American, U.S. Airways Move Closer to Merger

VIDEO: Ticket prices set to soar following big airline merger.

            (Image credit: Andrew Harrer/Bloomberg via Getty Images)

In an email to employees today, US Airways CEO Doug Parker said the airline had reached agreements with the three unions that represent nearly 55,000 American Airlines employees on what their collective bargaining agreements would look like after a merger.

This is an important  step toward a U.S. Airways and American Airlines merger, but it is far from a done deal.

The three unions - the Allied Pilots Association (APA), the Association of Professional Flight Attendants (APFA) and the Transport Workers Union (TWU) - issued a statement announcing their support of a US Airways-American Airlines merger.

"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," the unions said in a statement.

The combined carrier will be branded American Airlines and be based in Fort Worth, Texas, according to Dave Bates, APA President.

APFA  President Laura Glading said in a YouTube video, "As you know, American Airlines management has made several excessive demands of our contract since filing for bankruptcy protection last November. Not only were their demands unreasonable, but their business plan was uninspired and not viable. My fellow union leaders and I had no choice but to evaluate alternatives."

She went on to say, "After careful consideration, the APFA Board of Directors voted unanimously to sign an agreement in principle with US Airways, knowing that it was in the best interest of the membership."

US Airways CEO Parker in his email noted that the news does not mean there is a merger agreement.  "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.  To get to an actual merger, many more things must happen including gaining the support of AMR's creditors, its management team and its 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 also said the intention is to combine the two carriers' networks, maintain both airlines' existing hubs and aircraft, and "create an airline that could compete successfully with United, Delta and other carriers within our industry."

AMR Corp., American Airlines' parent company, filed for Chapter 11  bankruptcy Nov. 29, 2011.

American has said it wants to leave Chapter 11 as a standalone carrier. Today it issued the following statement: "American Airlines is moving steadily through the Court supervised restructuring process and the Court has granted American the exclusive right to create its plan of reorganization at least until September 28, 2012. We are making substantial progress in our efforts to return American to industry leadership, profitability and growth and maximize its value for all of its stakeholders. Our immediate next step is to pursue vital modifications to our collective bargaining agreements through the 1113 process that begins on Monday, April 23rd.

We believe statements of non-binding support from union leaders for alternative proposals are no coincidence given the timing of the 1113 process. These statements 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. For American's outstanding employees and loyal customers, business continues on track, as we continue to provide the safe, reliable travel experience our customers expect."

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