American Airlines Bankruptcy Meets Resistance

Just a few short weeks after the airline bankruptcy announcement, news broke about American Airlines’ plans to hire financial advisers to help with their Chapter 11 restructuring efforts. Two major labor unions have filed requests with the court to deny the hiring of these consultants and advisers.

Order In The Court

Since their bankruptcy filing, AMR has filed numerous motions with the court to allow the hiring of to financial experts and debt consultants. Unhappy with the decision to spend nearly $20 million in fees for financial advice, two big labor unions filed objections with the court on Friday to have these motions denied.

American’s Transport Workers Union and the Association of Professional Flight Attendants are against the hiring of four financial institutions that are supposedly to help the airline restructure its debts and emerge from the red in a few months. Now that talks of a potential buyout are trending topic, these labor unions are pointing out major financial flaws in the decision to hire “unnecessary” professionals.

The main objection is being held that AMR  “is seeking to retain … overlapping layers of professionals, some of whom are entirely unnecessary and all of whom the debtors propose to retain at a significant and unreasonable expense to the debtor’s estate.” The Association of Professional Flight Attendants is concerned that  ” they include fees that are made payable without court review even if the airline does not emerge from a successful Chapter 11 reorganization.”