Coverage of the merger between American Airlines and US Airways

AA Asks Court to Cancel Current Labor Contracts

Judge has 21 days to set hearing

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    NEWSLETTERS

    AP

    Editor's Note: A previous version of this story incorrectly identified April 10 as the date of the hearing on the 1113 process. The judge has 21 days from Tuesday to set a hearing on the matter. The April 10 hearing is a regularly scheduled hearing that does relate to the 1113.

    In a letter to employees Tuesday, Tom Horton, the CEO of Fort Worth-based American Airlines, said it would ask a bankruptcy judge to break union contracts and impose cost-cutting terms on workers.

    The airline filed the request Tuesday in U.S. bankruptcy court in New York and asks that they be allowed to reject nine separate collective bargaining agreements with the Allied Pilots Association, Association of Professional Flight Attendants and the Transport Workers Union.

    In the motion to reject, AA said the following:

    This Motion to Reject Collective Bargaining Agreements rests on three unpleasant but undeniable facts:

    First, American Airlines, Inc., will not survive if it does not restructure.

    Second, while American has been staggering with billions in losses and a crushing debt load, its long-time competitors have reorganized in Chapter 11 and have thrived: Delta, United, and US Airways were all profitable in 2011.

    Third, although American's financial peril has multiple sources, the greatest single challenge is its labor agreements. Collectively, American's collective bargaining agreements ("CBAs") with the Unions saddle the Company with the highest labor costs in the industry.

    If American is to survive -- if it is to continue to provide its employees with good jobs -- it must be allowed to deploy its people and its other assets rationally, as its competitors do now and as businesses in nearly every other industry take for granted.

    Read the entire motion to reject here.

    The judge has 21 days from Tuesday to set a hearing on the matter.

    "We will now proceed down that track which is known as the section 1113 process," Horton said. "While this process can allow the court to reject current labor contracts when it is necessary for a successful restructuring of the company, of course, the best outcome is consensually negotiated new contracts."

    The unions said they would still try to negotiate to save their contracts, and Horton said the airline would continue working with the unions to reach an agreement.

    The airline is making good on its threat last week when it said it would ask the court to throw out existing labor contracts if new concessions from pilots, flight attendants and ground workers couldn't be negotiated.

    For the time being, all existing labor contracts remain in effect.

    In his letter, Horton said the next phase of the process is the most challenging and that failure to make the right changes is a failure that will put all jobs at the airline at risk. 

    NBC 5's Kevin Cokely contributed to this report.

    American Airlines Bankruptcy:
    Find complete coverage of the American Airlines bankruptcy proceedings, expert analysis and impact to customers and the local economy in our special section. Click here for more.


    American Airlines Merger:
    Complete coverage of the merger between American Airlines and US Airways into the newly-formed Fort Worth-based company, American Airlines Group (AAL). Click here for more.