American Airlines' unions push for merger with US Airways

April 20, 2012 at 2:45 PM
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NEW YORK, April 20 (UPI) -- American Airlines' three largest unions said they have agreed to a labor deal with rival US Airways, paving the way for a merger between the two U.S. carriers.

American reported earlier it lost $1.5 billion in the first quarter, CBS News reported Friday.

Much of that was related to one-time costs due to the airline's filing for bankruptcy. Without those charges, the airline lost $248 million in the first quarter, which is a decline from the $436 million loss in the first quarter of 2011, the Fort Worth, Texas, Star-Telegram reported.

American has been negotiating with unions in an effort to cut $1.25 billion in operating costs related to its payroll. That would mean the loss of 14,000 jobs, the newspaper said.

Earlier, speculation over a merger prompted Transport Workers Union spokesman Jamie Horowitz to say, "We are considering all options, and our bargaining teams are continuing to work on final language with the goal of getting a consensual agreement," although he declined then to mention US Airways directly.

American Chief Executive Officer Tom Horton also denied there was any merger in the works, writing in a letter to employees, "There continues to be much takeover speculation in the press fueled by those who seek to serve their own agendas, including the circulation of misleading information.

"Naturally, there are many who do not want American to succeed. Surprisingly, our competitors have even been encouraged by a few within our own ranks," Horton wrote.

US Airways CEO Doug Parker ended speculation, however, saying, "We have concluded that a merger with American, while they are undergoing their bankruptcy restructuring, represents a unique opportunity that we should not ignore."

By passenger count, American is the third largest U.S. airline, while US Airways is the fifth largest, the Philadelphia Inquirer reported.

The three unions that struck a deal with US Airways are the Allied Pilots Association, the Association of Professional Flight Attendants and the Transport Workers Union, which represent a total of 55,000 workers.

In the meantime, direct talks between the two airlines are not going to happen soon. The court has already stipulated American cannot field any offers until Sept. 28. Until then, it must work on its own plan for emerging from bankruptcy.

In addition, US Airways is still tying up deals connected to its 2005 merger with America West.

"A contract for flight attendants at US Airways must be completed prior to any new merger deal," union officials Deborah Volpe and Mark Gentile said in a statement.

"There is a small window of opportunity for US Airways management to get this right," the statement said.

In turn, "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," American said in a statement.

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