March 22, 2012 / 12:58 AM / 6 years ago

AMR to seek termination of union contracts: Bloomberg

NEW YORK (Reuters) - AMR Corp AAMRQ.PK, the bankrupt parent of American Airlines, will ask a U.S. bankruptcy court to reject nine collective bargaining agreements with unions, after failing to secure cost-cutting concessions from its labor groups, Bloomberg News reported on Wednesday.

American Airlines planes sit at their gates while others taxi for arrival and departure at O'Hare International airport in Chicago November 29, 2011. REUTERS/Frank Polich

Barring any last-minute agreement during ongoing negotiations with its unions, AMR will seek court approval to terminate the union contracts within a week in the Manhattan bankruptcy court, Bloomberg said, citing two sources it did not name.

AMR declined to confirm or deny the report, but spokesman Bruce Hicks said in a statement the company will update the court on the progress of its labor talks during a court hearing on Thursday.

“Our challenge remains the same: work quickly to restructure our contracts, achieve the targeted cost savings and begin implementing the changes so we can emerge from restructuring and return to a growing, profitable company,” Hicks said.

AMR, which owns the third-largest U.S. airline, filed for Chapter 11 protection on November 29, citing uncompetitive labor costs after failing for years to reach an agreement on concessions with its unions.

It has said it is looking to cut as many as 13,000 jobs in an effort to trim costs by $2 billion, including $1.25 billion in labor costs.

Hicks stressed that concessions must come quickly if AMR is to emerge from bankruptcy in the near term.

“We have been consistent and direct with our unions that every day that passes without new agreements introduces more risk to our situation,” Hicks said.

An attorney representing Allied Pilots Association, the primary union for AMR pilots, could not immediately be reached for comment.

AMR’s bankruptcy case is In re: AMR Corp, U.S. Bankruptcy Court, Southern District of New York, No. 11-15463.

Reporting by Jessica Dye; Editing by Ramya Venugopal

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