American Airlines Eyes United's Moves
Mar. 19, 2003
DALLAS (AP) _ United Airlines' attempt to use bankruptcy to impose lower labor costs would increase pressure on American Airlines, which is already negotiating deep concessions from its major unions, an airline spokesman said Tuesday.
United asked a federal bankruptcy court judge Monday to scrap agreements it struck with labor unions unless new deals can be negotiated by May 1, clearing the way to impose wage and benefit cuts of nearly $2.6 billion per year.
The move by the nation's No. 2 carrier came one day after American opened negotiations with its flight attendants and ground workers on cuts in wages, benefits and working conditions. American, the world's largest carrier, had already been bargaining with its pilots' union.
American is seeking $1.8 billion in annual concessions from employees, saying it needs to cut costs sharply to avoid bankruptcy during the airline industry's current slump.
``As United significantly reduces its labor costs, it absolutely puts additional pressure on American from a labor-cost perspective,'' said Bruce Hicks, an American spokesman. ``When you have our chief competitor of the legacy carriers reducing its costs, it puts continued pressure on us.''
John Darrah, president of the Allied Pilots Association at American, said however that United's move did not represent much deeper cuts than American is already seeking through negotiations with its unions.
United has more room to cut wages, Darrah said. United had agreed to increase pay of its pilots before the industry's slump began in 2001 and spends $300 million to $400 million more per year on pilots than American, he said.
``We're right in the ballpark if we can do it (cut costs) consensually,'' Darrah said.
``But if we're going to give up $660 million'' _ the pilots' share of the cuts, as proposed by American _ ``we expect some kind of return on investment,'' he said.
American lost $3.5 billion last year. Company officials have said they would be willing to negotiate a means of sharing profits when the airline's financial performance improves, but Darrah said the topic has not yet been discussed at the bargaining table.
Darrah said the union may also seek a bigger role in running American, but he said the union has not considered seeking seats on the company board or taking an equity stake in the parent, Fort Worth-based AMR Corp.
Pilots union leaders have also warned American not to pursue another United strategy: creating a low-cost carrier as an airline within an airline.
Hicks, the American spokesman, said the airline was ``watching what the others are doing _ we take a look at everything _ but we're not interested'' in creating a separate low-cost airline.
``It didn't work for anybody in the past. There's no evidence that it can succeed,'' he said.
In trading Tuesday on the New York Stock Exchange, shares of AMR rose 7 cents to $1.71.