Airline asks judge to ax union contracts
American says it has industry’s costliest labor
NEW YORK – More than 300 American Airlines workers rallied in protest Monday in front of the U.S. bankruptcy court where their company asked a judge to wipe out the workers’ contracts, even as many embraced a possible bid by US Airways to take over the Fort Worth, Texas-based carrier.
The airline says it needs $1.25 billion in employee-related cost cuts to emerge from bankruptcy successfully, including changes in work rules and benefits, a pension-plan freeze and the closing of its maintenance base at Fort Worth’s Alliance Airport.
Its three major unions have opposed the restructuring plans.
Outside the court Monday, Jim Little, president of Transport Workers Union International, told the crowd, “It’s the blame game. They want to blame labor.”
TWU workers’ frustration with the cuts and financial situation of the carrier came across loud and clear in chants and on signs.
“We bailed them out, AA sells us out,” said a sign carried by Frank Ricci, a TWU member from New York’s John F. Kennedy International Airport. “I think this is an attack on the middle class.”
The bankruptcy case began a crucial phase Monday as attorneys for the airline made opening statements in a hearing aimed at persuading U.S. Bankruptcy Judge Sean Lane to throw out union contracts.
American started the Section 1113 proceeding to abrogate the labor contracts with attorney Jack Gallagher saying, “No one wins a 1113 proceeding.”
“American has the highest labor costs in an intensely competitive industry,” he said. “It’s that simple. We need to fix this business.”
Attorneys for the pilots union and the flight attendants union brought up US Airways, despite the judge having granted American exclusivity in the proceeding until September.
Allied Pilots Association attorney Edgar James said the judge should look at the business plan, and the need to consolidate as part of that.
“They have failed to consider consolidation,” James said.
American spokesman Bruce Hicks responded during the lunch break, “It has nothing to do with this hearing.”