Wednesday, March 21, 2012

Labor Pains Complicate American Airlines Reorganization

AMR Corporation, parent of American Airlines plans to ask the U.S. Bankruptcy court overseeing its reorganization plan to toss union labor contracts. Negotiations between the airline and its unions have not made any progress and may go down to the wire as similar negotiations have gone in the past. American insists that it must achieve savings of over $1 billion from its unions to become competitive with other carriers. AMR is also trying to unload its pension obligations, unfavorable leases and other debts in its reorganization effort. Failure to reach a labor agreement with its unions may result in serious consequences to the airline and its unions such as industrial action by the unions and a delay in reorganization.