American Airlines pilots still waiting for contract ruling

Oct 9 (Reuters) - The judge overseeing American Airlines' bankruptcy declined on Tuesday to rule on a pilots' appeal to preserve their old labor agreement, meaning the airline can continue making work changes while the two sides continue contract talks.

U.S. Bankruptcy Judge Sean Lane ruled last month that the airline, the operating unit of AMR Corp , could reject the previous labor agreement, which had been under negotiation since 2006.

The union appealed the decision and it has asked the court to stop the airline from making changes while the appeal is pending, arguing that the changes cause "irreparable harm" to members.

At a hearing on Tuesday, Judge Lane declined to rule on union's motion to suspend and did not set a date for a ruling on the issue.

AMR has been in bankruptcy since November, and through that process aims to find cost savings the airline says it needs to survive.

The airline says most of the changes in labor terms are based on a tentative agreement that the union leaders and the airline reached earlier, but that was rejected by members.

"The vast majority of the old contract never changed," said Bruce Hicks, an American Airlines spokesman. "Of the things we have changed, a significant majority came from the tentative agreement that was reached with the union board in June, but not ratified by membership."

But the Allied Pilots Association, the union representing 10,000 American pilots, said the new terms would among other things eliminate an 11 percent retirement fund contribution pilots received annually and cuts compensation by $55 million over the six-year life of the contract.

"The pilots are incensed by the new terms," said Dennis Tajer, an APA spokesman. "It's an overreach by management. It puts us well below the industry standard and that's why we're fighting."

Hicks said the airline had deferred a number of changes for October, including the planned elimination of night pay and changes to premiums paid for international flights.

"We are committed to working with the APA to secure a new pilot agreement that works for the pilots and allows American to successfully restructure, and we're pleased that we have jointly agreed to resume negotiations immediately," Hicks said.

Tajer said the APA also is "continuing to focus on negotiations."

(Reporting by Alwyn Scott; Editing by Tim Dobbyn)