August 14, 2012 / 2:47 PM / 6 years ago

AMR CEO, creditors to meet Tues for restructuring update-sources

American Airlines CEO Tom Horton attends a ceremony marking German carrier Airberlin's accession to the Oneworld network of airlines, at the BBI airport outside Berlin March 20, 2012. REUTERS/Thomas Peter

NEW YORK (Reuters) - AMR Corp AAMRQ.PK Chief Executive Tom Horton is to meet creditors on Tuesday and provide an update on labor talks after pilots rejected a contract offer from the bankrupt parent of American Airlines last week, according to people familiar with the matter.

Horton and other senior executives are also expected to discuss American’s financial and operational performance, negotiations with its trade vendors and its ongoing review of potential mergers at a regularly scheduled monthly meeting with the airline’s unsecured creditors committee Tuesday, one of the people said.

American management led by Horton has met with creditors monthly to brief the group on different elements of bankruptcy restructuring. Labor uncertainty created by the pilots’ rejection of a new contract offer is likely to be one of the major topics this month.

The people asked not to be named because the matter is not public. American declined to comment, as did a lawyer for its creditors’ committee.

The meeting in New York comes a day before Judge Sean Lane, who oversees American’s bankruptcy, is slated to rule on whether the third-largest U.S. carrier can abandon its current labor contract and unilaterally impose temporary work terms while the two sides continue to negotiate a long-term pact.

Last week, the Allied Pilots Association, the airline’s most powerful employee group, voted 61 percent to 39 percent to reject American’s latest contract offer, which would have imposed about $315 million in cost cuts.

Failure to reach a consensual deal could be a blow to American’s efforts to develop a standalone reorganization plan, which relies on slashing debt and labor costs to return to profitability.

Reporting by Soyoung Kim and Nick Brown in New York; Editing by Maureen Bavdek

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