Some of American Airlines' largest lenders and its unions were named to a creditors committee Monday by the U.S. trustee in the its Chapter 11 bankruptcy case.
With all three of American's major unions -- representing pilots, flight attendants and ground workers -- named to the committee, many of its 88,000 workers will have a say in how their parent company, Fort Worth-based AMR Corp., reorganizes its finances and operations in court. Strained by continuing losses, AMR filed for Chapter 11 reorganization last week, citing the need to lower costs."While we strongly believe that a company with $4 billion in the bank had other options besides a bankruptcy filing, we're going to deal with the facts on the ground," said Jim Little, president of the Transport Workers Union, referring to the airline's relatively large cash pile. His union represents American's mechanics, ground workers, dispatchers and store clerks."We're going to do our job as a union to fight like hell so that front-line workers don't pay an unfair price for management's failings," Little said.The Allied Pilots Association and the Association of Professional Flight Attendants were also named to the committee. Creditors committees typically work to make the bankruptcy court aware of the issues and interests of the unsecured creditors."It's one thing for the court to hear there are 427 objecting individual creditors. But when it is the creditors committee that voices a concern on whatever matter is in front of the court, then it is something the court takes seriously into account," said Wayne Barnes, a contract and bankruptcy law professor at Texas Wesleyan School of Law.The Pension Benefits Guaranty Corp. received a seat on the committee as well. The federal agency would be responsible for employee pensions if AMR seeks court permission to terminate the plans. The agency said that the airline's plans have about $8.3 billion in assets to cover about $18.5 billion in benefits and that if the plans are terminated, at least $1 billion in benefits would be lost.Airplane maker Boeing was also named to the committee. American is Boeing's third-largest leasing customer and leases about $350 million worth of aircraft from Boeing's financing group."We at Boeing Capital and at Boeing in general have had experience with previous customers, U.S. carriers that have gone through the bankruptcy process, so we feel we have some experience and expertise," spokesman John Kvasnosky said.Hewlett-Packard, Manufacturers and Traders Trust Co., the Bank of New York Mellon and Wilmington Trust round out the committee. Wilmington Trust has said it is not a creditor but represents several clients and trusts with interests in AMR.The committee plays an important role in the bankruptcy process, often providing the court with opinions on how smaller creditors may be affected by any restructuring proposed by management.Andrea Ahles, 817-390-7631Twitter: @Sky_TalkHave more to add? News tip? Tell us
