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U.S. Airways moves to merge with American Airlines

By Catholic Online (NEWS CONSORTIUM)
April 21st, 2012
Catholic Online (www.catholic.org)

U.S. Airways has filed papers to begin a merger with American Airlines. U.S. Airways CEO Doug Parker is quick to say that an earlier report that said an agreement between the two airlines had already been reached. Bringing the proposed merger closer with reality, U.S. Airways has struck deals with labor unions at American Airlines to win their support for a possible merger with American.

LOS ANGELES, CA (Catholic Online) - The unions represent more than 50,000 workers including pilots, flight attendants and ground workers. American Airlines is the nation's third-largest airline.

Both American and its parent, AMR Corp., are operating under bankruptcy protection.

Chairman and CEO of U.S. Airways Group Inc. Doug Parker, says that in order to win a merger with American, his company still needs support of AMR's creditors, management and board of directors.

"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 a note to U.S. Airways employees.

Parker said a merger could save about 6,200 jobs at American, or nearly half the jobs that American wants to eliminate. He also says he would keep both airlines' current hubs and planes to create a bigger company that could compete against United Airlines and Delta Air Lines.

In a statement, the three unions at American say that a merger with U.S. Airways is the best way to fix American, which filed for bankruptcy protection in November.

The unions oppose American's plan to cut 13,000 union jobs and sharply cut labor costs to return to profitability. American is seeking to throw out contracts with the unions that govern pay, benefits and work rules, and impose its own terms on employees.

U.S. Airways and the unions said that they have agreed on terms for collective bargaining agreements if there is a merger between the airlines. No such agreement currently exists.

Thomas Horton, who is the CEO of American Airlines' parent company, AMR Corp., has indicated he would prefer that AMR remain independent. Horton does say he is open to a merger after his company emerges from bankruptcy protection. The gambit by U.S. Airways and the American Airlines unions could complicate Horton's strategy, however.

In morning trading, shares of US Airways Group Inc., fell 27 cents, or 2.8 percent, to $9.24.

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