2ND UPDATE: One Of Three Main AMR Unions To Send Offer For Member Vote
37 minutes ago - Dow Jones News
--Latest offer to TWU has fewer job cuts than prior offer
--Day one of trial over whether AMR can terminate labor deals
--Protests held outside of U.S. Bankruptcy Court in lower Manhattan
(Adds excerpts from letter to AMR employees from CEO beginning in fifth paragraph)
By Joseph Checkler
Of DOW JONES DAILY BANKRUPTCY REVIEW
NEW YORK (Dow Jones)--The union representing American Airlines' mechanics and fleet service employees has agreed to send the airline's latest contract proposal to members for a vote, a lawyer for the company said Monday.
The Transport Workers Union of America, representing 26,000 American employees, will allow workers to vote on the proposal, which originally would have cut 8,500 jobs, said John J. Gallagher, a Paul Hastings lawyer representing American parent AMR Corp. (AAMRQ). Gallagher later said the newest "last, best offer" would cut fewer than 8,500 positions. A spokesman for AMR said the number would be "substantially" less than that.
The TWU is one of three main unions fighting American's attempt to ditch its labor contracts during a bankruptcy court trial, which in its entirety could last several weeks.
The unions, including those representing pilots and flight attendants, said Friday they believe American should merge with suitor US Airways Group Inc. (LCC) to emerge from bankruptcy proceedings. The unions negotiated terms with US Airways that would treat them better than terms AMR wants to impose in its standalone reorganization plan, they said. AMR lawyers didn't broach the US Airways topic in court Monday morning, but Chief Executive Thomas W. Horton addressed it in a letter to employees sent Monday afternoon.
"We have a strong plan that creates lasting benefits for our employees, our customers, our financial stakeholders and our airline," Horton said. He said that "whether American will choose to pursue any combination down the road" would be decided upon by the company's board of directors and executives.
He added, "We must be mindful of other parties who don't have our best interests at heart and who are working their own agendas at our expense."
James & Hoffman's Edgar N. James, a lawyer for the Allied Pilots Association, said in court Monday, "When we ask them, 'Have you looked at any other combination with another carrier?' what we get back is 'no.'" "That's like asking the Pentagon if they have a contingency plan for an attack on Iran...I just don't believe it. But it is what it is. "
A lawyer for American's official committee of unsecured creditors said the committee--which includes some labor representatives but speaks for all creditors, not any one group--supports the idea of pursuing a stand-alone plan and later comparing it to other alternatives.
In a statement, American Airlines spokesman Bruce Hicks said of the TWU vote, "As we've said from the start, American Airlines' goal is to reach consensual agreements with all of our unions."
AMR's negotiations with the pilots and the Association of Professional Flight Attendants haven't been as fruitful as those with TWU.
Gallagher said the TWU vote results would be in when the unions open their case against AMR next month. As part of the agreement to send AMR's vote to its members, the company will withhold evidence involving the TWU that it planned to use in the trial this week.
"That should substantially expedite this week's part," Gallagher said. About 750 TWU employees protested outside of the U.S. Bankruptcy Court on Monday, as did those from the other unions.
"Today is a momentous day. It's Shakespeare's birthday," said AMR's lead bankruptcy lawyer, Harvey Miller. The first day of the trial amounted to the start of a "Shakespearian epic," he said.
During his opening argument, Guerreri, Clayman, Bartos & Parcelli P.C.'s Robert S. Clayman, a lawyer for the flight attendants, blasted American's projections that it could increase revenue by $1 billion a year over the next six years.
"What happens in that six-year period while American is trying to catch up?" Clayman said. "The assumption of the plan is there will be no--no--competitive response from rival airlines."
Under bankruptcy-court protection, AMR is seeking concessions from union members. It has resisted entertaining a merger, aiming at exiting Chapter 11 as a stand-alone company. The company is trying to cut labor costs by $1.25 billion a year through rescinding the current contracts.
(Dow Jones Daily Bankruptcy Review covers news about distressed companies and those under bankruptcy protection.)
-By Joseph Checkler, Dow Jones Newswires; 212-416-2152; joseph.checkler@dowjones.com
--Susan Carey and Mike Spector contributed to this article.
(END) Dow Jones Newswires
04-23-12 1511ET
Copyright (c) 2012 Dow Jones & Company, Inc.
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