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American Airlines Plans to Slash Jobs, Cut Pensions in Bankruptcy Filing

Any unions that don’t reach deals with the airline in the next two weeks may have their new contract terms, and the number of layoffs, set directly by a bankruptcy judge.

Photo Credit: AFP



The following article first appeared at Working In These Times, the labor blog of In These Times magazine. For more news and analysis like this, sign up to receive  In These Times weekly updates.


Weeks after American Airlines' parent company AMR submitted a bankruptcy proposal to its three unions, labor and management say time is running out to reach negotiated settlements. Any unions that don’t reach deals with AMR may have their new contract terms, and the number of layoffs, set directly by a bankruptcy judge. The president of the largest of these unions, the Transport Workers Union’s Jim Little, says he expects negotiations will be either completed or abandoned within the next two weeks.

As I’ve  reported previously for In These Times, AMR filed for bankruptcy protection November 29, despite $4 billion in cash on hand and newly reached tentative agreements on new concessions in some of its union contracts. Union leaders questioned the motives for the bankruptcy filing, and the company’s then-CEO, Gerard Arpey, announced his resignation the same day as the filing. 

When AMR announced its intention to retain Bain & Company, Mitt Romney’s former employer, for bankruptcy consulting, TWU members held protests outside Florida GOP primary events. Last month AMR made its formal bankruptcy proposal, which includes cutting 13,000 jobs, replacing all pensions with 401(k)s, and ending retiree healthcare payments. American Airlines was the only major US airline not to file for bankruptcy following 9/11; to avert bankruptcy, union members narrowly approved a major concessions package in 2003.

American Airlines workers are represented by three unions: TWU, which represents 26,000 mechanics, technicians, and fleet service workers at American Airlines and sibling airline American Eagle; the Association of Professional Flight Attendants (APFA), which has 18,000 members at American Airlines; and the Allied Pilots Association (APA), which has 10,000.  As Mike Elk has  reported for In These Times, American Airlines customer service workers have filed for a union recognition election to join the Communications Workers of America (CWA).

Granted anonymity to speak candidly about negotiations, a source close to TWU said AMR appears to be attempting to reach a deal with one of its three unions so that it will have greater credibility against the other two unions before the bankruptcy judge.  This source said that AMR’s efforts initially appeared focused on APA, but those negotiations appear to have stalled, and that with APFA President Laura Glading's ability to reach a deal compromised by a very narrow re-election, a TWU deal now represents AMR’s best opportunity to face the judge with one set of negotiations resolved.  Glading  received 51 percent of the vote in a February 24 run-off against challenger Liz Geiss, who had received the most votes in the first round of voting; a Geiss ally was elected as APFA's new vice president.

In a Friday  statement, AMR said, “We are disappointed there wasn’t more progress this week at the negotiating table…we continue to lose money as our cost structure is too high and uncompetitive with our industry peers. We cannot sustain this path.”

“Our discussions with the TWU have been constructive,” said AMR, “but there are still major gaps to address.” The company took a harsher tone toward its two other unions.  It charged that APA had not provided sufficient “supporting data to verify the valuation of their own proposals” and that “the savings associated with APA’s proposals fall far short of what the company needs.” It accused APFA of prioritizing an "out-of-town convention" over negotiations and showing “apparent disinterest” in responding to proposals.  An American Airlines spokesperson declined to elaborate on the statement.

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