American Airlines pilots' union rejects latest contract offer

The pilots' union on Wednesday rejected the latest contract offer from American Airlines, which is awaiting a judge's ruling on whether it can impose its own terms for cutting costs that include eliminating thousands of jobs.

The union's board voted 11-5 to reject the company's offer.

A federal bankruptcy judge is scheduled to rule Friday on whether American can break its current contracts with pilots and other union workers. The pilots' union wants in that ruling delayed.

American and parent AMR Corp., filed for bankruptcy protection in November. American is the nation's third-biggest airline behind United and Delta.

Its attempt to fix itself has been complicated by US Airways, which has taken steps toward a potential takeover of AMR -- something that AMR executives don't want to talk about yet. US Airways won the support of American's unions by promising fewer layoffs and even some wage increases if it buys AMR.

American wants to emerge from bankruptcy as an independent company. To do that, it says it must cut labor costs by $1.25 billion per year -- mostly by eliminating nearly 12,000 union jobs. American has about 75,000 employees including nearly 55,000 union members.

While pilots would bear only 400 of the immediate job losses, they have complained bitterly about other changes sought by American. A key ingredient to the turnaround plan is boosting revenue by selling seats on other U.S. airlines as if they were American flights.

American can't do that under the current contract with pilots, who fear that so-called code-sharing would mean fewer pilot jobs at American. But federal law lets companies in bankruptcy scuttle their union contracts if it's essential to their survival.

After several days of last-ditch negotiations, American made a new contract proposal to the pilots' union last week. Neither side disclosed the offer's specific terms. The union said there were "clear improvements" over American's original plan but that some areas, such as scheduling, which affects a pilot's pay, were too vague.

"This is still a concessionary contract," said union spokesman Tom Hoban.

Still, Hoban said the two sides were "very close in many areas." He said that union President David Bates asked AMR CEO Thomas Horton to seek the judge's approval for more time to negotiate by pushing back Friday's deadline.

American had no immediate comment on the union vote or the request for a delay in the judge's ruling.