American says pilots contract would cost airline $3B


American Airlines Inc. has rejected recent proposals from its pilots’ union, saying it would cost the airline an additional $3 billion a year and damage its competitiveness.

Fort Worth, Texas-based American Airlines said on its Web site yesterday that after completing a financial analysis of the union’s proposals, it “determined that implementing these items would have a serious detrimental impact on the company’s economic stability.”

The carrier said pilot costs would be increased by $3 billion in recurring expenses, excluding signing bonuses, one-time pension contributions and various other one-time investments. This would translate to a $350,000 increase per active pilot, according to American.

“Our pilot cost per block hour – which is already the industry’s highest – would increase more than 150 percent, placing AA at a crippling disadvantage compared to our competitors,” the airline said.

American said the Allied Pilots Association, which represents the airline’s 12,000 pilots, requested changes that “would place at risk up to $3.5 billion of code-sharing revenue over the near term.”

In addition, the pension proposal would require the company to immediately contribute an additional $1 billion to keep funding levels above 80 percent and avoid restrictions on lump sum payments, it said.

“Given these facts, we have informed APA negotiators that these unrealistic requests are not in the best long-term interests of either our company or our pilots and we must reject them,” American said.

The company said it is willing to discuss boosting pilots’ compensation, giving them more control over their work schedules and adopting proposals that could improve their quality of life.

“However, any changes that benefit our pilots must be linked to increases in efficiency and productivity so that we can strengthen our company and be better equipped to compete and succeed in our rapidly changing industry,” American said. “In these mediated negotiations, it is critical that we engage in a process that produces economically viable proposals and stimulates honest conversations.”

American Airlines is owned by AMR Corp. The company’s subsidiary, American Eagle, serves Albany International Airport, handling 3 percent of the airport’s passenger traffic.

AMR last month post a loss of $328 million in the first quarter, compared with a profit of $81 million last year.