Five out of seven work groups represented by the largest union at American Airlines voted to accept contract terms offered by the bankrupt airline that will cut thousands of jobs, the Transport Workers Union (TWU) said on Tuesday.
The vote ends a court battle between the groups and AMR over the airline's bid to void its current collective bargaining agreements as it seeks to save USD$1.25 billion a year in staff costs, including USD$990 million from its unions.
Had that request been successful, AMR might have been allowed to unilaterally impose even more stringent terms.
That same court battle continues this week, however, for the TWU groups that turned down the deal, as well as two other unions representing AMR pilots and flight attendants who elected not to vote on the deal.
Those groups are taking a higher-risk path, accepting the possibility of deeper cuts in the hope that Judge Sean Lane, in US Bankruptcy Court in Manhattan, will deny AMR's bid.
The TWU groups' vote does not alter the union's overall support for a proposed merger between US Airways and AMR, the union said in a statement on Tuesday.
All three of AMR's primary unions support a merger, saying it could save 6,000 jobs that would be doomed if AMR restructures on a standalone basis. AMR, initially resistant to a merger, said last week it was willing to explore its M&A options.
The five TWU groups that accepted the deal -- fleet service clerks, dispatchers, ground school instructors, maintenance control technicians and simulator technicians -- will sustain about 7,300 job cuts, according to Bruce Hicks, a spokesman for AMR.
But Hicks said the deal saves 1,300 fleet service jobs that would have been cut under earlier AMR proposals. He added that another 1,960 jobs could have been saved if two other work groups -- aircraft maintenance workers and stores clerks -- had accepted the plan.
AMR filed for bankruptcy in November, citing staff costs. The USD$990 million it has targeted in annual savings has angered staff.
Unions including TWU rallied last month outside Manhattan Bankruptcy Court. TWU President James Little at the time dubbed the court a "crime scene" for AMR's perceived unfair position on talks.
But Little on Tuesday said in a statement that some of his union's work groups "found the company's last offer to be a safer bet than waiting on the court to make a decision."
"The members in bargaining units that voted 'no' thought the proposals were not in their best interests," Little said.
TOUGH ROAD AHEAD?
The flight attendants' and pilots' unions this week are arguing in court that AMR has not considered alternatives to its proposed cuts, and is seeking deeper-than-necessary cuts to gain a competitive advantage.
But some analysts feel AMR has the edge in that fight, which could mean the successful abrogation of union deals and even tighter, potentially unilateral work terms.
"AMR's motion is moving full steam ahead, and I don't see it as going that well for the unions," bankruptcy analyst Kevin Starke, of CRT Capital, said on Tuesday.
Starke, who has been following the weeks-long court hearing, said work groups that did not ratify AMR's offer may "get to an outcome potentially worse than they might have gotten had they just said yes."
"Those who voted 'no' are just choosing to take their chances in court first," he said.
Ray Neidl, an airline analyst at Maxim Group, said the votes reflect an overall understanding by workers that the latest AMR proposals are better than potential alternatives.
"The thing is sometimes emotion gets ahead," Neidl said. "I think there's been enough time for people to think about it and think of what's best for their future."
The proposal had been sent directly by union leaders to the workers, an unusual step because unions frequently recommend an offer as a tentative agreement before submitting it for a vote.
The deal still needs bankruptcy court approval.
AMR said it would still try to win deals with the two TWU groups that rejected the offers even as it seeks court permission to void its existing contracts with those units.
On Tuesday, Delta Air Lines, which emerged from bankruptcy in 2007, announced it had reached a tentative new deal with its pilots.
Delta said in a statement that it reached the deal late on Monday, and still needed to send it to its pilots' union's governing body for deliberation.
Gravity always wins!