Updated 5/14 – 6:00 p.m.
NEW YORK (CBSDFW.COM) – American Airlines and its biggest unions were in a New York City courtroom again Monday.
The Fort Worth-based company is asking the bankruptcy court to let it end its union contracts, which the airline says put it at a competitive disadvantage. Unions are making their case against the cuts, following a two-week break in which the two sides weren’t able to resolve the dispute.
The hearing convened this morning. Only a handful of protestors from the Allied Pilots Association appeared outside the courthouse. That’s a sharp contrast to the last hearing, when several hundred American flight attendants and transport workers were there to protest the company.
The chief negotiator for the Allied Pilots Association, Neil Roghair, took the stand first. He reviewed the union’s negotiations with American as the two sides tried to adjust the terms of their contract over the last few months.
Roghair said as late as Februrary he thought the two sides had a deal. Roghair said it was clear though that American was entirely focused on achieving a set cost reduction from pilots of $370 million, rather than on finding a middle ground. The APA says it values its concessions at $270 million. Roghair said American puts the value closer to $140 million.
He also said a proposed merger with US Airways would take less money from the pilots, about $240 million. He said that merger would be best for the long-term future of American Airlines.
During cross examination though, American tried to poke holes in the offer from US Airways. Roghair admitted key issues including pilot seniority, sick time and code sharing have not been worked out in the merger agreement. American attorneys also questioned the APA’s willingness to agree to things like testing new routes with US Airways, something pilots woujld not agree to do with American. Roghair chalked that up to a “whole different environment” in the bargaining process.
The pilot’s second attorney, Andrew Yearly a restructuring expert, said in the afternoon that the $370 million in concessions that American is seeking would grow quickly to more than $400 million in just five years. He also said the airline is asking for far more money than analysts thought American needed to climb out of bankruptcy.
A spokesman for American said that was due to American’s efforts to make sure the company didn’t slip back into bankruptcy any time soon.
Pilots are expected to continue with witnesses Tuesday. Their testimony will follow an expected announcement from the Transport Workers Union in the morning on the outcome of a vote on a last, best, final offer from American.
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