American Airlines has experienced some turbulence since it filed for Chapter 11 bankruptcy three months ago.
When American filed for Chapter 11 protection on Nov. 29, 2011, it claimed its labor cost structure wasn’t competitive with other airlines. According to Bloomberg, companies can use bankruptcy to reject labor contracts in order to cut costs. But yesterday, American’s pilots’ union, Allied Pilots Association (APA), sued the airline, saying its parent company, AMR Corp., can’t use the bankruptcy case to reject a collective bargaining agreement that expired in 2008. The union seeks to block American from forcing new employment terms on its more than 10,000 members.
Although APA said in its court filing that it wants to continue contract negotiations with American, it expressed dismay at the airline’s lack of interest in reaching a consensus.
“To say that I am disappointed would be an understatement. Management can choose how they handle bankruptcy restructuring,” APA President Dave Bates said in a letter to members. Bates told Reuters that some APA pilots plan to resign and fly for Chinese airlines instead.
Meanwhile, American Airlines Spokesperson Bruce Hicks said in a statement that “it is unfortunate that APA has resorted so quickly to litigation rather than focusing on the bargaining table where there are pressing economic issues to be resolved.”
Reuters reports that American has lost $10 billion over the past decade and must cut 13,000 jobs in order to reduce labor costs by $2 billion. The airline currently has about 74,000 full- and part-time employees, and its regional carrier, American Eagle, has about 14,000 full- and part-time employees.