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4-Traders Homepage  >  Equities  >  Nyse  >  AMR Corporation    AAMRQ

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Unions call on AMR board to support U.S. Air merger

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05/03/2012 | 11:43pm CEST

Three labor unions at American Airlines are appealing directly to the company's board of directors to support a merger with rival carrier US Airways Group (>> US Airways Group, Inc.), a step managers at carrier's parent, AMR Corp (>> AMR Corporation), have so far resisted.

Three labor unions at American Airlines are appealing directly to the company's board of directors to support a merger with rival carrier US Airways Group (>> US Airways Group, Inc.), a step managers at carrier's parent, AMR Corp (>> AMR Corporation), have so far resisted.

In a letter addressed to the board and signed by leaders of unions representing 55,000 flight attendants, pilots and ground workers, the unions insist a merger plan offered by US Airways will save jobs, boost revenue and shore up the combined network of the two airlines.

Fort Worth, Texas-based AMR, which filed for bankruptcy in November citing a need to cut labor costs, has said it is committed to emerging from Chapter 11 as a stand-alone company.

"Under the plan put forth by US Airways management, a merger now between American Airlines and US Airways would result in a rejuvenated American Airlines," according to the letter, signed by leaders of the Allied Pilots Association (APA), the Transport Workers Union (TWU) and the Association of Professional Flight Attendants (APFA).

The text of the letter was set to appear on Friday in ads published in the Wall Street Journal, the Dallas Morning News and the Fort Worth Star-Telegram, a TWU spokesman said.

US Airways has not submitted a formal merger proposal to AMR, which has the exclusive right in bankruptcy court to reorganize without interference from outsiders.

US Airways, however, has struck a labor deal with AMR's unions, which are members of AMR's creditors committee and therefore have a say in the restructuring.

"An American Airlines-US Airways merger would be mutually beneficial by filling the gaps in each carrier's network and boosting overall revenue," the letter said.

US Airways has said a merger with AMR would generate at least $1.2 billion a year beyond the benefits that could be passed to employees of the combined carrier.

AMR, however, insists its stand-alone plan would create $3 billion in financial improvements by 2017. To achieve this goal, the company says, it must slash labor costs by $1.25 billion a year.

AMR has been locked for years in fruitless negotiations with its unions on concessions it says it needs to survive. The company has asked its bankruptcy court for permission to void the contracts it has with unions that are not willing make required sacrifices.

Spokesmen for the TWU and the APFA confirmed their unions have talked with their counterparts at US Airways to lay the foundation for joint contracts in the event of a merger.

James Ray, spokesman for US Airline Pilots Association, which represents the pilots at US Airways, said members are working with the APA on a joint contract.

US Airways, formed from a 2005 merger with America West Airlines, still has not integrated its pilots and flight attendants work groups.

American Airlines is the third-largest U.S. airline behind United Airlines (>> United Continental Holdings, Inc.) and Delta Air Lines (>> Delta Air Lines, Inc.), both of which have already restructured in bankruptcy.

(Reporting by Kyle Peterson; Editing by Steve Orlofsky)

By Kyle Peterson

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