December 21, 2012
The bankruptcy court overseeing American Airlines’s restructuring has approved the pilots contract while also denying a separate group of senior pilots’ request for a lump-sum retirement payment option.
The court approved the tentative agreement ratified Dec. 7 by Allied Pilots Association (APA) members, clearing the last labor-related hurdle for American to emerge from bankruptcy.
The new contract gives APA a 13.5% equity stake in the carrier when it emerges from Chapter 11 protection, but changes scope, pension and benefits provisions.
With the new contract, American sought to eliminate the lump-sum payment option for retiring pilots, arguing that the option would be an incentive for too many pilots to retire at once, leaving the carrier short-staffed and unable to successfully emerge from Chapter 11.
A breakaway group of senior pilots sought to reinstate the lump-sum option. These pilots, all hired before 1983, acted separately from the APA when they filed last week. The court on Dec. 19 ruled that the lump-sum option can be eliminated.
Both APA and American welcomed the ruling. “Since March, we’ve worked collaboratively with the Allied Pilots Association, the PBGC [Pension Benefit Guaranty Corp.] and the Unsecured Creditors Committee to develop a solution that would allow us to maintain the freeze of our pilot defined benefit pension plan,” says an American spokesman.
Separately, Aviation Week has learned that American’s flight attendants union has been invited to join the merger discussions between American and US Airways. APA and the US Airline Pilots Association, which represents US Airways pilots, were invited into the talks last week.