American Airlines

Situation

In November 2011, American Airlines (“AMR”) filed for bankruptcy protection in the Southern District of New York amid industry consolidation, high fuel prices, dampened travel demand and rising labor costs.. At the time of its filing, AMR reported assets of close to $25 billion and liabilities approaching $30 billion, making it the 2nd largest airline bankruptcy and one of the largest US bankruptcies ever.

Engagement

Gordian was engaged by the TWU – American Airlines’ largest union, comprising several distinct labor groups with in excess of 26,000 workers at American and American Eagle, and thousands of retirees – in connection with AMR’s bankruptcy filing.

During the pendency of its engagement, Gordian provided the TWU with strategic advice in connection with both a potential standalone restructuring of AMR as well as a merger transaction with US Airways. This work involved working closely together with Union leadership, while also meeting with the TWU’s rank-and-file when needed and collaborating with other TWU-engaged professionals.

In addition, Gordian provided expert witness services, including deposition and Court testimony and the related analysis, in the contested 1113 proceedings between AMR and its labor groups related to AMR’s requested rejection of its existing collective bargaining agreements (“CBAs”).

Outcome

Gordian’s client was able to negotiate successfully with both AMR and US Airways on the terms of new CBAs for which the TWU would consent. In addition to the labor aspects of the new arrangements, the TWU was able to negotiate for a meaningful equity stake in the merged airline.