Airline Making Concessions As It Works To Rebuild During Bankruptcy

American Airlines executives say they are willing to drop a pilot furlough plan in an effort to work out a deal with its pilot's union while it restructures under Chapter 11 bankruptcy laws. The airline is also reportedly offering a slight pay increase to pilots.

The disclosure of its willingness to make concessions came shortly after a judge delayed a ruling on the Airline's request to throw out its labor contracts for a week. The pilot's union now has more time to consider the final offer from American, but the Associated Press reports that analysts say it could also help the airline stave off a takeover bid from another airline.

US Airways Group still has designs on AMR Corp, the parent company of American Airlines, and the acquisition has been supported by three of American's unions, including the pilots. If American can win acceptance for the six-year cost-cutting deal from the pilots, as well as a similar compromise being worked on with the machinists, it may be able to convince its creditors that it can operate as a stand-alone airline.

The pilot's union board had rejected American's most recent "last and best" offer without allowing it to go to the rank and file for a vote. Analysts say it's unlikely that American will be able to reach an agreement with its flight attendants, but that the pilots and machinists may be willing to deal. That, they say, could shore up its position to emerge from bankuptcy as a stand-alone airline.

FMI: www.aa.com