Fate of American Airlines up in the air

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Fate of American Airlines up in the air
By Marilyn Adams and Dan Reed, USA TODAY

American Airlines' parent AMR (AMR) agreed Tuesday to hold off on a
bankruptcy court filing to give its flight attendants union another day to
ratify contract concessions that will save the company $340 million a year.
The Association of Professional Flight Attendants narrowly rejected the
concessions Tuesday after the airline's other major unions ratified
cost-saving contracts. AMR wants $1.8 billion a year in labor savings,
which includes $200 million from non-union employees. The APFA will
continue voting until 6 p.m. ET Wednesday. Yesterday's vote was 9,309 in
favor of the concessions, 9,842 against and 462 votes ruled ineligible.
American management was also said to be speaking with creditors about
extending deadlines for large debt payments an extra day or two, to allow
for a flight attendants' re-vote. On April 1, the company said it was
taking advantage of 15-day grace periods on unspecified payments to
creditors. The grace periods were to end Tuesday. Don Carty, AMR's chief
executive, had earlier rejected the APFA's request to extend the company's
deadline and insisted the voting results be announced by noon. Burning $5
million in cash a day, the airline threatened to file in U.S. Bankruptcy
Court in New York as early as Tuesday afternoon if the unions didn't agree
to slash the concessions package.

Pressure around the voting was palpable. In Fort Worth, where American is
based, TV news trucks were camped out in front of American's headquarters
and at nearby union offices. In Miami, American's third-largest hub city,
updates dominated news broadcasts. Following ratifications by some of the
unions, AMR's share price jumped and ended up 32 cents to $3.40 after
trading was supsended. The vote by American's pilots Tuesday was most
decisive. About 69% of pilots voted to ratify $660 million a year in
concessions. But votes by American's mechanics and ramp workers,
represented by the Transport Workers Union (TWU), were close. About 52% of
mechanics and related workers approved the concessions package. And about
54% of the TWU unit representing ramp workers, janitors, meteorologists and
others voted yes. TWU employees were asked for $620 million a year in
concessions. Flight attendants were asked for $340 million. "The past
several weeks have been tremendously difficult for our pilots, and I would
like to thank them for their willingness to contribute to the recovery of
American Airlines," said John Darrah, the Allied Pilots Association
president. "Clearly, the gut-wrenching decision our pilots have had to make
will have a major impact on their lives." The voting took place against the
backdrop of two other airline reorganizations. US Airways' employees took
deep cuts in pay, benefits and pensions to get their airline out of Chapter
11. United Airlines is still in Chapter 11. United's pilots last week
overwhelmingly approved concessions much greater than those asked of
American's pilots: $1 billion a year for six years. Votes by other United
unions are pending.


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