The only American airline company to avoid bankruptcy after the 9/11 attacks was American Airlines. But now the expenses union contracts are dragging the company under water:
FORT WORTH, Texas (AP) — American Airlines’ parent company is seeking Chapter 11 bankruptcy protection as it seeks to unload massive debt built up by years of accelerating jet fuel prices and labor struggles.
The nation’s third largest airline also said its CEO Gerard Arpey will step down. He’s being replaced by Thomas Horton, currently the company’s president.
Fort Worth, Texas-based AMR Corp., along with its regional affiliate AMR Eagle Holding Corp. said Tuesday that they filed voluntary petitions to reorganize.
American says it sought protection to reduce its costs and debt to remain competitive. …
American says labor-contract rules force it to spend at least $600 million more than other airlines.
So how is it that American is stuck with more than a half billion more in union labor expenses than its competitors? I’m guessing its because the competitors were allowed to renegotiate their labor contracts after their post-9/11 bankruptcies. American couldn’t, and now they’re paying the price.
For what it’s worth, that’s exactly why the Obama administration went to such extraordinary lengths to bail out the auto companies. It wasn’t because General Motors and Chrysler would have disappeared (any more than American Airlines will disappear because of this bankruptcy), but rather because the Obama administration wanted to protected the United Autoworker Unions from a renegotiation.
(Headline stolen shamelessly from Million Dollar Way)