APA Files Lawsuit “To Clarify Legal Gray Area” In American Airlines Bankruptcy


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APA Files Lawsuit “To Clarify Legal Gray Area” In American Airlines Bankruptcy

By Shane Nolan

March 4, 2012 - The Allied Pilots Association (APA), certified collective bargaining agent for the 10,000 pilots of American Airlines, filed an action for declaratory judgment with the bankruptcy court asking the judge to clarify how the Railway Labor Act and Section 1113 of the U.S. Bankruptcy Code interrelate.  

“Our objective is to enhance the prospects of a consensual agreement between the Allied Pilots Association and airline management in the ongoing restructuring negotiations,” said APA President Captain Dave Bates.  

“APA believes that a consensual agreement between our union and airline management is in our company’s long-term best interests. Accordingly, APA has asked the bankruptcy court to clarify a legal gray area regarding rejection of airline industry collective bargaining agreements in bankruptcy.”  

While Section 1113 of the U.S. Bankruptcy Code outlines procedures for rejecting existing labor contracts during their term, the comprehensive collective bargaining agreement between APA and American Airlines expired in 2008. Since then, APA and American Airlines have been negotiating under federal labor law provisions that prohibit airline management from changing rates of pay, rules and working conditions until the National Mediation Board (NMB) finishes mediating toward an agreement.  

“The Railway Labor Act provides specialized procedures for peaceful resolution of labor contracts in the airline industry, and the conflict between the bankruptcy code and the Railway Labor Act’s requirements has not been thoroughly adjudicated,” Bates said.  

Under the terms of the Railway Labor Act, the status quo period remains in force until the NMB declares a negotiations impasse and proffers binding interest arbitration. APA has been seeking such a proffer from the NMB. If either party declines the proffer, a 30-day cooling-off period begins.  

“While the Railway Labor Act permits self-help by both parties, in a significant Chapter 11 proceeding such as AMR’s reorganization, it is conceivable that the White House would appoint a Presidential Emergency Board (PEB) before the end of the cooling-off period to prevent disruption to interstate commerce,” Bates said.  

The PEB would examine the unresolved bargaining items and issue a settlement recommendation. “The Railway Labor Act represents the more promising path to a consensual agreement by offering multiple options for dispute resolution at different junctures in the bargaining process,” Bates said.

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