Business
12:29 am
Mon July 16, 2012

In Bankruptcy, American Airlines Looks At All Options

Originally published on Tue July 17, 2012 4:30 am

Imagine going into bankruptcy with billions of dollars in cash still in your bank account. That's what American Airlines did last November. The thinking was that management would gut the company's pensions and union contracts and emerge from bankruptcy ready to compete.

But then US Airways said it could take over American and be profitable, and it wouldn't have to hurt American's employees nearly as bad in the process. American's pilots, mechanics and flight attendants loved that idea.

James Little is the president of the Transport Workers International Union of America. His 26,000 members who work at American are still going to be giving back in these newly renegotiated contracts. But it's going to be better than American first proposed.

"In one group, the fleet service alone, which is a little over 12,000 members, we were saving about 4,000 jobs. In fact, we were keeping about another 27 cities open that American had chosen to close," Little says.

While American Airlines could very well emerge from bankruptcy a healthier stand-alone airline, there are quite a few analysts who believe that if it really wants to compete successfully with United and Delta, American needs to merge.

American spokesman Bruce Hicks says it's looking at all options. "American Airlines is committed to the best outcome, whatever that outcome might be, for all stakeholders involved, and particularly our employees, all employees at every level — management, nonmanagement, union, nonunion alike," Hicks says.

The New York Times reported that American's management team stands to make between $300 million and $600 million in bonuses if American Airlines emerges from bankruptcy as a stand-alone company, and that only after the giant payday has been pocketed will the inevitable merger with US Airways be allowed to go through.

That's not the case, says Hicks. "Trust me: There's nothing motivating the management of American Airlines except the success of American Airlines," he says.

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Transcript

RENEE MONTAGNE, HOST:

And the future of American Airlines is very much up in the air. American is currently in bankruptcy protection, and the question is, will it emerge from bankruptcy as a stand-alone airline, or will it end up merging with US Airways. NPR's Wade Goodwyn has more from Dallas.

WADE GOODWYN, BYLINE: Imagine going into bankruptcy with billions of dollars in cash still in your bank account. That's what American Airlines did last November. The thinking was that management would gut the company's pensions and union contracts and emerge from bankruptcy ready to compete. But then US Airways came along and said it could take over American and be profitable, and it wouldn't have to hurt American's employees nearly as bad in the process. American's pilots, mechanics and flight attendants loved this idea.

JAMES LITTLE: I think US Air had a lot to do with it.

GOODWYN: James Little is the president of the Transportation Workers International Union of America. His 26,000 members who work at American are still going to be giving back in these newly renegotiated contracts. But it's going to be better than American first proposed.

LITTLE: In one group, the fleet service alone, which is a little over 12,000 members, we were saving about 4,000 jobs. In fact, we were keeping about another 27 cities open that American had chose to close.

GOODWYN: So US kind of pushed American into a better agreement. Now American might US Air into a better agreement.

LITTLE: Well, that's probably what could happen.

GOODWYN: That's because US Airways is not going away. While American Airlines could very well emerge from bankruptcy a healthier stand-alone airline, there are quite a few analysts who believe that if it really wants to compete successfully with United and Delta, American needs to merge. American spokesman Bruce Hicks says they're looking at all the options.

BRUCE HICKS: American Airlines is committed to the best outcome whatever that outcome might be, for all stakeholders involved. And particularly, our employees, all employees, at every level, management, non-management, union, non-union alike.

GOODWYN: The New York Times reported that American's management team stands to make between 300 and $600 million in bonuses if American Airlines emerges from bankruptcy as a stand-alone, and that only after the giant payday has been pocketed, will the inevitable merger with US Airlines be allowed to go through. American spokesman, Bruce Hicks.

HICKS: Trust me, there's nothing motivating the management of American Airlines except the success of American Airlines.

GOODWYN: Wade Goodwyn, NPR News, Dallas. Transcript provided by NPR, Copyright NPR.

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