Ruling On ATA Airlines Pilot Pay Cuts Postponed To June 3
By Marc Hopkins, Of DOW JONES NEWSWIRES, Dow Jones
WASHINGTON (Dow Jones)--Judge Basil H. Lorch of the U.S. Bankruptcy Court in Indianapolis delayed a decision Wednesday on whether to extend pay cuts for ATA Airlines pilots as the company and the Air Line Pilots Association decided to continue talks on a compromise. A decision is expected by June 3.
Last week ATA Airlines parent, ATA Airlines Holdings Inc. (ATAHQ), filed a request with the bankruptcy court to postpone a provision in the pilots' contract that would increase the company's operating costs.
The company argued that it needs to avoid a 50% increase in pilot compensation that is scheduled to occur in two phases on June 1 and July 1.
Court papers said ATA is in "imminent danger" of falling below sufficient cash levels needed to stay in business, unless changes are made to a collective bargaining agreement with the pilots' union.
ATA said in addition to cutting its operating costs, the relief sought from the pay increases will allow the airline to stay in compliance with cash balance requirements of the Air Transportation Stabilization Board and Southwest Airlines Co. (LUV), which provided ATA with a $47 million debtor-in-possession loan.
Court papers said ATA wants to continue for four months the concessions originally agreed to by the union in June 2004 and in January and additional changes that reflect the company's "worsening financial position." The company didn't outline the additional contract changes it intends to impose.
Counsel for the pilots union said Wednesday that the union already has made concessions to help the company survive, and that forgiveness of certain loan covenants with lenders could be arranged to keep ATA from defaulting on its loans.
After several breaks for talks between the company and the union, the two sides ultimately decided more time was needed to work out a new agreement.
ATA has been operating under Chapter 11 protection since October 2004 in the U.S. Bankruptcy Court in Indianapolis. The company is the 10th-largest U.S. air carrier based on revenue passenger miles.
-By Marc Hopkins, Dow Jones Newswires; 202-862-1362;
[email protected]
Dow Jones Newswires 05-25-051617ET
