Tuesday, June 19, 2018
Business

US Airways strikes deals with unions at American Airlines to win support for possible merger

DALLAS — US Airways has struck deals with unions at American Airlines to win their support for a possible merger of the two airlines.

The unions are angry that American is trying to cut jobs and labor costs while under bankruptcy protection. They represent 55,000 pilots, flight attendants and ground workers at American, the nation's third-largest airline.

The unions can't force a merger on their own, but they can work with other creditors of American's parent company, AMR Corp., to persuade the bankruptcy judge to open the door to a deal.

Doug Parker, chairman and chief executive officer of US Airways Group, said Friday that to win a merger with American, his company still needs support from AMR's creditors, management and 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," Parker said in a note to US Airways employees.

Parker said a merger could save about 6,200 jobs at American, or nearly half of the jobs that American wants to eliminate. He said he would keep both airlines' current hubs and planes to create a bigger company that could compete against United Airlines and Delta Air Lines.

The pilots' union said US Airways executives promised that the combined company would be called American Airlines and be based in American's hometown of Fort Worth, Texas.

The three unions at American said in a statement that a merger with US Airways is the best way to fix American, which filed for bankruptcy protection in November.

The unions oppose American's plan to cut 13,000 union jobs and sharply cut labor costs to return to profitability. American is seeking to throw out contracts with the unions that govern pay, benefits and work rules and impose its own terms on employees.

US Airways and the unions said they have agreed on terms for collective bargaining agreements if there is a merger between the airlines. However, no such deal exists.

AMR chief executive officer Thomas Horton has indicated he would prefer that AMR remain independent but is open to a merger after his company emerges from bankruptcy protection. Friday's gambit by US Airways and American's unions could complicate Horton's strategy, however.

On their own, the unions can't force a combination. However, they hold three of the nine seats on the committee of unsecured creditors in AMR's bankruptcy case. That committee can ask the judge to review AMR's current exclusive right to present a reorganization plan to the bankruptcy court, and if the judge agreed, it could open the door to a merger bid.

American said the unions' comments "do not in any way alter the company's commitment to pursue our business plan or our focus on moving steadily through the court-supervised restructuring process to create a profitable, growing industry leader."

US Airways is the nation's fifth-largest airline. As recently as 2008, American was the world's biggest, but it has been eclipsed by United, which combined with Continental, and by Delta, which bought Northwest.

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