US Airways strikes deal with AMR’s unions
In an unusual move that could prefigure a serious bid for its bankrupt rival, US Airways said Friday that it had reached an agreement with the three main labor unions at American Airlines to support a merger.
Doug Parker, the chief executive of US Airways, said in a statement that a combination with American Airlines “represents a unique opportunity we should not ignore.” It would form “a pre-eminent airline with the enhanced scale and breadth to compete more effectively and profitably.”
Both airlines have trailed their bigger rivals Delta Air Lines and United Airlines, which in recent years have grown their business through big mergers that followed their own restructuring in bankruptcy. By moving quickly now, Parker seemed to be seeking to put pressure on American’s management, inject himself in the bankruptcy proceedings and set up a merger between the carriers as an alternative plan for American’s creditors.
One of the longest-serving executives in the business, Parker has long advocated the merits of airline consolidation. But after the mergers of Delta with Northwest and United with Continental, US Airways has few options left to bulk up.
US Airways has been huddled with its bankers for months to consider its options and put together a merger plan. It lacks the international network needed to compete with the bigger carriers. American has a global network, though it has lost money, market share and business customers and it has struggled in a period of high fuel prices.
A combination, some analysts said, might make sense, though it could face heightened regulatory scrutiny given the industry’s increasing market concentration. But it could also create a third powerful global rival to Delta and United that could spur more competition on some domestic and international routes.
Parker’s move also set up US Airways as a kind of white knight for American’s unions, which have balked at the restructuring terms set by the AMR Corp., American Airlines’ parent company.
By agreeing to back a merger, the unions - the Allied Pilots Association, the Association of Professional Flight Attendants and the Transport Workers Union - are betting that they will get a better deal from US Airways than from American’s current management.
The surprise announcement Friday came just before American Airlines was scheduled to ask a federal bankruptcy court in New York on Monday to void its existing contracts with the unions representing its pilots, flight attendants and mechanics. The airline has outlined plans to shed 13,000 jobs, freeze or terminate employee pensions, curb health benefits and cut costs to regain some competitiveness.
US Airways has not made a formal offer for American. Nor has it disclosed the terms of its deal with the unions that represent about 50,000 workers at American. But Parker said his plan “contemplates saving at least” 6,200 jobs that AMR would terminate.