"It was an important milestone in our restructuring," AMR chief commercial officer Virasb Vahidi says of the deal. "It accelerated the momentum of our labor negotiations."
A few days after the agreement with pilots, American had a similar deal with mechanics, who are also expected to vote by early August. Long-stalled negotiations with the flight attendants' union resumed.
The unions have a powerful incentive to bargain. If they don't, a federal bankruptcy judge in New York could rule next month that American can simply throw out its labor contracts and impose pay and other terms on workers.
American has used bankruptcy to get rid of some leased aircraft and is negotiating with aircraft lessors and suppliers for more savings. It has taken a sharper pencil to money-losing flights, dropping service between Chicago and New Delhi and closing operations at Burbank, Calif.
To reduce empty seats, it put smaller planes on some routes where it couldn't fill 140-seat MD-80s, including new service between New York's LaGuardia Airport and Atlanta and many flights between Chicago's O'Hare Airport and Newark, N.J., San Antonio, Texas, and Denver.
Since bankruptcy, American is operating better by some measures. Its rate of lost or damaged bags was down nearly 40 percent in May from a year ago. In the first quarter, the percentage of flights arriving on time was its best in 10 years and canceled flights were the lowest in five years, although American still ranks below average in both categories, according to government figures.
Even if American solves its operating weaknesses and labor problems, it faces other challenges.
It must fix a route network that is weaker than key rivals on the East and West coasts. American has pulled out of many secondary cities, leaving weak connections. For example, to fly from Rochester, N.Y., to London, American sends passengers west to Chicago, then back east to London. That's a tough sell when United will route them to London via New York City or Washington.
American could bolster its position in the eastern U.S. by code-sharing with or even buying JetBlue, which is strong at New York's Kennedy airport.
Publicly, JetBlue isn't interested. "Our path forward," says CEO David Barger, "is one of independence."
And that brings American back to a potential combination with US Airways, which many analysts consider to be American's best option — but not necessarily for AMR's top management.
"In all probability," says longtime airline industry analyst Ray Neidl of Maxim Group LLC, "it would be the US Airways management that would survive."
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