American Airlines watching United's attempts to cut labor costs

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American Airlines watching United's attempts to cut labor costs

DALLAS (AP) =97 United Airlines' attempt to use bankruptcy to impose lower=
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labor costs would increase pressure on American Airlines, which is already=
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negotiating deep concessions from its major unions, an airline spokesman=20
said Tuesday. United asked a federal bankruptcy court judge Monday to scrap=
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agreements it struck with labor unions unless new deals can be negotiated=20
by May 1, clearing the way to impose wage and benefit cuts of nearly $2.6=20
billion per year. The move by the nation's No. 2 carrier came one day after=
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American opened negotiations with its flight attendants and ground workers=
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on cuts in wages, benefits and working conditions. American, the world's=20
largest carrier, had already been bargaining with its pilots' union.=20
American is seeking $1.8 billion in annual concessions from employees,=20
saying it needs to cut costs sharply to avoid bankruptcy during the airline=
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industry's current slump. "As United significantly reduces its labor costs,=
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it absolutely puts additional pressure on American from a labor-cost=20
perspective," said Bruce Hicks, an American spokesman. "When you have our=20
chief competitor of the legacy carriers reducing its costs, it puts=20
continued pressure on us." John Darrah, president of the Allied Pilots=20
Association at American, said however that United's move did not represent=
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much deeper cuts than American is already seeking through negotiations with=
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its unions.

United has more room to cut wages, Darrah said. United had agreed to=20
increase pay of its pilots before the industry's slump began in 2001 and=20
spends $300 million to $400 million more per year on pilots than American,=
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he said. "We're right in the ballpark if we can do it (cut costs)=20
consensually," Darrah said. "But if we're going to give up $660 million" =97=
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the pilots' share of the cuts, as proposed by American =97 "we expect some=
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kind of return on investment," he said. American lost $3.5 billion last=20
year. Company officials have said they would be willing to negotiate a=20
means of sharing profits when the airline's financial performance improves,=
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but Darrah said the topic has not yet been discussed at the bargaining=20
table. Darrah said the union may also seek a bigger role in running=20
American, but he said the union has not considered seeking seats on the=20
company board or taking an equity stake in the parent, Fort Worth-based=20
AMR. Pilots union leaders have also warned American not to pursue another=20
United strategy: creating a low-cost carrier as an airline within an=20
airline. Hicks, the American spokesman, said the airline was "watching what=
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the others are doing =97 we take a look at everything =97 but we're not=20
interested" in creating a separate low-cost airline. "It didn't work for=20
anybody in the past. There's no evidence that it can succeed," he said.


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