Union members gathered outside a New York courtroom while the bankruptcy attorneys representing American Airlines argued that union contracts needed to be changed in order to make the company financially solvent.
American Airlines is asking to eliminate 13,000 union jobs, which represent one in four employees, freeze or eliminate pension plans, reduce days off among many other cuts.
Lawyer for the airline, Jack Gallagher said, “A restructured job is better than no job at all.” Gallagher pointed out that other airlines such as TWA and PanAm were forced to shut-down.
American also stated that management costs would be reduced 20 percent through layoffs and pay cuts.
American Airlines retained bankruptcy lawyers and filed for debt protection last November after it lost $10 billion on revenue over the past 10 years. Several of American Airline’s rivals filed for bankruptcy to reduce employee wages and benefits in an effort to become profitable again.
Union leaders have stated that American is blaming workers for their financial problems instead of taking steps to increase revenue, and approve of a merger with US Airways, who they believe are more capable of running American than the airline’s current management.
Union member carried signs saying “Profits First, Workers Last,” and “Merge Don’t Purge.”
Bankruptcy hearings over labor contracts will continue all week, followed by a two week break when the airline and unions will be given the opportunity to negotiate new labor contracts. If they cannot reach a mutual agreement a bankruptcy judge will make determine the fate of the labor contracts in June.
An insolvent company may find that a bankruptcy attorney will outline a number of ways the company can cut costs and return to a profitable state.