=20 ---------------------------------------------------------------------- This article was sent to you by someone who found it on SFGate. The original article can be found on SFGate.com here: http://www.sfgate.com/cgi-bin/article.cgi?file=3D/n/a/2008/05/27/financial/= f140319D19.DTL --------------------------------------------------------------------- Tuesday, May 27, 2008 (AP) American rejects pilot union's contract proposals By HARRY R. WEBER, AP Business Writer (05-27) 14:03 PDT ATLANTA (AP) -- American Airlines, facing the possibility of a future cash crunch amid soaring fuel prices, said Tuesday it has rejected its pilot union's contract proposals after determining the cost to the nation's largest carrier would be too high if it accepted them. The union immediately shot back, seeking to know from management if its rejection means the talks are at an impasse. American, a unit of Fort Worth, Texas-based AMR Corp., said in an intern= al negotiations update that it informed Allied Pilots Association negotiators that the union's proposals "are not in the best long-term interests of either our company or our pilots." It said the proposals would increase American's annual pilot costs by roughly $3 billion in recurring expenses. The pilots' 2003 contract with American became amendable on May 1, though the two sides started talks in September 2006. Last fall, the union asked for pay raises of 50 percent to return their pay to 1992 levels. The union says the pay restoration would only increase the company's annual costs by $750 million. The company proposed that pilots could earn more money by working longer hours. In their negotiations update Tuesday, the airline also said that the union's pension and scope proposals are not feasible. A proposal related to a particular pilot pension plan would require the company to immediately contribute an additional $1 billion to keep funding levels above 80 percent and avoid restrictions on lump sum payments, American said. The airline said that implementing the union's proposals would have a "serious detrimental impact on the company's economic stability." But union spokesman Scott Shankland said the company is not acting in go= od faith. He said the airline rewarded top management when the airline's performan= ce improved, but hasn't given pilots back what the pilots gave up when American teetered on the verge of bankruptcy five years ago. American has about 9,600 active pilots, according to the union. Pilots took wage and benefit cuts in 2003. AMR earned $735 million in 20= 06 and 2007, raising employees' hopes of pay raises to offset the 2003 cuts. But American's parent lost $328 million in the first three months of this year due largely to record fuel prices. "We're concerned on multiple levels," Shankland said. "We've been trying over the last two weeks to appeal to the AMR board of directors directly, trying to convince them and enlist their help in turning this airline around." Shankland said the union is aware that American again faces an uncertain financial future in light of $130 a barrel oil, but he argued that the company should be fair to employees who have sacrificed for the airline in the past. "This company will never change direction if they don't fix the poisonous relationship that exists between management and employees," he said. Shankland said the union wants to know from the company if the talks are at an impasse. He said the airline didn't offer any counterproposals Tuesday. "It sure sounds like an impasse," he said. Jeffrey J. Brundage, American's senior vice president of human resources, said in an interview that rejection of proposals is not uncommon in negotiations, and he suggested that there is still hope for finding common ground with the pilots union on a new contract. "All we've said to the pilots is, 'This is not a proposal that makes a good starting point for us,'" Brundage said. Under federal law designed to avoid strikes, labor contracts in the airline don't expire; they become "amendable." American is also facing negotiations with its flight attendants and ground workers. According to Shankland, the average American pilot currently makes about $100,000 a year. However, Brundage put the figure at roughly $139,000. Atlanta-based Delta Air Lines Inc. secured two rounds of pay and benefit cuts from its pilots in recent years. One of the rounds occurred while Delta was under bankruptcy protection, and it came after the airline sought to reject the pilot contract and impose concessions unilaterally. After threatening to strike, the union reached a consensual pay cut agreement with management. Delta pilots negotiated pay increases and an equity stake in the company in a revised contract that was negotiated during the run-up to the announcement that the airline plans to acquire Eagan, Minn.-based Northwest Airlines Corp. in a stock swap deal that would create the world's largest carrier. --------------------------------------------------= -------------------- Copyright 2008 AP <<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>> If you wish to unsubscribe from the AIRLINE List, please send an E-mail to: "listserv@xxxxxxxxxxxxxxxxx". Within the body of the text, only write the following:"SIGNOFF AIRLINE".