Source: Fort Worth Star-Telegram
By Andrea Ahles

May 25–U.S. Bankruptcy Judge Sean Lane ruled Thursday that American Airlines’ pilots union must follow the usual steps in filing an appeal of a previous ruling that its contract can be rejected though it expired four years ago.

The Allied Pilots Association said it will continue to pursue its case in district court after Lane denied its request to take the case straight to the 2nd U.S. Circuit Court of Appeals.

“There is an important question of law that the court has split on, and we want clarity,” association spokesman Gregg Overman said. “All the ruling signified is that we can’t go straight to the 2nd Circuit court. We have to go to district court.”

The union had said that since its contract expired in 2008, there was no agreement that could be rejected under Section 1113 of the bankruptcy code. In April, Lane ruled against the union, prompting it to file a motion seeking to take its appeal directly to a higher court. Lane ruled against that motion after hearing arguments Thursday.

“We’re pleased that the court has ruled the union will need to follow the prescribed steps to file their appeal,” American spokesman Bruce Hicks said. “We’re confident in our legal position and urge union leadership to focus their efforts at the bargaining table, where there are pressing economic issues to be resolved, instead of this legal matter.”

Lane will hear closing arguments today in the Section 1113 hearing, in which American is asking the court to reject its labor contracts.

Under 1113, companies can ask a Bankruptcy Court to reject collective bargaining agreements and put in place new terms deemed necessary for the company to restructure. Lane is expected to rule on the issue by June 22.

Andrea Ahles, 817-390-7631

Twitter: @Sky_Talk