American Airlines Workers Grapple With Us Airways Tiein
Written by Scott Blake on May 3, 2012
By Scott Blake
American Airlines is at odds with many of its employees over a proposal to merge Miami’s dominant, but financially struggling, carrier with US Airways.
Despite reluctance from American Airlines management, the unions say the merger would be a job-saver at American while it tries to reorganize under Chapter 11 bankruptcy protection.
A merger with US Airways would "only make American stronger" in Miami, a spokesman for American’s pilots union told Miami Today.
US Airways’ substantial operations in cities such as New York and Washington, DC, would feed more passengers into American’s already large system at Miami International Airport, said Gregg Overman, communications director for the Allied Pilots Association.
American management has expressed skepticism about the idea, saying US Airways is trying to force a merger.
"We must be mindful of other parties who don’t have our best interests at heart and who are working their own agendas at our expense," American Chairman and CEO Tom Horton said in a statement.
Mr. Overman said a merger should not lead to any decrease in American flights and staffing in Miami, which, along with Dallas-Fort Worth, already is one of its busiest hubs.
He said American’s network of domestic flights nationwide has shrunk in the past decade, but the effect in Miami has been limited due to its growth of international flights.
The proposed merger is expected to be discussed and perhaps debated at American’s next bankruptcy court hearing May 14 in New York.
Meanwhile, the Allied Pilots Association and two other unions representing American flight attendants, mechanics and flight service personnel have reached agreements with US Airways on term sheets for collective bargaining agreements that would govern employees under a merger.
A merger, according to the unions, would be "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."
While American operates more than 300 flights a day from Miami International, US Airways has a small presence in Miami.
During the bankruptcy process, American has been consolidating around its hubs, including Dallas-Fort Worth and Miami. US Airways maintains hubs in Charlotte, Philadelphia and Phoenix, with a smaller hub in Washington, DC.
US Airways Chairman and CEO W. Douglas Parker said American’s stand-alone strategy would mean more than 13,000 employees would lose their jobs, while a merger would save at least 6,200 of those positions.
"Our intention would be to put our two complementary networks together, maintaining both airlines’ existing hubs and aircraft," Mr. Parker said in a letter to employees, "and create an airline that could compete successfully with United, Delta and other carriers within our industry."
In 2008, Delta Air Lines merged with Northwest Airlines. And in 2010, United Air Lines merged with Continental Airlines.
Mr. Parker said US Airways does not need a merger, and its agreements with three American unions would only govern "what their collective bargaining agreements would look like after a merger, and that they would like to work with us to make a merger a reality."
To get an actual merger, he added, "many more things must happen including gaining the support of [American’s] creditors, its management team and its board of directors."
American management, meanwhile, has maintained the goal of reorganizing under Chapter 11 bankruptcy protection is to emerge as a stand-alone airline.
Martha Pantin, an American spokeswoman in Miami, declined to comment on the matter, instead referring to the statement by Mr. Horton, who noted that US Airways’ agreements with the American unions are merely "non-binding arrangements."
"First and forecast," Mr. Horton wrote, "nothing changes as a result of these announcements and we will proceed on our path toward a successful restructuring of American."
He wrote that "it is easy to understand US Airways’ sense of urgency to find a way to address the challenges it has faced for a long time."
Mr. Horton said AMR Corp., American’s parent company, is making "significant progress" in its restructuring plan, and the court has granted the company the right to pursue its plan at least through the end of September.
For the quarter ended March 31, AMR Corp. reported a net loss of $1.7 billion, compared a net loss of $436 million in the first quarter of 2011. Excluding reorganization costs and special items, the net loss for the quarter was $248 million, compared with a net loss of $405 million in the same quarter the previous year, the company said.
In his statement on the proposed merger, Mr. Horton added that "everyone should understand that what’s best for our company, our people and our financial stakeholders will be determined by the facts in a disciplined manner and process."
Mr. Overman of the pilots union suggested that American managers know a merger is "inevitable" but want the bankruptcy process to unfold on their terms to ensure it ends being as lucrative as possible for them, or offers them job security.
He added: "The management team will collect a large paycheck when they emerge from Chapter 11."