American’s unions support merger with US Airways

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Published: April 20, 2012

American Airlines’ three main labour unions have formally supported a merger with US Airways, setting the stage for a possible merger between the two US mainline carriers.

The three unions – the Allied Pilots Association, the Transport Workers Union and the Association of Professional Flight Attendants – represent almost 55,000 employees at the Oneworld carrier, whose parent AMR filed for bankruptcy protection last November.

“We are pleased to confirm our support of a possible merger between our airline and US Airways. We have reached agreements on terms sheets for collective bargaining agreements that would govern the American Airlines employees of the merged airline with US Airways,” say the three unions in a joint statement.

“This significant step represents our shared recognition that a merger between American Airlines and US Airways is the best strategy and fastest option to complete the restructuring of American Airlines, enabling it to exit the Chapter 11 bankruptcy process and restore American Airlines to a preeminent position in the airline industry.”

In a letter to US Airways employees, carrier chief executive Douglas Parker confirms the signing of the agreements with the three unions, and says that a merger with American presents an “unique opportunity” for the airline.

Reiterating previous comments, he says US Airways does not need to merge with another airline “as evidenced by our team’s outstanding results” and says that this remains the case.

“But after studying American Airlines’ current state and their future plans, we have concluded that a merger with American, while they are undergoing their bankruptcy restructuring, represents a unique opportunity that we should not ignore,” says Parker.

A merger would result in “a preeminent airline with the enhanced scale and breadth required to compete more effectively and profitably”, he adds.

“Our intention would be to put our two complementary networks together, maintaining both airlines’ existing hubs and aircraft, and create an airline that could compete successfully with United, Delta and other carriers within our industry.”

A merger with American could help save at least 6,200 jobs that would be lost under the airline’s standalone restructuring plan, say Parker and the three unions.

Parker, however, reiterates that the agreements with the union do not mean that the two airlines have agreed to merge.

“To get to an actual merger, many more things must happen including gaining the support of AMR’s creditors, its management team and its board of directors. But this is obviously an important first step along that path and we are hopeful we can all work together to make this happen.” he says.

American has asked for court approval to dissolve its labour agreements, with a hearing set for 23 April, and is expected to be allowed to do so under its standalone financial restructuring plan.

The airline’s unions and analysts have expressed doubts over this plan, with the Allied Pilots Association saying previously: “As for management’s business plan, our consultants have reached the same conclusion as many Wall Street analysts – it won’t fix American Airlines’ revenue problem.”

US Airways confirmed in January that it had hired advisors to look at options relating to AMR. The Star Alliance carrier’s president Scott Kirby fuelled further speculation that US Airways would target American for a takeover when he said in March that he believes there would be one additional large consolidation event in the US airline industry.

Kirby, commenting on US Airways’ failed takeover of Delta Air Lines in 2006, said the airline has learnt that it would be important to have the target of acquisition and its labour unions on its side.

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