American Airlines in Bankruptcy Is Pushing to Get Rid of Union Contracts

On Monday, more than 300 American Airlines employees protested the attempt by American Airlines to eliminate the union contracts in their bankruptcy filing. The employees showed up in force at the U.S. Bankruptcy Court where the hearing was going on. Many employees were hoping that US Airways would take over the Fort Worth, Texas airline out of bankruptcy.

American Airlines stated in their bankruptcy filing that they needed to cut $1.25 billion in payroll and pension costs to be able to emerge after filing bankruptcy successfully. In the submitted plan, AMR wanted to change work rules and employee benefits, freeze their pension plan and close the Fort Worth Airport maintenance base. All of the employee unions involved have opposed any bankruptcy restructuring plan.

The bankruptcy filing started an important phase Monday as the bankruptcy attorney for the airline made an opening statement targeted at having US Bankruptcy Judge Sean Lane eliminate the company’s union contracts.

American Bankruptcy attorney, Jack Gallagher, stated “No one wins a 1113 proceeding. “And continued, “American has the highest labor costs in an intensely competitive industry. It’s that simple. We need to fix this business.”

Attorneys for the unions brought up US Airways as a way to offer an alternative even though the bankruptcy judge has already given American Airlines exclusivity until next September.

With many airlines filing bankruptcy, people will start questioning the cost of employment using union contracts. Union contracts are becoming a big problem with municipalities also.

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