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A judge on Thursday postponed a ruling on whether to throw out contracts covering thousands of unionized workers at bankrupt American Airlines, giving labor and management an extra week to try and reach deals to save the company money, Reuters reported yesterday. Judge Sean Lane was set to rule on Friday on the airline's motion to abrogate terms covering pilots, flight attendants and certain ground workers. American said Lane postponed his decision until June 29, averting for now the possibility of management imposing work rules and other terms until long-term deals could be cut. American sought bankruptcy in November, partly blaming high union labor costs for losing its competitive edge vs. rivals who restructured in court several years ago and then strengthened themselves further through mergers. The case is In re AMR Corp et al., U.S. Bankruptcy Court, Southern District of New York, No. 11-15463.

AMR Corp. Chief Executive Officer Tom Horton asked an ad hoc bondholder group to study his plan for a stand-alone American Airlines before reviewing a possible merger for the bankrupt carrier, Bloomberg News reported on Friday. The group, which holds about $700 million in AMR debt, supports that sequence for its review. Horton expressed frustration with attention being given to a pending US Airways Group Inc. merger bid. The process discussed at the June 13 session in New York is the one being followed in AMR’s bankruptcy, with the company agreeing to consider options after detailing its own strategy to stay independent. The ad hoc group organized outside of bankruptcy court and is not obliged to follow the same steps. Horton's meeting was his first with the bondholders, who formed two such groups in an effort to gain leverage and reap the largest return.

AMR Corp.'s American Airlines won a court order temporarily blocking passenger-service employees from conducting a union representation election because it might violate labor laws, Bloomberg News reported yesterday. U.S. District Judge Terry R. Means yesterday granted the provisional order requested by the airline three days ago. He also denied a National Mediation Board bid to dismiss the carrier's lawsuit and slated a consolidated preliminary injunction hearing and trial for June 21.

In related news, US Airways Group Inc. CEO Doug Parker told shareholders yesterday that their airline can jump to the top of the industry with a merger with American Airlines, the Associated Press reported yesterday. American has lost market share to Delta and United over the past five years, a trend that Parker asserts will not be fixed through bankruptcy reorganization. The merged airline would be the market leader across two-thirds of the country, he said. American’s parent, AMR Corp. filed for bankruptcy protection on Nov. 29. American CEO Tom Horton has repeatedly said that he wants his airline to emerge from bankruptcy before considering a merger, although AMR and its creditors committee have agreed to explore potential consolidation. Link:
http://www.washingtonpost.com/business/us-airways-ceo-says-american-can…

American Airlines and the union for its mechanics ended two days of negotiations without a deal on labor cost-cutting, making it likely that the decision will be left to the judge handling American's bankruptcy case, the Associated Press reported yesterday. The airline also resumed talks yesterday with its pilots, and while the pilots' union reported progress in talks, no agreement has been reached. Negotiations with flight attendants broke off two weeks ago.

AMR Corp.'s American Airlines asked a federal judge to stop a union-representation election scheduled to take place among passenger service employees at the carrier, Bloomberg News reported yesterday. In a district court filing on Monday, American requested a court order preventing the National Mediation Board from holding what the airline called an "illegal" election. American, which sued the board in May over its decision to order an election, said that the agency "completely disregarded that its very statutory authority to act was at issue" in the litigation. The board has asked the court to dismiss the company's complaint.

American Airlines failed to agree on cost-cutting measures with its flight attendants' union, setting the stage for a judge to rule on voiding the contract for the bankrupt carrier, Reuters reported on Saturday. The Fort Worth, Texas-based airline filed for chapter 11 protection in November, citing a need to cut labor costs, while its flight attendant and pilot unions have pushed for a merger with rival carrier US Airways Corp. to reduce expenses. Talks between American Airlines and the Association of Professional Flight Attendants ended without reaching a deal after two days of meetings, the union said on Friday. The pilots union will meet with the airline in another round of mediated sessions beginning today.

In related news, American Airlines' parent company lost $142 million in April as revenue failed to keep up with the cost of jet fuel, labor and other expenses, the Associated Press reported on Friday. AMR Corp.'s net loss was smaller in April than in other recent months, even though revenue fell 7 percent compared with March. Since filing for Chapter 11 protection in late November, AMR has posted a net loss of $2.7 billion including bankruptcy costs and a loss of $1.1 billion excluding those items. AMR said that in April it had $75 million in expenses for its bankruptcy reorganization, including $22 million in fees for lawyers and other professionals and $53 million to renegotiate and reject aircraft and facility leases. Without those reorganization costs, AMR would have lost $67 million on revenue of $2.04 billion.
http://www.startribune.com/business/156409395.html

American Airlines told Bankruptcy Judge Sean Lane on Friday that its labor contracts must be terminated in order for the company to survive, the Fort Worth (Tex.) Star-Telegram reported on Saturday. Judge Lane finished the lengthy §1113 hearing, which included three weeks of testimony, on a surprising note by telling the courtroom that while he is prepared to rule by the June 22 deadline, he would prefer not to. "The only thing I have in front of me," he said, "is whether to reject a collective bargaining agreement. You're all still stuck with each other. You still have to negotiate new agreements."

Nearly 20 months after completing their $3.2 billion merger, United and Continental are grappling with the messy business of stitching together two sprawling operations, the Wall Street Journal reported today. The process has left many longtime customers fuming, bewildered many of the company's agents and slowed revenue growth. The company can ill afford to alienate its elite frequent fliers, a notoriously finicky bunch who make up about 1 percent of frequent-flier membership but account for about 25 percent of airline revenues. Many of them are business travelers who fly constantly and pay top dollar for their tickets. A decade of airline consolidation has proved the business logic of such unions, with the industry broadly profitable once again. Another such deal may be on the way as US Airways Group Inc. is pursuing a merger with American Airlines parent AMR Corp., which hopes to remain independent when it exits bankruptcy protection.

American Eagle, which operates short-haul flights for American Airlines, says that is cutting about 100 management and support jobs as it pares costs during a bankruptcy reorganization, the Associated Press reported yesterday. The regional airline plans to save $7 million a year with the layoffs, which would trim nonunion management and support staff by about 10 percent, including about 15 percent of executive officers. Eagle and American Airlines are owned by AMR Corp., and all three filed for bankruptcy protection in November. Eagle, which has about 14,000 workers compared with 73,000 at American, wants to cut annual labor costs by $75 million, with more than two-thirds coming from union pilots and flight attendants. Eagle has been negotiating concessions with its unions since March 21.

AMR Corp.'s American Airlines has to look to a merger with US Airways Group Inc. to turn around the bankrupt airline, an expert for one of the unions fighting planned labor cuts testified in court, Bloomberg News reported yesterday. American's business plan is not viable, and a merger would create a network allowing it to compete better with larger rivals, Daniel Akins, an expert for the flight attendants union, said in court. Akins, an airline industry economist, was testifying for the flight attendants as the union fights AMR's effort to cut labor costs as part of its bankruptcy restructuring. The Fort Worth, Texas-based airline is seeking court approval to void contracts with unions representing with pilots, flight attendants and mechanics.