3.28.12 – (LAA) – 1113 Motion Filing

WHAT HAPPENS NOW?

Following filing of an 1113 motion, the judge will schedule a hearing to hear evidence and arguments from the Company and the Unions related mainly to the business need for the Company’s requested contract changes and the fairness and equity of the Company’s proposals. This hearing is typically scheduled to begin14-21 days following the Company’s filing, as required by the Bankruptcy Code, but it will be up to the judge to decide when the hearings will occur and when they will end.

The Company must prove each of the following:

• The changes are fair and equitable to all parties;
• The company provided all of the relevant information necessary to evaluate the proposal;
• APFA rejected the contract proposal without good cause; and
• The balance of the equities clearly favors the changes being proposed.
• Under the Code, if the judge has not issued a decision within 30 days from the first day of the hearings, the Company may unilaterally begin to implement its proposal pending a decision. However, this period may be extended by agreement of the parties.
• If the judge finds that the Company’s 1113 proposals are both fair and equitable and necessary to AMRís successful restructuring, and that the unions rejected the proposals without good cause, he can grant the Company’s motion to reject the current collective bargaining agreements, which would allow the Company to implement contractual changes it has proposed during 1113 negotiations.
• If the judge finds the Company’s proposals are either not necessary for successful restructuring or not fair and equitable, he can deny the motion and our current collective bargaining agreements will remain in place.

 

What happens when the judge’s decision is made?

• If the judge grants the motion, he authorizes the company to reject the contract and usually to implement its 1113 proposal or its last offer, depending on the case. Changes may not happen immediately across the board, and in any event changes can only be prospective. Whether and at what pace to implement changes would be at the company’s discretion if the motion is granted.
• If the Company does succeed in rejecting the contract, the parties will still be in negotiations to reach a new contract. The Companyís proposal does not become a new collective bargaining agreement, but rather just becomes the baseline from which the negotiations will be taking place.
• If the judge denies the motion all parties will also return to the negotiating table and the process continues with the current agreement in force. If the motion is denied the Company may still come back later and file a further motion to reject if it believes it has corrected any problems identified by the judge in denying its original motion.

 

We hope to be able to give you a more complete timeline in Friday’s weekly hotline.

Click here to view the Flight Attendant portion of the 1113 filing.