American Airlines pilots will vote on contract

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Associated Press

Posted on June 27, 2012 at 5:01 PM

Updated Wednesday, Jun 27 at 7:30 PM

DALLAS (AP) — Union leaders at American Airlines agreed to let pilots vote on a company proposal for deep cuts in labor spending, just two days before a bankruptcy judge could have imposed even tougher terms.

A union spokesman said Wednesday that the Allied Pilots Association board voted 9-7 to order a ratification vote on American's offer, reversing a board decision from last week.

American said that with the pilots' vote now set, U.S. Bankruptcy Judge Sean Lane would postpone his decision scheduled for Friday on whether to throw out the airline's contracts with pilots and other employees for several weeks.

The union said pilots would begin voting in mid-July and results would be counted Aug. 8, and the judge would delay his ruling until after the vote-counting.

Separately, American said it also would resume negotiations with flight attendants and mechanics next week.

American has said all along that it wanted to reach voluntary cost-cutting deals with its unions. But negotiations went nowhere for weeks other than settlements with a few smaller groups of workers.

But American may have broken the logjam last week when it eased demands on pilots, including removing a threat to lay off 400 of them.

If ratified, the deal would give American the right to hire other airlines for more of its regional flying, something the pilots have long opposed as a threat to job security.

But the pilots would get 14.8 percent pay raises over five years and a stake in the "new" company that emerges from bankruptcy. Their pension plan would be frozen but not terminated.

Even if no pilots are furloughed, American's current plan still calls for 9,800 job cuts, mostly among ground workers but including 2,300 flight attendants. Those groups are likely to seek reduced job losses in new negotiations that begin next week.

Northwest Airlines was able to use bankruptcy to throw out a contract with flight attendants, but more often unions have negotiated concessions as American's unions are now doing.

American, the nation's third-biggest airline, hopes that it can impress its bankruptcy creditors by showing that it can negotiate deals with labor and cut around $1 billion a year in costs. That might help American delay or fend off a budding takeover bid from US Airways Group Inc.

American and Fort Worth, Texas-based parent AMR Corp. filed for bankruptcy protection in November. While American says it can emerge from bankruptcy as a successful stand-alone company, US Airways argues that American's only hope is to grow bigger through a merger with the nation's No. 5 carrier by passenger traffic.

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