AMR – Debtors’ Motion to Pay or Honor Obligations with Labor Arbitration Hearings

The Debtors are required, under the Railway Labor Act and certain collective bargaining agreements (the “CBAs”), to establish and engage in a regulated procedure to settle labor grievances.  The Railway Labor Act requires the parties to establish a system board of adjustment (the “System Board”) for the purpose of adjusting and deciding disputes or grievances which may arise under the CBAs.  Pursuant to the CBAs, a neutral arbitrator is typically responsible for preparing and issuing a written decision setting forth and explaining the basis for the System Board’s determination.  Pursuant to the CBAs, the System Board is contractually required to maintain a complete record of all matters submitted to it for its consideration and of all findings and decisions made.  The Debtors retain court reporters to provide these services.

By the Motion, the Debtors seek to pay or honor certain obligations to neutral arbitrators and court reporters, as the Debtors determine, in the exercise of their business judgment, to be necessary or appropriate.  Prior to the Commencement Date, the Debtors incurred approximately $225,000 in connection with arbitration hearings to resolve grievances filed by, or on behalf of, certain unionized employees. Of that amount, approximately $220,000 relate to fees owed to neutral arbitrators and approximately $5,000 relate to fees owed to court reporters.  The Debtors submit that the failure to pay for such past fees will damage the Debtors’ relationships with the neutral arbitrators (most if not all of whom will continue to be asked to hear and decide grievance disputes under the CBAs) and the court reporters, and also threaten the future success of the labor grievance resolution process.

The Motion will be heard on February 29, 2012 at 10:00 a.m. (ET).  Objections to the Motion are due by February 22, 2012 at 4:00 p.m.

Lowenstein Sandler PC

Sharon L. Levine

S. Jason Teele

Nicole Stefanelli