Unions At Bankrupt American Airlines Endorse US Airways Takeover

Unions representing more than 50,000 workers at bankrupt American Airlines said Friday they signed a conditional labor agreement with U.S. Airways (NYSE: LCC) and support that carrier's bid to take over their ailing employer. American, meanwhile, responded by saying it will continue pursuing its existing restructuring plan.

The Allied Pilots Association, the Association of Professional Flight Attendants and the Transport Workers Union signed an agreement with the Phoenix-based airline on what their collective bargaining rights would look like if U.S. Airways takes over American Airlines, which is owned by AMR Corp. and filed for protection from its creditors Nov. 29, 2011.

The unions represent 10,000 pilots, 17,000 flight attendants and 26,000 mechanics and ground workers, the Wall Street Journal reported.

After extensive review by our legal and financial advisers and subject-matter experts, your APA leadership is confident that a merger between American Airlines and US Airways would be the best possible course of action for both our profession and for the future of our airline, the pilots union said in a statement on its website.

The unions support a U.S. Airways-American Airlines tie-up because such a move would eliminate the size gap compared to Delta and United, and the combined operation will also immediately create a comprehensive network that can compete with Delta and United, the pilots union said.

U.S. Airways CEO Doug Parker released a statement made to his employees on the development explaining his rationale for pursuing the Dallas-Fort Worth, Texas-based carrier.

Combining American Airlines and US Airways would create a preeminent airline with the enhanced scale and breadth required to compete more effectively and profitably, his letter stated.

Our intention would be to put our 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 our industry.

Parker said that while American's stand-alone strategy envisions more than 13,000 American employees would lose their jobs, U.S. Airways contemplates saving at least 6,200 of those jobs.

American Airlines responded by affirming its commitment to its existing restructuring plan.

Our immediate next (restructuring) step is to pursue vital modifications to our collective bargaining agreements through the 1113 process that begins on Monday, April 23, the carrier said in a statement, referring to a section of the bankruptcy code that allows companies to ask the court to reject and alter their collective-bargaining agreements with unionized employees.

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.