The APA and American Airlines are facing off in bankruptcy court in New York City today.  The APA contends that the last, best final offer should be the baseline of the Section 1113 terms whereas AA thinks that the judge already addressed everything but 2 terms that are being revisited.

The judge did acknowledge that AA needed its savings in his last ruling and did seem to indicate that if AA fixed two minor issues, he would rule in their favor for Section 1113 terms.  Smart money says that AA will get what it wants this time.

But I am not so sure.  This judge hasn’t been inclined to be punitive in his rulings thus far and worked extra hard to see if AA could come to an agreement with all its unions.  If anything, he’s bent over backward trying to see to it that agreements with unions are in place and reasonable for both parties.

No doubt he may have been annoyed at the APA voting down the last, best offer but annoyance doesn’t have a place in the courtroom when it comes to judges and this judge seems to avoid it quite a bit.

The bankruptcy judge is also there to see to it that creditors are protected.  Reasonable union agreements protect creditors when an airline exits bankruptcy.  Unreasonable union agreements offer the potential for labor strife that adds risk to the exit.

I think there is a chance that the judge may try to see to it that the baseline of the pilot Section 1113 terms is, in fact, the last best offer.  Or something closely approximating that.

Filed under: Airline News by ajax