It's Official: USAirways Wants American

[grog_sit_reserv]

Sigh...

Today, we filed a statement (a form called an 8-K) with the Securities and Exchange Commission disclosing that we have signed agreements with the three unions that represent nearly 55,000 American Airlines employees. These unions are the Allied Pilots Association (APA), the Association of Professional Flight Attendants (APFA) and the Transport Workers Union (TWU), which represents all of American Airlines’ mechanics and fleet service employees.

 

[waveflyer]

HuffPost Social Reading
American Airlines, US Airways Merger In Works; Unions To Support Deal: Report [UPDATE]
Posted: 04/20/2012 9:47 am Updated: 04/20/2012 10:53 am

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UPDATE: CBS News is reporting that U.S. Airways has filed papers to begin the process of taking over American Airlines. U.S. Airways CEO Doug Parker disputed an earlier CBS News report that an agreement between the two airlines on a merger had been reached.

The Full AP report on the deal is below:

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

The unions represent more than 50,000 workers including pilots, flight attendants and ground workers at American, the nation's third-largest airline.

American and its parent, AMR Corp., are operating under bankruptcy protection.

Doug Parker, the chairman and CEO of US Airways Group Inc., said Friday that to win a merger with American, his company still needs support of 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 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 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 that they have agreed on terms for collective bargaining agreements if there is a merger between the airlines. However, no such deal exists.

Thomas Horton, CEO of American Airlines' parent company, AMR Corp., 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 the American Airlines unions could complicate Horton's strategy, however.

In morning trading, shares of US Airways Group Inc., fell 27 cents, or 2.8 percent, to $9.24.

___

Josh Freed reported from Minneapolis

 

[Mercyful Fate]

I just barfed in my mouth

 

[waveflyer]

What would a US Air-American merger mean for you?
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By Jack Otter
CBS News travel editor Peter Greenberg and a friend.*****(CBS)
(MoneyWatch) If US Airways (LCC) and American Airlines (AAMRQ) merge, what will that mean for you, the beleaguered traveler? It probably won't surprise you to hear that it would likely lead to higher ticket prices. That's the assessment of CBS News travel editor Peter Greenberg, who spoke to MoneyWatch.com from the Mediterranean, where he is aboard the cruise ship Seven Seas Mariner.

MoneyWatch: Peter, is this merger really going to happen?

Peter Greenberg: First, you can't see something like this happening for 18 months. There will be antitrust review before American could even leave bankruptcy. That said, [US Airways CEO] Doug Parker has been meeting with American's creditors, and, according to sources I've spoken to, promising to make them whole. If the majority of those creditors are on board, he's in a good position to pull this off. He can go down to the judge in Delaware and say, hey, I've got a plan and the creditors are on board. And what judge is going to throw that out?

MW: So if a merger happens, would fliers see fewer routes? What would the airline be called?

PG: I would expect little change in terms of routes. There's not too much overlap between the carriers, and US Airways is much smaller, with just 8 percent of the market [American has 13 percent]. I suppose it would be in US Airways best interest to lose the name and go with American.

MW: What other changes would fliers see?

PG: There would be a merging of frequent-flier programs and a diminishing availability of reward seats. There's no point in giving away seats in a frequent-flier program if you are only three airlines. But the programs will stick around -- these companies actually make more money from frequent-flier programs than they make from being airlines. But instead of getting a free ticket, you'll get a toaster.

MW: And of course ticket prices will rise....

PG: Anytime you shrink capacity and jettison certain routes, airfares have nowhere to go but up. They're already climbing: The cost of a flight to Europe is up 22 percent over last year. From a business standpoint, a merger is a smart move for these companies. In the past you'd always have some low-cost carrier come in to fill the void [and keep downward pressure on ticket prices.] Now we don't have those. Maybe a small airline comes in and cherry-picks a few routes, but not many.

MW: So it doesn't sound like this is good news for travelers, while historically airlines have been a terrible business. Will this consolidation finally help them make money?

PG: All the major airlines are turning a profit right now. They're not doing it on ticket prices, however. The industry brought in $32.5 billion in revenue in checked bags and other ancillary fees last year.

MW: It hurts just to hear that number. Thanks, Peter.

Copyright © 2012 CBS Interactive Inc. All rights reserved.
>> View all articles by Jack Otter

Jack Otter is Executive Editor of CBS MoneyWatch.com. Prior to the launch of MoneyWatch, he served as deputy editor of Best Life magazine and as features editor of SmartMoney magazine. Otter's writing has appeared in The Wall Street Journal, O magazine and The New Yorker. His new book, Worth It...Not Worth It: Simple and Profitable Answers to Life's Tough Financial Questions, will be published on May 1.

 

[fam62c]

This will be a long process, the bankruptcy court will probably extend the exclusivity period for the incumbent management the full 18 months. If the judge rejects the labor agreements things will get ugly. If I were an American employee I would want to see Parker's plan in excruciating detail before I got on board with that guy. This is good for the American unions though, they will get a better deal if there are competing interests. Let's see who else shows up to the party.

 

[Flash]

First things first, bonuses in place for mgmt. Have to retain top talent.

 

[dollacrackho]

How is Parker gonna pull off all these pay raises?

 

[grog_sit_reserv]

Let's see who else shows up to the party.

Indeed....

 

[Flying Illini]

If it goes through it will mean America West has saved two Legacy Airlines.

:ducking:


Sent from my iPhone using Tapatalk

 

[Turtle21]

If it goes through it will mean America West has saved two Legacy Airlines.

:ducking:


Sent from my iPhone using Tapatalk

Yes indeed. The selfless efforts by AW employees over the last couple of decades has proven to be the most prosperous, viable business model and has enabled two bankrupt, failing businesses to be saved, along with all of the jobs and economic benefits to communities across the fruited plane.

All AA and USAir employees should show their gratitude by demanding to be stapled below the desert scorpions.