proposal in August.
Union spokesman Dennis Tajer would not disclose specifics on
the tentative deal but said it was "industry-standard, which has
been our goal all along."
Last week, Tajer told Reuters the union had been seeking a
deal on par with competitors like Delta Air Lines,
particularly on issues of pay and outsourcing flights to pilots
not represented by the union.
AMR has already reached new collective bargaining agreements
with unions representing its flight attendants and ground
workers. A deal with pilots would achieve peace with all
AMR spokesman Bruce Hicks characterized the tentative deal
as a compromise.
It "addresses the priorities identified as most important to
our pilots" while also being economically feasible enough "to
ensure American's successful restructuring," Hicks said in a
The pilots stand to gain a 13.5 percent equity stake in a
reorganized AMR. Ray Neidl, and airline analyst with Maxim
Group, estimated that could come out to about $100,000 per
"So it's very important that they pass the contract," Neidl
told Reuters on Friday.
AMR declared bankruptcy last November, saying it needed to
cut more than $1 billion a year in labor costs. It would like to
exit bankruptcy as a stand-alone firm, but needs to convince its
creditors it can be viable.
Investors would view a consensual agreement as a huge step,
"To put good value on the equity, you need to have an
agreement with the pilots," he said.
Smaller competitor US Airways Group is making an
aggressive takeover push, and AMR's unions, including its
pilots, have said they would prefer a merger. The unions say
they already have a tentative deal with US Airways should it
achieve a takeover.
The union board voted 13-2 to send the tentative deal with
AMR to pilots for a vote. Union leaders will brief members on
the deal in a series of roadshows ahead of a vote, a process
that took about six weeks when the pilots voted on the earlier
proposal in August.
The pilots are currently working under strict labor terms
imposed unilaterally by AMR as part of its bankruptcy process.
AMR's unsecured creditors committee in August said it
supported giving pilots an equity stake in the company, but only
if they reached a prompt consensual labor deal. According to the
APA's statement, Jack Butler, a lawyer for the committee, met
with the union's board in Dallas on Friday for a confidential
Reached by phone, Butler said he was invited to address the
board, but declined to comment on the specifics of the briefing.
"It was an extensive briefing, with lots of questions and
answers on a wide variety of subjects," Butler said.
Passage of the contract may not be etched in stone. Pilots
have been firm in their demands for an industry-standard deal,
and the sides have been trying unsuccessfully to form a new
collective bargaining agreement since 2006.
The prospect of the 13.5 percent equity stake could be an
incentive. In addition to providing a payout for pilots, it
would allow the union, as a shareholder, to vote against
restructuring plans it did not support.
But the same equity offer did not stop the pilots from
voting down the earlier labor proposal in August.
"It's up to our membership to make the final decision,"
AMR's bankruptcy case is In re AMR Corp et al, U.S.
Bankruptcy Court, Southern District of New York, No. 11-15463.