Judge Delays American Airlines, Union Contract Decision
FORT WORTH (CBSDFW.COM) - A New York bankruptcy judge has delayed his decision by one week to cancel American Airlines' contracts with its three main unions. Judge Sean Lane did so late Thursday afternoon after American Airlines requested more time to negotiate with the pilots union, the Allied Pilots Association.
The judge was scheduled to issue his ruling this Friday, but now will do so on Friday, June 29.
On Wednesday, the pilots union board voted 11-to-5 to reject American's last, best offer and not to send it to its members to vote on. But the pilots union said, because it was close, that more time could be beneficial, and so the union leadership asked American to request a delay in the judge's decision.
Two sources confirmed to CBS 11 News that two board representatives from DFW International Airport voted in favor of the deal.
Sources say American, the trustee, creditors, pilots and other parties held a conference call late Thursday afternoon.
After the judge's ruling, American Airlines said it won't continue to negotiate with the pilots, and that it's current offer stands as is. Airline spokesman Bruce Hicks said, "They have our final offer. This is a process of giving them information, and answering questions."
The pilots union leaders left their Fort Worth office without comment Thursday evening, but they expressed optimism earlier in the day.
In a statement issued Thursday evening, the Allied Pilots Association said:
The interim period is intended to give APA and management additional time to discuss and deliberate details of management's "final offer" and to develop related contract language. In voting "no" yesterday against approving management's final offer as a tentative agreement, Board members cited the lack of specificity in various areas and the need for additional time to properly analyze various contractual provisions and related language.
Once APA and management have had an opportunity to address the APA Board's concerns, the Board will vote again on whether to approve management's offer as a tentative agreement. At Judge Lane's request, that vote is to take place no later than the close of business on Wednesday, June 27. Meetings between APA and management are slated to continue through this coming weekend. The APA Board of Directors will reconvene on Monday, June 25.
American has said its last offer included pay raises, a freeze in the pilots' pension instead of a termination, and a stake in the new company that emerges from bankruptcy. American sent information on the deal out to pilots Thursday night. The offer included a 14.8 percent pay raise over the term of the six year deal; cash payment for a percentage of unused sick time; and a 13.5 percent claim in the newly formed company. On Wednesday, the pilots said American's offer was too vague on its proposed work rules.
Mark Drusch, a retired executive at Delta and Continental Airlines, says it's a major development. "It means the union is still engaged with American, which is actually a positive sign for American because the union had a very strong no-confidence vote in management just a few months ago," he said.
But Judge Lane's ruling also grants more time for American to negotiate with two units of the Transport Worker's Union, including mechanics, and the Association of Professional Flight Attendants, which have also not reached agreements with the airline. Hicks, American's spokesman says, "We're willing to sit down with the APFA and TWU to resume good faith negotiations at any time. It's vital we close this chapter and move toward agreements that support a new American Airlines that can compete and win."
Leaders at the pilots, flight attendants, and mechanics unions have all supported U.S. Air's desire to merge with American Airlines.
Jamie Horwitz, a spokesman for the TWU, said Thursday evening, "The ruling gives more breathing room to reach a negotiated settlement."
Earlier Thursday, flight attendant union spokeswoman Leslie Mayo says their talks broke off two weeks ago because American's continued plan to slash $230 million in flight attendants' compensation was too steep. The flight attendants also disagree with the airline's plan to emerge from bankruptcy as an independent airline. "When American invites us back to the table, we hope it will move off its very solid position of a stand-alone plan, and a $230 million ask, we will come back to the table," Mayo said.
American has said it needs to eliminate a total of more than more than 12,000 jobs and slash $1 billion each year in costs to emerge from bankruptcy.
Southern Methodist University business professor Mike Davis says US Air's talks with American's unions are making matters more difficult for American. "It's kind of their fascinating little dance that's going on right now. USAir is using the union to give them leverage," Davis said. "The unions want a contract on favorable terms and they're using USAir to give them leverage."
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