Court approves American Airlines' labor deal with pilots


The parent company of American Airlines received court approval on Wednesday for a new collective bargaining agreement with its pilots that will allow the bankrupt company to cut costs as it tries to emerge from bankruptcy.

AMR Corp also received approval from the U.S. Bankruptcy Court in Manhattan to eliminate lump-sum payments of benefits upon retirement for pilots, which the airline said could trigger a run on the plan soon after the bankruptcy.

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The new collective bargaining agreement was opposed by two small groups of pilots, including former TWA pilots who believed they were losing protections they had negotiated when American Airlines bought part of their former airline out of bankruptcy.

"Bankruptcy brings with it many hardships. The sacrifices of the pilots here along with the sacrifices of the other employees are one of those hardships," said Judge Sean Lane on Wednesday as he approved AMR's requests.

AMR is pushing to emerge from bankruptcy as a standalone company, but its pilots' union favors a merger with US Airways Group Inc.

AMR filed for bankruptcy in November 2011 to cut the highest labor costs in the industry.

The case is In Re: AMR Corp, U.S. Bankruptcy Court for the Southern District of New York, No. 11-15463