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ATW Editor's Blog

Crandall Weighs in on AA-US Air Merger


In a must-see video, former American Airlines CEO (and industry legend) Bob Crandall has made clear his thoughts on whether a merger of American and US Airways makes sense.

The video, posted Dec. 22 and titled "Thoughts for American Airline Pilots," Crandall says that although it's been more than 14 years since he talked to them collectively, he continues to talk to many American pilots individually and many have asked his opinion on what route to choose as American draws to the close of its restructuring process under Chapter 11 bankruptcy protection.

Crandall basically comes down in favor of a merger, but caveats that preference with a big "if": that pilots at both airlines first sign a seniority integration agreement. Without such an agreement, Crandall says, "bitterness and anger will undermine the spirit of cooperation that I think is absolutely essential for success."

Crandall says a merger probably makes sense because it would create a larger carrier which could serve more destinations with more frequencies.

"It would close off some advantages and opportunities that are now available to Delta and United," he adds.

"On balance, I would favor a merger, subject to a big 'if' and that is that there be a signed, sealed and delivered seniority integration agreement among all the pilots at US Airways and American before such a merger occurs," Crandall says.

"Unless such an agreement is in place, however, I do not think a merger makes sense."

Crandall explains that mergers are complicated and for them to work, everyone involved has to be onboard. "Without a seniority agreement, that won't happen and without cooperation, I am certain the merger will fall far short of expectations and might even cause such serious problems that the company could fail again."

He urges pilots to study carefully all the personal implications of a merger and weigh the potential personal downsides - such as having to fly smaller aircraft on undesirable routes - against long-term upsides. He also advises them to choose whether to leave final decisions to an arbitrator or to decide for themselves: he urges the latter.

The Allied Pilots Association, which represents AA pilots, has made some headway towards what Crandall advises. A couple of days before his video posted, a US bankruptcy judge approved AMR Corp.’s new labor contract with the carrier’s 10,000 flight deck crew. And APA said it was involved in ongoing four-party discussions with AMR and US Airways management and the US Airline Pilots Association representing US Airways pilots. The talks “are aimed at crafting a memorandum of understanding that would serve as an interim agreement while a merger is undertaken,” the union said.

To see Crandall's full video, go to this link at the Dallas Morning News.

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