US Airways 767-200. Courtesy, US
US Airways (US) and American Airlines’ (AA) three largest unions reached an agreement Friday that supports a US-AA merger, a major development that threatens to upend AA’s plans to emerge from Chapter 11 bankruptcy restructuring as an independent carrier.
In a Friday morning letter to US employees, chairman and CEO Doug Parker said, “First of all, today’s news does not mean we have agreed to merge with American Airlines. It only means we have reached agreements with these three unions on what their collective bargaining agreements would look like after a merger, and that they would like to work with us to make a merger a reality.”
He said AA parent AMR Corp.’s creditors, management and board of directors would need to support a merger for one to happen, but the agreement with the unions “is obviously an important first step along that path and we are hopeful we can all work together to make this happen.” Parker said US management has “concluded that a merger with American, while they are undergoing their bankruptcy restructuring, represents a unique opportunity that we should not ignore. These beliefs are shared by the three American labor unions.”
AA filed a motion with a US bankruptcy court last month seeking to have its contracts with the three unions rejected (ATW Daily News, March 29).
In a joint statement, the Allied Pilots Assn., the Assn. of Professional Flight Attendants and the Transport Workers Union, which collectively represent 55,000 of AA’s approximate 80,000 employees, said, “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 [with US] … As envisioned, a merger of US Airways and American Airlines provides the best path for all constituencies … The contemplated merger would be based on growth, preserve at least 6,200 American Airlines jobs that would be furloughed under the company’s standalone strategy, and provide employees of both American and US Airways with competitive, industry-standard compensation and benefits.”
Parker said that “combining American Airlines and US Airways would create a preeminent airline with the enhanced scale and breadth required to compete more effectively and profitably. 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.”
He cautioned that the deal with the AA unions “is one step in what will be a much longer process. For now, it remains business as usual.”