Coverage of the merger between American Airlines and US Airways

Unions Brace for Worst in AA Bankruptcy

News of AMR Corp.'s Chapter 11 filing surprised some workers

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    NEWSLETTERS

    Union workers say they were caught off guard when AMR Corp. filed for bankruptcy Tuesday.

    Local 565 Transportation Workers Union treasurer Michael Hatfield was getting ready for work when he heard the Fort Worth-based parent company of American Airlines had declared Chapter 11 bankruptcy.

    Union Workers Surprised by AA Bankruptcy Filing

    [DFW] Union Workers Surprised by AA Bankruptcy Filing
    AMR Corp.'s Chapter 11 bankruptcy filing is causing ripples with the unions. (Published Tuesday, Nov 29, 2011)

    "I was in the shower," Hatfield said. "I saw it on your morning news show."

    The news shocked many North Texas union workers.

    Airline Expert: AA Bankruptcy Will Hurt Employee Morale

    [DFW] Airline Expert: AA Bankruptcy Will Hurt Employee Morale
    Aviation expert Denny Kelley says the bankruptcy filing will affect employee morale but also says he would not have any concerns about flying on American Airlines. (Published Tuesday, Nov 29, 2011)

    "It's devastating both personally and professionally," said Tom Hoban, Allied Pilots Association spokesman.

    He said the news is devastating because the bankruptcy throws a wrench in the union's contract negotiations with American Airlines.

    AMR: Bankruptcy Will Have Little Impact on Passengers

    [DFW] AMR: Bankruptcy Will Have Little Impact on Passengers
    For the 240,000 passengers who fly American Airlines each day, the airline's bankruptcy filing should have little noticeable impact. (Published Tuesday, Nov 29, 2011)

    "It's potentially devastating," Hoban said. "In the restructuring process, we're undoubtedly facing significant pay cuts, reduction in benefits and changes to workload and retirement."

    Laura Glading, president of the Association of Professional Flight Attendants, said she thinks the filing will also hurt her workers.

    "Do I expect the company will try to reduce benefits and possibly reduce benefits and possibly reduce our pay? I think so," she said.

    Union representatives say labor costs were not a significant part of American's problems, pointing to rising fuel costs and revenue projections.

    But industry analysts do not agree with that assessment.

    "It's really a matter of, American's costs are way higher than their competitors' costs," said Mike Davis, a professor at Southern Methodist University's Cox School of Business. "American has to get their costs down, and labor is a huge part of that cost."

    American's labor costs are higher than its competitors'.

    Analysts say the airline spends $3,000 per flight hour on salary and benefits compared to United's $2,800, Delta's $2,500 and U.S. Airways' just less than $2,000.

    Those three airlines have been through bankruptcy, allowing them to restructure union contracts.

    A member of the Transportation Workers Union speaking on background said the timing of the announcement was a surprise, but that the union had been working for almost two years with a bankruptcy attorney.

    The TWU worker said the attorney had been working to help the union make a "contingency plan" to protect the worker's interest in case American Airlines filed Chapter 11 bankruptcy.

    When the bankruptcy filing was made, the TWU source said the union's attorney immediately filed a "notice of appearance" in a New York court. The TWU source in Washington, D.C. said the filing should make "any documents related to bankruptcy available to us."

    American Airlines Bankruptcy:
    Find complete coverage of the American Airlines bankruptcy proceedings, expert analysis and the impact on 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.