Pilots Reject American Airlines Contract

by Alyssa Oursler | August 9, 2012 9:29 am

Pilots Reject American Airlines Contract

The Transport Workers Union representing American Airlines pilots turned down a six-year cost-cutting contract[1] yesterday, as the airline’s’ mechanics and aircraft stock clerks ratified new labor agreements.

The offer would have rescinded the current labor agreement — and offered modest raises, furlough protection, a 401k boost and an equity stake in the airline’s parent company AMR Corp (PINK:AMMRQ[2]).

Now, the issue will be taken to U.S. Bankruptcy Court, which has been overseeing the reorganization of AMR. This will delay the process — if the agreement had been ratified, the company would have won all its labor-saving costs through negotiation and would have reaped those savings faster.

It could also complicate the deal with U.S. Airways (NYSE:LCC[3]), who has been pursuing AMR for months and has a plan to bring AMR out of court protection through a merger[4].

The contract was rejected by a a vote of 61%, or 4,600 pilots, while the remaining 30%, or 2,935, voted for the new agreement.

Shares of U.S. Airways have more than doubled since January, while AMR Corp has also seen solid gains of around 25%.

Endnotes:
  1. six-year cost-cutting contract: http://online.wsj.com/article/SB10000872396390443991704577577331575899376.html
  2. AMMRQ: http://studio-5.financialcontent.com/investplace/quote?Symbol=AMMRQ
  3. LCC: http://studio-5.financialcontent.com/investplace/quote?Symbol=LCC
  4. through a merger: http://investorplace.com/2012/08/us-air-amr-2-courtship-scenarios/

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