On Monday in New York, American Airlines is scheduled to begin presenting its case for throwing out union contracts and imposing cuts in pay and benefits and increases in productivity.
The airline filed the request March 27 asking to reject nine separate contracts with the company's three major unions -- the Allied Pilots Association, the Association of Professional Flight Attendants and the Transport Workers Union.
In the March motion to reject, AA said:
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.
The judge set the hearing for AMR to present its case for Monday.
The hearing comes days after the airline's three major unions reached an agreement supporting a merger with US Airways.
The TWU, APFA, and the APA said Friday that they have reached agreements on term sheets for collective bargaining agreements that would govern the employees of American Airlines should the airline merge with US Airways. Read the full statement from the unions here.
To date, US Airways has not publicly detailed a merger proposal.
A spokesman for American said Friday that the company is focused on its own plan to reorganize under bankruptcy protection.
"We believe statements of non-binding support from union leaders for alternative proposals are no coincidence given the timing of the 1113 process. These statements do not in any way alter the company’s commitment to pursue our business plan or our focus on moving steadily through the court supervised restructuring process to create a profitable, growing industry leader," the airline said in a statement.
After AMR presents its case, federal bankruptcy judge is expected to rule on AMR's request to throw out its current labor contracts in early June.
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