Bankruptcy Judge Sean Lane yesterday declined to rule on a pilots' appeal to preserve their old labor agreement, meaning the airline can continue making work changes while the two sides continue contract talks, Reuters reported. Judge Lane ruled last month that the airline, the operating unit of AMR Corp, could reject the previous labor agreement, which had been under negotiation since 2006. The union appealed the decision and it has asked the court to stop the airline from making changes while the appeal is pending, arguing that the changes cause "irreparable harm" to members. Judge Lane did not set a date for a ruling on the issue.
Pinnacle Airlines Corp.'s thousands of pilots and flight attendants are objecting to the airline's bid to scrap their contracts, a move the regional carrier says is necessary to exit bankruptcy protection, Dow Jones Daily Bankruptcy Review reported yesterday. The union representing some 1,800 flight attendants said in a court filing Friday night that Pinnacle has shown no compelling need to cut "by even one penny," its flight-attendant compensation. The Association of Flight Attendants said in a court filing that Pinnacle's flight attendants, far from being overpaid, are "actually below market in their wages, benefits and work rules." Pinnacle's 2,800 pilots, represented by the Air Line Pilots Association, is also protesting the carrier's bid to void their contract. The pilots' objection, unlike their flight attendant colleagues', was filed under seal.
American Airlines said on Friday that it had repaired seat locks on 42 of 48 Boeing 757 jets after some seats came loose during flights last week, Reuters reported on Friday. The AMR unit, which filed for bankruptcy protection last year, said all 48 of its 757 jets that were to get the seat adjustments would be back in service by Saturday. The carrier had canceled 94 flights over Thursday and Friday to improve the locking mechanisms used to secure seats to aircraft floors. In recent days, three separate incidents occurred in which seats on American Airlines flights came unbolted from the floor, prompting an investigation by the FAA and jet inspections. American said an internal probe showed that improperly installed clamps had caused seats to loosen in six aircraft.
AMR Corp.'s American Airlines lost a bid to stop a union-representation election for a group of employees as a federal appeals court threw out the carrier's lawsuit challenging the vote, Bloomberg News reported yesterday. The decision yesterday by the U.S. Court of Appeals in New Orleans means the union vote among approximately 10,000 passenger-service employees at the airline can proceed, the Communications Workers of America said. The CWA is seeking to represent the workers. The appeals court's decision is a setback for American, which is seeking to cut labor costs as part of its bankruptcy restructuring. The Fort Worth, Texas-based airline has negotiated cost-cutting deals with flight attendants, mechanics and other workers, and has won court approval to reject its labor contract with pilots. American sued the National Mediation Board in May to stop the union election by passenger service employees. U.S. District Judge Terry Means blocked the vote, and said that the board exceeded its authority when it authorized an election. The appeals court said in its decision that Means "erred in exercising jurisdiction." Judicial review of National Mediation Board decisions is appropriate only when the agency has committed egregious error, the court said.
American Airlines says that if pilots do not end actions that are disrupting its flights, it will take their union to court, the Associated Press reported yesterday. A top American Airlines executive told union leaders that some pilots were conducting "an unlawful, concerted effort to damage the company" by filing more maintenance complaints and other tactics, leading to a surge in late and canceled flights. Denise Lynn, the company's senior vice president of people, asked union officials to denounce any "work actions." She said that the pilots' actions alienated passengers and threatened the company's financial prospects just as American parent AMR Corp. is trying to turn itself around after a decade of huge losses.
The union representing pilots at American Airlines said that the airline wants to resume talks, signaling the company's intent in resolving a stalemate with the association, Reuters reported yesterday. A special meeting of the association's board has been scheduled for Wednesday to determine next steps, said Keith Wilson, president of the Allied Pilots Association. American began implementing cost cuts for its pilots this month after a bankruptcy judge ruled that the airline could abandon its collective bargaining agreement with the pilots union. The pilots, the only major work group at American that has not agreed on contract concessions since the carrier filed for chapter 11, had voted down a final offer from the airline in August.
Pilots for AMR Corp.'s American Airlines asked a U.S. bankruptcy judge to suspend his order allowing the carrier to throw out their labor contract and impose cost cuts while their appeal is considered, Bloomberg News reported on Saturday. The decision by Bankruptcy Judge Sean Lane allowing AMR to reject the contract will cause "irreparable harm" to pilots, the Allied Pilots Association said in a court filing on Friday. American won Judge Lane’s approval on Sept. 4 to impose work rule and other changes as it restructures after pilots rejected a final contract offer. The union has appealed the decision to U.S. District Court in Manhattan and is asking Judge Lane to stay his order while the appeal is considered.
Appaloosa Management LP has positioned itself to benefit from a possible merger between bankrupt AMR Corp. and US Airways Group Inc. after taking stakes in both airlines, Bloomberg News reported on Friday. While the hedge fund run by David Tepper is not lobbying for a merger, it favors consolidation and may opt later to push for a deal. Appaloosa is US Airways’ top shareholder and has amassed AMR debt that could be converted to equity in a chapter 11 restructuring, court records show. Owning US Airways stock and AMR debt gives the $15 billion investment firm an opening to sway both sides of a potential combination that would form the world’s largest airline. AMR dismissed the idea of a merger for months before agreeing in May to weigh options besides its stand-alone bankruptcy-exit plan.
AMR Corp. won court approval yesterday to pay the professional fees for bondholders considering a potential equity infusion that could allow the bankrupt airline to emerge as a standalone company, Reuters reported yesterday. The bondholders group, which holds roughly $900 million in various bond offerings, wants to perform due diligence to explore a financing offering, AMR attorney Harvey Miller said at a hearing. The 12-member bondholder group includes Pentwater Capital Management, Litespeed Management, Claren Road Asset Management and a JPMorgan unit, according to court filings. The fee agreement does not mean the bondholder group will ultimately provide funding on a standalone plan, or that other parties cannot explore providing an equity infusion, said Jack Butler, an attorney for AMR's creditors' committee. Read more: http://www.reuters.com/article/2012/09/20/amr-hearing-idUSL1E8KK6E02012…
In related news, the union representing pilots at American Airlines yesterday said that it has called no job action at the bankrupt carrier, which this week canceled hundreds of flights citing increased pilot maintenance reports and sick leave usage, Reuters reported. American began implementing cost cuts for its pilots this month after a U.S. bankruptcy judge ruled that the airline could abandon its collective bargaining agreement with the pilots union. The airline, a unit of AMR Corp, said on Wednesday that it canceled about 300 flights for this week out of nearly 24,000 departures planned across its network, including the American Eagle regional division. American cited factors including "an increase in maintenance reports filed by pilots, as well as levels of sick leave usage that have been running higher than historical norms." Read more: http://www.reuters.com/article/2012/09/20/americanair-pilots-idUSL1E8KK…
Holders of $450 million in American Airlines bonds plan to ask a U.S. bankruptcy judge for an order to help ensure they get paid, claiming that the 143 planes that are collateral for their investment could lose too much value, Reuters reported yesterday. The bondholders' agent, U.S. Bank , is expected to argue at a bankruptcy court hearing today that the airline unit of AMR Corp. has neglected its planes, and failed to make hundreds of repairs. They fear that this and other costs could force the value of the planes to sink too low to cover the bonds. The value "will continue to erode as a result of the costs to insure, store, ferry, market and sell the aircraft," U.S. Bank said in court papers.
