American airlines to seek rejection of union deals

AMR Corp's American Airlines plans to start a bankruptcy-court process for rejecting union contracts this week after failing to reach a deal to cut labour costs. American will ask for court approval to void the contracts unless there is a "profound change" in negotiations with unions, AMR's bankruptcy attorney Harvey Miller said at a court hearing Thursday in Manhattan. "We must start the process if we are going to bring these cases to a successful conclusion within a reasonable period of time," Miller told US Bankruptcy Judge Sean Lane. The plan escalates AMR's efforts to win lower labour costs in contract talks that began in 2006. AMR is now seeking $1.25 billion (Dh4 billion) in annual labour savings, including 13,000 job cuts, as it reorganises in bankruptcy. "A deadline will focus the union leadership teams," said Jeff Straebler, an independent airline analyst in Stamford, Connecticut. "It will come down to their making a choice of getting the best deal in negotiations or rolling the dice with the judge." AMR Thursday won court approval to extend to September 28 its control over the reorganisation and retain the exclusive right to file a bankruptcy plan. Jack Butler, a lawyer for AMR's unsecured creditors, said in court that the plan will lead to "complete conversion" of unsecured debt to equity. Bankruptcy law permits companies in court protection to seek permission to rework contracts to help them restructure. Bargaining can continue even after the filing of a motion to void labour accords at the third-largest US airline. American will file a motion seeking to reject collective bargaining agreements this week, Jeff Brundage, AMR's senior vice-president for human resources wrote in a letter on Thursday.