US Airways, American Airlines unions ink merger-contingent CBA deals

By Caroline Salls

Pittsburgh, April 20 - US Airways Group, Inc. said it has reached agreements for collective bargaining agreements that would govern American Airlines employees represented by the Transport Workers Union (TWU), Association of Professional Flight Attendants (APFA) and Allied Pilots Association (APA), according to an 8-K filed Friday with the Securities and Exchange Commission.

The effectiveness of these agreements is contingent on a business combination involving US Airways and American Airlines parent AMR Corp. in connection with AMR's pending bankruptcy case.

US Airways said in the 8-K that no agreement for that business combination has been reached.

No merger yet

US Airways chairman and chief executive officer W. Douglas Parker said in a letter to employees that Friday's news does not mean US Airways has agreed to merge with American Airlines, but only that it has reached agreements with these three unions on what their collective bargaining agreements would look like after a merger and that the unions would like to work with US Airways 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," Parker said in the letter.

"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 the letter that US Airways does not need to merge with anyone, but the company has concluded that a merger with American while it is undergoing a bankruptcy restructuring "represents a unique opportunity that we should not ignore."

Parker said this sentiment is shared by the three American Airlines labor unions.

US Airways intentions

According to Parker's letter, US Airways' intention would be to put the companies' two complementary networks together, maintaining both airlines' existing hubs and aircraft, and create an airline that could compete successfully with United, Delta and other carriers within the industry.

Parker said a merged airline would provide competitive, industry-standard compensation and benefits as well as improved job security and advancement opportunities for all employees of the combined airline.

In American's stand-alone strategy, Parker said more than 13,000 American Airlines employees would lose their jobs. Under the merger, at least 6,200 of those positions would be saved.

"Today is one step in what will be a much longer process," Parker said in the letter. "For now, it remains business as usual."

Union support

In a joint statement released Friday, the TWU, APFA and APA stated: "On behalf of nearly 55,000 American Airlines front-line employees - including the 17,000 members of the Association of Professional Flight Attendants, the 10,000 members of the Allied Pilots Association and the 26,000 members of the Transport Workers Union - we are pleased to confirm our support of a possible merger between our airline and US Airways."

"We have reached agreements on terms sheets for collective bargaining agreements that would govern the American Airlines employees of the merged airline with US Airways," the unions said.

"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.

"As envisioned, a merger of US Airways and American Airlines provides the best path for all constituencies, including employees of both American Airlines and US Airways.

"The contemplated merger would be based on growth, preserve at least 6,200 American Airlines jobs that would be furloughed under the company's stand-alone strategy and provide employees of both American and US Airways with competitive, industry-standard compensation and benefits.

"Over the long term, the combined new airline would support greater job security and advancement opportunities for both American Airlines' and US Airways' employees that are far superior to those available to employees at either airline on a stand-alone basis.

"Importantly, by avoiding a lengthy and contentious 1113 process, the new carrier would be able to emerge from bankruptcy more quickly.

"A merger would create a foundation to establish American Airlines as a vigorous competitor of the two larger network carriers and the industry at large. Customers of both airlines and air travelers in general will benefit greatly from a viable third network carrier and significantly enhanced travel choices."

IAM pledges protection

Meanwhile, The International Association of Machinists and Aerospace Workers (IAM) said in a separate release that it has reassured its members at US Airways that it will aggressively represent their interests in any potential takeover of bankrupt American Airlines.

"The IAM's first responsibility is to protect the seniority, job security, wages, benefits and pensions of our members at US Airways," IAM transportation general vice president Sito Pantoja said in the IAM release.

"We have a long history at US Airways, with substantial experience defending members during mergers and uncertain economic times. We are fully prepared to protect our members as this process unfolds."

The IAM said US Airways intention to acquire American Airlines "is certain to encounter many obstacles, including bankruptcy court, shareholder approval and regulatory scrutiny."

"Too often we have seen airline consolidation advance at the expense of airline workers, except for the corporate executives who cut jobs, raise fares, reduce service and shower themselves with cash and bonuses," Pantoja said in the IAM release.

"The IAM will oppose any merger that would take place at the expense of workers, the flying public and the communities served by these two airlines."

AMR, the Fort Worth-based parent of American Airlines, filed for bankruptcy on Nov. 29 in the U.S. Bankruptcy Court for the Southern District of New York. Its Chapter 11 case number is 11-15463.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.