Federal Judge Delays Decision On American Airlines' Union Contracts

A federal bankruptcy judge has delayed a ruling scheduled for Friday on whether American Airlines can break its contracts with unions and impose cost-cutting steps including thousands of layoffs.

Judge Sean Lane in New York City postponed a decision until June 29, 2012.

The one-week delay gives the company and unions more time to negotiate voluntary cost-cutting agreements that the unions have so far resisted.

The Allied Pilots Association had requested more time after its board voted 11-to-5 late Wednesday to reject American's latest offer. The company said it proposed pay raises, profit-sharing and stock in the airline after it emerges from bankruptcy protection.

Bruce Hicks, a spokesman for American parent AMR, said the company would not sweeten the proposal that was rejected by the pilots' union board but will give the union "more time to better understand our proposal and make a decision that is in the best interests of our pilots."

Pilots' union spokesman Tom Hoban said both sides would meet over the weekend and the union board would hold another vote next week. The union had said American's last proposal was too vague in some key areas.

Negotiations had previously broken down with unions for flight attendants and mechanics. Hicks said American was willing to reopen talks with those groups.

Leslie Mayo, a spokeswoman for the Association of Professional Flight Attendants, said her union wants American to open its books to potential buyers and ease concession demands.

Hovering in the background is US Airways Group Inc., which is preparing a takeover bid for AMR. US Airways has won the support of American's three unions by promising fewer layoffs and fewer concessions than American is demanding.

AMR filed for bankruptcy protection in November. It says it must cut labor costs by $1.25 billion per year to succeed, and it proposed to eliminate nearly 12,000 union jobs at American and impose other cuts on workers.

For more stories on American Airlines, visit our special coverage page "American Airlines: Turbulent Times."