Reduction in Retirement Benefits and Outsourcing Restrictions Approved
Dallas, TX -- (SBWIRE) -- 09/27/2012 -- Changes were announced on Wednesday from American Airlines, who has been granted permission to reduce their retirement benefits and ease their restrictions on outsourcing its flights to other airlines. The permissions were granted by a bankruptcy judge as the airline attempts a turnaround from its bankruptcy protection.
Other changes were also allowed by the federal judge. For instance, last week American Airlines was allowed to toss their previous pilots’ contract and replace it with their own working terms after its pilots rejected an offer from the company. Earlier in the day, the judge also approved labor contracts that had been changed by the mechanics as well as flight attendants.
In another move, which is designed to boost the revenue of American Airlines without adding any flights, the limits on the revenue sharing deals that it held with other airlines was relaxed. This move will give American Airlines more flexibility to change flying to regional airlines.
On Wednesday, a four year deal was announced by American Airlines, which would outsource some of the regional flying to SkyWest Inc. These flights in Los Angeles and Dallas are currently being handled by American Eagle, which is a regional affiliate of American Airlines.
Starting in November, the maximum amount of work hours for pilots will be increased. The defined benefit pension plan for pilots will also be frozen, and a supplemental retirement plan for pilots is set to be terminated the same month.
Other contracts that were ratified will allow the airline to reduce jobs for flight attendants and ground workers, as well as close a maintenance hub located in Fort Worth, Texas. Employee pensions will be frozen but not terminated, with pilots the one exception. An improved profit-sharing plan will replace these pensions. There will also be a reduction in health care benefits.
According to Thomas Horton, CEO of AMerican Airlines parent company (AMR), he hopes to eventually have a voluntary agreement with its pilots. However, he states that American has to start making “changes that are necessary for our restructuring.” In a letter to American Airline employees, Horton stated that other airlines have used bankruptcy to strengthen themselves, and cut costs. American is renegotiating leases and labor contracts in order to do the same. Both AMR and American filed for bankruptcy in November. Although US Airways is trying to force American to merge, it has refused to give in to the overtures.
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