American Airlines, pilots reach tentative contract

Wed Jun 27, 2012 8:23pm EDT
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(Reuters) - Pilot union leaders at American Airlines reached a tentative agreement with management on Wednesday on a steep cost-cutting contract aimed at heading off a threat by the carrier to abandon the current deal in bankruptcy and impose stricter terms.

The Allied Pilots Association board voted 9 to 7 to send the last and best offer to its membership for consideration, the union and the company said.

A vote by members is expected in coming weeks, prompting the judge overseeing American's case in New York to postpone a ruling that had been scheduled for Friday on whether to allow the airline to abrogate the pilots' contract, the airline said.

Ratification by pilots would end years of bitter negotiations and introduce a measure of labor stability to American's bankruptcy.

The airline is seeking more than $1.2 billion in cost cuts from its unions annually, a key factor in its decision to seek Chapter 11 protection from creditors last November.

Added certainty from labor would allow the parties to shift focus to American's planned emergence later this year and whether it will do so alone or as part of a merger.

The six-year deal was revisited over the past several days after union board members rejected a previous proposal from American's parent, AMR Corp AAMRQ.PK.

Details of the tentative deal were not released. But proposed terms disclosed over the past few days included $315 million in annual cost savings - down from $370 million - no layoffs, annual pay raises, and a stake in the new company.

The union representing 10,000 pilots had no immediate comment beyond confirming the deal and the board's vote.   Continued...

American Airlines aircraft stand on the tarmac at Los Angeles International Airport in Los Angeles April 20, 2012. REUTERS/Lucas Jackson