American Airlines has made its most forceful case yet to terminate its labour contracts as the company's top restructuring official laid out the airline's bleak finances in bankruptcy court.
In a precise, deliberate manner, Beverly Goulet, American's vice president for corporate development and treasurer, on Tuesday told the US Bankruptcy Court the carrier had lost just under $US1.1 billion ($A1.07 billion) in 2011 and that it needed to save $US1.25 billion ($A1.22 billion) a year in labour costs in the next six years - $US990 million ($A962.89 million) a year of that from the company's three unions.
By cutting costs, getting more flexible work rules to fly regional jets and expanding its domestic flight offerings through code-sharing with other airlines, Ms Goulet said, "we believe that the business plan will generate $US1 billion of incremental revenues" annually.
"The goal, obviously, is to emerge from bankruptcy (with) sustainability ... liquidity and a balance sheet that allows us to invest in the business," Ms Goulet said.
Tom Horton, chief executive of American Airlines parent company AMR Corp, appointed Ms Goulet last year to address what American called its "substantial cost disadvantage" to rival carriers.
The Fort Worth, Texas-based carrier, which entered bankruptcy in November, 2011, is seeking US Bankruptcy Judge Sean Lane's approval to terminate its contracts with pilots, flight attendants and transport workers.
The proceeding, which began on Monday with the airline making its case to restructure with a management plan, requires American and labour unions to continue negotiations under the rules of the Railway Labour Act, which applies to airlines as well as railroads.
The unions will present their case the week of May 14 and a ruling is expected by June 6.
The prospect of a take-over of American by US Airways Group Inc hangs over the hearing since the unions have come to a preliminary understanding with the Arizona-based carrier on contract terms for a merged company.
The judge, however, has given American the exclusive right through the end of September to come up with a plan with labour to emerge from bankruptcy.
Ms Goulet testified that prior to the bankruptcy filing, Horton had said "he believes consolidation has been good for the industry and might well have a role as we move forward".
But she acknowledged that the company had not considered a merger as part of its plan to emerge from bankruptcy.
The unions see the possibility of a US Airways take-over as a solution that wouldn't cause the kinds of cuts in pay and benefits proposed by American.
On Monday, hundreds of flight attendants and transport workers staged a demonstration in front of the courthouse to protest the company's move to terminate contracts and to support a US Airways take-over.
Allied Pilots Association President Dave Bates, who is attending the hearing, said outside the courtroom that US Airways "plans to submit an alternative re-organisation plan" to American - a move he says he supports because "a standalone plan is not viable in the long term".
Mr Bates said he was assured by US Airways chief executive Doug Parker and president J Scott Kirby that if a merger happens, the combined company's corporate headquarters would remain in Fort Worth and the new, larger carrier would keep the American Airlines brand.
"I'm trying to keep the best options for the airline, my members and the community," Mr Bates said.
But American senior vice president Jeff Brundage told reporters on Monday evening that the idea of a merger "is a creation of (US Airways) and the unions. It's not real".Mr Bates, in response, said, "It's very real".
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