AA Pilots Prepare For Bumpy Ride Through Bankruptcy
FORT WORTH (CBSDFW.COM) - Now that bankruptcy has been filed, pilots for American Airlines are preparing for a bumpy ride. "There's no way to dress this thing up. It's ugly," said Tom Hoban.
Hoban is with the Allied Pilots Association, the union for AA pilots. Hoban says the airline was offering 7% less than what the pilots wanted, which led to a halt to negotiations earlier this month.
The APA representative says, even if the union agreed to the terms, it still would not have saved American Airlines from bankruptcy."The pilots' contract alone, by their [AA Management] own admission, would have saved them about $100 million per year," explained Hoban. "They're currently losing about $1.2 billion per year, so that's effectively a drop in the bucket," he added.
American Airlines did not return calls by CBS 11. However, it's been the airline's long-standing policy not to comment on contract negotiations.
The APA union admits that bankruptcy strips them of any and all leverage in contract negotiations. The pilots also realize that their next contract will be settled by a judge.
Mark Ralston is a Dallas attorney who worked on bankruptcy cases for TWA and U.S. Airways. Ralston expects a judge to chop down the pilots pay to salaries equivalent to what other airlines are paying. "I think the big justification for American to file this bankruptcy is essentially to create a level playing field with its competition; all of which went through the bankruptcy process."
Meanwhile, the pilots' union fully expects AA executives to ask a judge for temporary relief which could come in the form of pay cuts across the board for all American employees. The request for temporary relief could also come within 30 days.
However, pay cuts may be a hard sell since AA has $4 billion dollars in the bank to fall back on. Never-the-less, the pilots understand that they're in a holding pattern for at least a year while the courts decide their fate. AA's first bankruptcy hearing is scheduled for December 22, 2011.
Click here to read the bankruptcy code that American Airlines must follow.
