Bankruptcy is newest union-busting tool

American Airlines is declaring bankruptcy even as it’s swaddled in cash. Critics contend that it’s a scam to escape union contracts.

With $4 billion in cash, American Airlines’ parent company AMR Corp still declared bankruptcy in November after concluding that the billions of dollars in concessions from its unions since 2003 — plus profits from tax breaks and subsidies — wasn’t enough.

Wanting labor costs down 20 percent, American chose to file for bankruptcy in order to break its union contract and lay off 13,000 workers — 16 percent of the workforce. Some 130,000 current and former workers risk losing pensions and retiree health care as management seeks to offload $9 billion in unfunded pension obligations to a federal insurance program.

American hired Mitt Romney’s old consultancy, Bain & Co., to “assist in labor-cost assessment and negotiation” at a cost of $525,000 a month.

“Taking a long-term view, the American bankruptcy is a very positive thing,” a Boeing executive told Reuters. The aircraft maker expects billions of dollars in plane orders from American once its court-ordered restructuring is complete.

Laura Glading, the president of the Association for Professional Flight Attendants, denounced what she called management’s “take-it-or-leave-it tactics, which never result in real success but only resentment and turmoil.”

The company is negotiating with the union, but if an agreement is not reached, it plans to ask the judge to dismiss the current collective-bargaining agreements. If granted, the company can unilaterally impose its own work rules.

Labor Notes, March 5
Associated Press, March 13
NBC News/Dallas-Fort Worth, March 22