by JASON WHITELY
Posted on April 25, 2012 at 9:50 AM
NEW YORK — American Airlines parent company AMR Corp. told a federal bankruptcy judge in New York Tuesday it is squeezing out savings as it restructures.
A top executive of the carrier told the court that cutting labor costs is the only option it has left on the table.
The future of a storied airline and 13,000 union workers is being laid out in the courtroom more than 1,500 miles from its Fort worth headquarters, in sight of the Statue of Liberty.
Taking the stand on Tuesday was Beverly Goulet, American's Chief Restructuring Officer. She said the company and its consultants have squeezed out all the savings they can from the airline — $4 billion worth.
She said pilots, flight attendants and ground workers must now take a 20 percent pay cut, worth another billion dollars.
Laura Glading, representing the Association of Professional Flight Attendants, said she understands the airline's strategy in the wake of similar restructurings at other airlines. "I think American looked at the other bankruptcies and said, 'We're going to get what we want. Everyone else has. And so we won't be denied.'"
She's right; no other airline has been.
Still, American's unions continue to suggest to the court that a merger is the carrier's only option to save jobs — and the airline itself.
In court, Goulet admitted to union attorneys: "I think there are advantages to larger [airline] networks," but she wouldn't concede that American must merge to grow.
"American Airlines has a business plan going forward," said American spokesman Bruce Hicks. "It isn't like we're trying to follow five different plans; we know what we want. We're heading in that direction. It's the plan that will return American Airlines to sustainable profitability and success."
Tuesday's testimony sometimes got mired in the mundane. The judge half-joked to attorneys: "We'd like to finish this hearing sometime this calendar year. We seem to be hop-scotching around."
One of the flight attendants' lawyers pointed out the problem — that the court is dealing with three different groups, all of them facing an uncertain future — a future that's likely to be decided in this New York courtroom.