American Airlines parent may reject union pacts

NEW YORK, Thu Mar 22, 2012 – The parent of American Airlines Inc. was preparing to void union contracts through the bankruptcy process within one week unless there was a “profound change” in the unions’ labor proposals, a lawyer for the company said on Thursday.

Harvey Miller, who represents AMR Corp., told a federal bankruptcy judge at a hearing in New York that there appeared to be no basis to expect “real forward movement” obtaining union concessions, and avoid the rejection of collective bargaining agreements. Talks were ongoing, he added.

AMR has been trying to cut labor costs, including thousands of jobs. The third-largest U.S. airline filed for Chapter 11 protection from creditors in November.

Clearwire soars as Sprint eases liquidity concerns

NEW YORK ― Sprint Nextel Corp., the No. 3 U.S. mobile provider, agreed to pay up to $1.6 billion to Clearwire Corp. in the next four years, including a network pact and a potential equity infusion, easing concerns about a liquidity crisis at Clearwire.

Clearwire, for which some investors had bankruptcy fears, saw its shares rise more than 20 percent in morning trade after it said on Thursday that it will be able to make a $237 million debt interest payment due Dec. 1.

The stock had closed up 13 percent the day before after a Reuters report that Sprint was expected to reach a funding agreement for Clearwire.

Wireless service provider Clearwire, which is majority owned by its biggest customer Sprint, last month told the Wall Street Journal that it might skip the interest payment to conserve cash as it needs almost $1 billion in new financing to keep operating and fund a network upgrade.

At the time analysts said the comment was likely a negotiating tactic aimed at forcing Sprint’s hand.

Sprint, which itself recently raised $4 billion from a bond sale, said it would pay Clearwire $926 million for unlimited use of its current wireless network in 2012 and in 2013, after which its payments would depend on how much customers used the service.

In return Clearwire committed to keep that network — based on WiMax technology — up and running at least until 2015.

Sprint would also pay Clearwire up to $350 million in a series of prepayments, over two years at most, for capacity on a high-speed service Clearwire hopes to build using a faster technology known as Long Term Evolution, as long as Clearwire achieves certain network targets by June 2013.

Sprint, which has minority voting rights in Clearwire, also committed to providing more equity funding “in the event of an equity offering.”

If Clearwire raised between $400 million and $700 million in new equity, Sprint said it would participate in the offering on a pro rata basis up to $347 million, consistent with its current voting interest.

United Auto Workers union nears OK of four-year GM deal

DETROIT ― The United Auto Workers union looks set to announce approval of its labor contract with General Motors Co on Wednesday as more than half the local bargaining units have voted in favor of the four-year deal.

Ratification of the GM deal, which includes bonuses instead of hourly wage increases, would clear the way for the union to complete talks with the automaker’s crosstown rival, Ford Motor Co.

The UAW had indicated a deal with Ford could yield a proposed contract this week, although an update for union members by Ford negotiators on Tuesday night said only that talks continued, and there were no major developments to report.

Voting ends Wednesday on the GM contract, which would be the first for 48,500 GM hourly workers represented by the UAW since the automaker’s 2009 bankruptcy and restructuring.

GM executives have set a conference call with Wall Street analysts for Wednesday afternoon to explain the financial implications of the contract for the first time.

The deal would add or save more than 6,000 U.S. factory jobs, raise wages for entry-level employees and pay each worker at least $11,500 in bonuses over the four years.

The terms also would leave GM’s break-even point unchanged and allow the automaker to tackle the risk of its underfunded pension plan, one of the few issues left unaddressed by the restructuring directed by the Obama administration.

“When we went into this labor negotiation, we were very focused on that,” GM Chief Executive Officer Dan Akerson told a conference in New York on Tuesday. “We could not do anything to negatively bias our break-even point.”

UAW President Bob King joined the Ford talks this week, and the focus shifted to the tough economic issues.

Teams of negotiators for the union and Ford, the only U.S. automaker to avoid bankruptcy, have been meeting for about two months. The two sides typically address financial issues in the final stages of negotiations.

The union began an intense focus on Ford last week, a day after failing to finalize a deal with Chrysler Group LLC. It has extended its contract with the Fiat SpA-controlled automaker until Oct. 19.

Observers are interested in the extent that the UAW will adjust contract terms to the different financial positions of the three Detroit automakers.