Interesting. Somehow these deals have to be recut or the jobs just go away. Megan McArdle:
Details of the American Airlines bankruptcy are emerging. And the details are that AMR wants all of its creditors to take a deep haircut, especially the workers:
The company aims to cut labor costs 20% under bankruptcy protection, and will soon begin negotiations with its three major unions. Some management jobs would also be cut.
AMR also proposes to end its traditional pension plans. The move has been strongly opposed by the airline’s unions and the U.S. pension-insurance agency.
CEO Thomas Horton said the company hopes to return to profitability by cutting spending more than $2 billion per year and raising revenue by $1 billion per year.
. . . Horton said cost-cutting will include restructuring debt and aircraft leases, grounding older planes, and changing labor contracts.
This is just the opening salvo in what promises to be a bruising negotiation with the unions. It’s not clear that the company actually expects to be allowed to terminate the pension plan. But the threat certainly gives them leverage with the unions, especially the pilots, because if the plan is terminated and taken over by the Pension Benefit Guaranty Corp, the payouts will be capped at around $50,000 a year–far less than pilots get from the current plan.