Judge Bars American From Dropping Pilots' Contract
DALLAS (CBS 11 NEWS/AP) -- In what American Airline pilots called a historic victory Wednesday, a federal bankruptcy court judge ruled the airline cannot cancel its contract with the pilot labor union as part of its effort to climb out of bankruptcy.
In the 106-page ruling Judge Sean Lane wrote that that the airline went too far in its efforts to cut costs and climb out of bankruptcy. "American's proposed changes to furlough and codesharing have not been justified," Lane wrote.
The ruling caught the Allied Pilots Association unprepared. All guidance had been that the airline would get the go ahead to abrogate the contract, which has happened in every previous airline bankruptcy case.
"It focuses the fact that the corporation has consistently overreached in its objectives," said APA spokesman Tom Hoban. "This bankruptcy we believe is one of convenience."
The APA said American now has the opportunity to sit down with pilots again to hash out a deal. Pilots narrowly voted down a tentative agreement last week.
American quickly responded to the ruling however saying it would make adjustments to the areas the judge took issue with, and resubmit its motion by the end of the week.
"Both of those were already fixed," said spokesman Bruce Hicks, referring to code sharing and furloughs. "All we now need to do is file as part of the term sheet."
Hicks said adjustments were made to both conditions in the April term sheet offer to pilots that would add controls to the nearly unlimited code sharing and furloughs the judge took issue with.
Most of the ruling was favorable to American. In one section Lane wrote "It is clear
that rejection of the agreement is necessary for American to successfully reorganize."
Hicks expected a new ruling could come within weeks.
(©2012 CBS Local Media, a division of CBS Radio Inc. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. The Associated Press contributed to this report.)
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