(The San Jose Mercury News posted the following story by Ina Paiva Cordle on its website on April 15.)
SAN JOSE, Calif. — American Airlines will learn this morning whether its three labor unions have agreed to wage and work concessions, possibly avoiding a bankruptcy filing.
If any one of the three labor group votes down its package of cuts or fails to deliver vote results by 8 a.m. PDT, the world’s largest airline said it will for Chapter 11 bankruptcy protection today.
American says it needs $4 billion in annual cost savings, including $1.8 billion in employee savings, to survive.
The carrier has asked its pilots’ union for $660 million in annual cost cuts; the Transport Workers Union for $620 million; and the flight attendants for $340 million.
If American files for bankruptcy protection, it will not have to pay debts while it attempts to reorganize the business. The carrier is expected to continue flying while in bankruptcy.
United Airlines is operating under bankruptcy protection, trying to cut labor and other costs to become profitable.
On Monday, a Texas federal judge denied a bid by three pilots to delay their union’s vote on the American cuts. Had they been successful, the airline would have filed for bankruptcy, said American spokesman Bruce Hicks. The case had been closely watched by all the unions, which are facing a tight voting deadline of 14 days, less than half the usual time.
The pilots had filed suit against their union, the Allied Pilots Association, Monday morning. Citing a lack of information about terms of the concession, they wanted to extend the period of time to vote.
“I’m disappointed,” said Sam Mayer, chairman of the APA’s New York base and a supporter of the lawsuit. “But I think we’ve done what we could to highlight the process, or lack thereof, to our pilots. And now it is up to them to make a decision based on the information or lack thereof that they have.”
Late Friday, Congress approved a bill that includes about $2.9 billion to reimburse airlines for additional security costs incurred since Sept. 11, 2001.
American is expected to receive at least $400 million.
“While it is much appreciated,” said American spokeswoman Martha Pantin, who wouldn’t confirm the amount, “it is a one-time assistance and doesn’t alter our need to remove $4 billion from our annual operating costs.”
All three unions have until this morning to complete their ratification votes. Two unions, the APA and the Transport Workers Union, each extended their deadlines from Monday afternoon until 7 a.m. PDT, citing the American Arbitration Association’s difficulty handling more than 73,000 electronic votes from the three unions.
The Association of Professional Flight Attendants’ voting deadline is 8 a.m. PDT.
Kersten Norlin, spokeswoman for the arbitration association, said she could not comment specifically on American’s votes. But the organization has used the electronic voting process successfully for more than four years, on elections with more than 200,000 votes, she said.In addition to the union concessions, the airline has identified another $2 billion in cost cuts. Another $80 million is expected to come from agents, representatives and planners, and $100 million from management and support staff.
“The only positive in this entire process,” said Rick Musica, Miami base vice chairman of the flight attendants union, “is that ultimately it will be the employees that will decide the future of American Airlines.”