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US Airways Inches Closer To American Airlines Merger

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US Airways Reaches Agreement with American Airline's Unions Over Possible Merger
US Airways Reaches Agreement with American Airline's Unions Over Possible Merger

US Airways says it has taken a first step to a potential merger with rival American Airlines.

The company has reached an agreement with the three main unions at American Airlines on terms that would govern future collective bargaining agreements for a potential merged airline, according to US Airways spokesman Andrew Christie and documents filed with the Securities and Exchange Commission Friday morning.

The agreement with the unions was reported by Bloomberg News on Thursday.

In a letter to employees filed with the SEC, US Airways Group CEO Douglas Parker offered an explicit endorsement of a potential merger with American, writing that the deal "represents a unique opportunity that we should not ignore."

However, Parker pointed out that there is no deal yet for a merger. "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."

In a statement emailed to The Huffington Post, American Airlines did not address the merger directly, but said that the company is committed to creating "a profitable, growing industry leader." American also suggested the timing of the agreement might be a bargaining tactic as the unions and American Airlines management prepare to begin contract negotiations on Monday. "We believe statements of non-binding support from union leaders for alternative proposals are no coincidence given the timing" of the negotiation process, the statement read.

In a letter to fellow union members on Friday, Transport Workers Union president James C. Little wrote that while the union supports a merger, the TWU is still keeping the option of continued negotiation with American Airlines on the table.

“We don’t know, at this time, whether a merger will actually take place. So we are also preparing for the possibility of a hearing in U.S. Bankruptcy Court,” Little wrote.

According to Reuters, American Airlines’ unions support a merger because they believe the deal would entail fewer job losses than what American Airlines workers would suffer under the bankruptcy process. Reuters reports that the union estimates a merger could save at least 6,200 jobs.

“There will be a loss of jobs,” if a merger with US Airways moves forward, a union source told The Huffington Post. “But the question is, would the job losses be greater than if American Airlines’ plan is allowed to be implemented? The answer is no.”

American Airlines filed for bankruptcy protection in late November. Since then its unions -- the Allied Pilots Association, the Association of Professional Flight Attendants and the Transport Workers Union -- have been battling management over plans to cut 1,200 jobs in an effort to trim $1.25 billion.

In a separate, joint statement about the agreement with US Airways, the three unions wrote: “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."

According to Parker's SEC letter, there are still a number of steps that US Airways would need to take before a merger could actually move forward, including winning the support of American Airlines' creditors and, perhaps more importantly, American's management team and Board of Directors.

US Airways has reportedly been looking to do exactly that in recent weeks, discussing a possible merger with some of American Airlines' creditors, according to Bloomberg.

This article has been updated to include a statement from American Airlines.

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