New York, NY- The parent company of American Airlines will ask a bankruptcy court to dismiss union labor contracts, within a week, if they cannot reach a cost-cutting deal with unions.
The company is trying to void several collective bargaining contracts that have been under intense negotiations since the airline retained a bankruptcy attorney and filed for debt protection on November 29th.
On Thursday, Attorney Harvey Miller said that American Airlines and unions have been negotiating in good faith, but have not been able to reach an agreement, he does not expect AMR Inc., the airlines parent company, and unions to reach a consensus.
American Airlines was forced to file for Chapter 11 bankruptcy amid rising fuel costs and contracts with employees. Like other airlines, such as Delta, American was facing failure and losing money. In order to save their business, they decided to hire a bankruptcy attorney and seek protection from their creditors so that it could become more profitable.
Under Chapter 11, the troubled business is able to continue operations while they draft a plan to pay off creditors. Businesses are often able to get private loans to help them through the bankruptcy process.
Any company facing overwhelming debt has a number of bankruptcy structures they can chose from. A bankruptcy lawyer can evaluate their finances and determine which debt reduction plan will be most appropriate with their needs.