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December 28, 2012

No. 4 American pilots contract thrown out by bankruptcy court

It has never happened in an airline bankruptcy before. That is, until AMR's bankruptcy case.

On September 4, U.S. bankruptcy judge Sean Lane ruled that American Airlines' parent company could reject its pilots contract and impose new work rules and cost cuts.

The ruling came after a three-week trial in May and months of delays as the pilots and American tried to work out a new, concessionary contract. When American's pilots voted against the "last-best-final-offer" from the carrier in August, it appeared likely that American's management would be allowed to throw out its pilots contract as part of the Section 1113 of the bankruptcy code. With the contract rejection in August, the head of the Allied Pilots Association, Captain David Bates, resigned.

But the judge's ruling didn't come immediately as Lane initially ruled that American's request had overreached in proposed changes to furlough protections and domestic code-sharing. Once American refiled its request, taking out the furlough policy changes and scaling back the amount of domestic code-sharing agreements, Lane ruled in American's favor.

No airline has emerged from bankruptcy contract without a pilots contract. After weeks of talks this fall and before American implemented most of its cost-cutting proposals, the APA and American reached a tentative agreement which the pilots approved with 74 percent voting in favor in December.

-Andrea Ahles




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