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US Airways pilots on board with AMR deal

by Lou Whiteman  |  Published January 7, 2013 at 12:29 PM
UnitedAirlinePilotStrike227x128.jpgThe union representing pilots at US Airways Group Inc. late Friday backed a proposed deal with bankrupt American Airlines Inc., an agreement that could ease creditor concerns about the proposed transaction.

Tempe, Ariz.-based US Airways has been vying to buy AMR Corp., parent of American, since soon after the company entered Chapter 11 protection in November 2011. The airline had previously reached tentative agreements with unions representing American workers, but has had a difficult relationship in recent years with its own workers.

AMR creditors are mulling competing plans for AMR to emerge as either an independent or via a deal with US Airways.

While US Airways has talked up the benefits of a proposed transaction, including cost savings and more scale to better compete with Delta Air Lines Inc. and United Continental Holdings Inc., sources say that integration issues including labor relations remain a concern of some creditors.

The two sides also differ on issues including valuation, with some creditors hoping for more than the 70% equity stake in the combination suggested by US Airways.

The two airlines in a joint statement said that they have completed discussions with American's Allied Pilots Association and US Airways' US Airline Pilots Association "intended to develop a framework for the terms of employment for pilots" in the event of a merger. The memorandum of understanding was approved by the boards of both the APA and USAPA, and according to the statement "will assist all of the stakeholders ... in making an informed decision" on whether a merger should be pursued.

AMR chief executive Tom Horton in a letter to employees last week said that the company expects a decision on whether to pursue a deal to be made in the weeks to come.

AMR management is believed to favor emerging as an independent before considering consolidation, but Horton in his letter said that the airline hopes "to create the most value for our owners and the strongest possible American going forward."

Tags: Allied Pilots Association | American Airlines Inc. | AMR Corp. | APA | Chapter 11 | Delta Air Lines Inc. | Tom Horton | United Continental Holdings Inc. | US Airline Pilots Association | US Airways Group Inc. | USAPA

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