AMR Wins Approval to Reject Pilots’ Contract

AMR Corp.’s American Airlines won court approval to throw out its labor agreement with pilots, capping the airline’s campaign to force cost cuts on the lone union it couldn’t reach a deal with on concessions.

U.S. Bankruptcy Judge Sean Lane in Manhattan yesterday granted American’s request to reject the pilots’ contract, saying proposed changes to the agreement are necessary for the airline’s restructuring.

The decision is a victory for AMR, which blamed its November bankruptcy filing on labor costs that it said exceeded competitors’ by as much as $800 million a year.

The Fort Worth, Texas-based airline has reached cost-cutting agreements with unions for flight attendants, mechanics and baggage handlers. The pilots voted down a contract proposal in August.

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