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AMR will have to submit a more pilot-friendly contract or convince the judge of their need to reorganize without the contract so they get on with their bankruptcy exit and enter talks with US Airways.

AMR Corp. (AAMRQ)’s American Airlines was denied approval from a U.S. bankruptcy judge to throw out its existing pilot contract and impose cost reductions needed to restructure after workers refused to accept concessions.

The airline didn’t make the case that its labor proposal for the pilots was necessary for its reorganization, U.S. Bankruptcy Judge Sean Lane said in a decision filed today. He said that the airline could try again to persuade him otherwise. The ruling came one week after the union rejected a sweetened offer that would have eliminated furloughs and given the Allied Pilots Association a 13.5 percent stake in AMR after it emerged from court protection.

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Tags: american airlines, labor, pilots

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