AMR management, pilots move ahead on contract talks

(Reuters) - American Airlines, a unit of AMR Corp <AMR.N>, and its pilots planned weekend contract talks amid fresh signs the two could be nearing a deal after five years of mostly bitter bargaining, chiefly over wages and job protection.

Brief bankruptcy speculation at the third-largest U.S. carrier, triggered by a spike in pilot retirements and other developments over the last two weeks have focussed more attention on negotiations and added pressure on reaching a settlement.

American has cancelled flights due to pilot shortages and this week told the union it would close its San Francisco crew base that is home to 300 pilots and other workers, the union said.

"I remain convinced that the best course of action in our present situation is to conclude negotiations expeditiously," said David Bates, president of the Allied Pilots Association, the union at American.

"A contractual agreement that is good for our pilots and good for the operation will help move American Airlines in a more positive direction," Bates said.

Pilots and management had reported good progress in talks over the summer and were optimistic an agreement was possible. Most recently, negotiations moved to the final and most difficult issues -- wages and job protection.

The pilot union's board was expected to convene on Saturday, the APA said.

A spokesman for the airline could not immediately be reached for comment.

Ray Neidl, an analyst with Maxim Group, said pilots are the "bellwether group" in bargaining but rated the chances for a deal at one-in-three over the next several days.

"Just because there are intense talks does not necessarily mean that they will reach an agreement ... much less a contract that has large cost savings," Neidl said in a note to clients on Friday.

Substantial cost savings, Neidl said, would help the carrier return to profitability along with an increase in revenues.

American is scheduled to report quarterly results on October 19. The company reported a second-quarter net loss of $286 million.

Shares of AMR Corp closed off less than 1 percent on Friday at $2.94 on the New York Stock Exchange.

Other unions at American and pilots and other workers in negotiations at other big carriers are watching the AMR developments closely.

American was the only big U.S. carrier to not restructure in bankruptcy last decade, leaving it with mostly higher labour costs even though its pilots and other workers agreed to sweeping concessions to keep the company solvent.

(Reporting by John Crawley and Kyle Peterson; editing by Gunna Dickson)