NEW YORK (AP) —American Airlines is asking a federal bankruptcy judge to throw out its union contracts if it can't reach cost-cutting deals with labor unions.
American's lead bankruptcy lawyer, Harvey Miller, said T that the company and unions have bargained in good faith but he doesn't expect them to reach compromises.
Union officials disputed the lawyer's comments. They said that American planned all along to ask the court to toss out their collective bargaining agreements.
American and parent AMR Corp. filed for bankruptcy protection in November. Last month, the airline made cost-cutting proposals to the unions that include the elimination of 13,000 jobs, outsourcing of maintenance work, hiring regional airlines to do flying now handled by American pilots and increasing working hours for many employees.
Miller said in court March 22 that, despite seven weeks of negotiations, “There has been no evidence that we can make strong progress — and time is of the essence.” He said the company is still interested in bargaining but without deals it will have no choice but to ask the judge to cancel the union contracts.
Under federal bankruptcy law, judges can let companies break union contracts if the company first negotiates with its unions and then shows that it needs relief from the contracts to be successful.
Unions for pilots, flight attendants and ground workers have been expecting the company to seek to break the contracts, which, they said, would destroy morale among American's 73,000 employees.
American says it needs to cut costs by $2 billion per year, with $1.25 billion of that coming from labor. American's much-smaller regional affiliate, American Eagle, said that it needs to shave an additional $75 million per year from its labor costs.
A hearing on AMR's bankruptcy case took place March 22 in New York before federal Judge Sean H. Lane. Among the items on the agenda was a lawsuit by the pilots' union that challenges American's legal ability to use the bankruptcy process to cancel its contract.
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