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October 23, 2012

US Airways likely to pursue merger with American even if American management doesn't agree, pilots union says

US Airways is likely to pursue a merger with American Airlines, even if American's management doesn't agree to it, according to a message sent to the pilots on Monday evening.

Allied Pilots Association president Keith Wilson said the union's advisers have indicated that US Airways will "most likely pursue an alternate strategy that wouldn't involve securing AMR management's consent."

"While it’s pointless to speculate about the AMR-US Airways merger protocol discussions, it’s probably safe to assume that AMR management is aggressively protecting their stand-alone plan and ability to retain control. In your APA leadership’s estimation, if US Airways management needs a few more weeks to make a deal that results in a reinvigorated American Airlines, that would be time well spent," Wilson wrote in the message.

American's parent company, AMR Corp., has asked the bankruptcy judge to extend its exclusivity period, giving it about one more month to file its restructuring plan with the court. The unsecured creditors committee supports the request for extra time and a hearing is scheduled for October 30.

Wilson went on to say the extension may not have been something sought by AMR management but they may have been "compelled to agree to it" by the creditors committee in order to take more time working on a possible merger between US Airways and American.

Keep reading for the full note from Wilson.

-Andrea Ahles

Fellow pilots,

By now you are well aware that the Unsecured Creditors’ Committee (UCC) and AMR jointly requested a 30-day extension in AMR management's exclusivity period, to Jan. 28, 2013. United States Bankruptcy Judge Sean Lane has scheduled a hearing for Oct. 30 to consider the joint motion.

As we noted in the Friday, Oct. 19 edition of the APA News Digest, your APA leadership understands the concerns many of you have voiced about this potential extension. Rest assured we share your frustration with what seems like an interminable process. By our very nature, training and experience, pilots don’t like delay and uncertainty. We become exasperated when things drag on outside our control. Yet continued uncertainty has become the norm for us while AMR undergoes restructuring. Whether we like it or not, that’s the world we live in right now. The stakes are high in Chapter 11 bankruptcy, and the outcome of AMR’s restructuring is yet to be determined.
This prospective 30-day extension is not necessarily something that AMR management sought, but they may have been compelled to agree to it by the creditors that make up the UCC. Remember, since AMR filed bankruptcy nearly a year ago, Chairman and CEO Tom Horton has repeatedly emphasized the need to expedite restructuring and get the corporation through the “exit doors” as quickly as possible. In all likelihood, one of the main reasons for this sense of urgency is senior management’s desire to retain control. Our advisers believe that prolonging the restructuring process increases the likelihood of a change of control.
With that in mind, the most obvious beneficiary of an extension to the exclusivity period would be US Airways management and their plan to create a successor company similar in scale to Delta and United. If ongoing merger protocol discussions between US Airways and AMR don’t prove productive, our advisers have indicated that US Airways management will most likely pursue an alternate strategy that wouldn’t involve securing AMR management’s consent. While it’s pointless to speculate about the AMR-US Airways merger protocol discussions, it’s probably safe to assume that AMR management is aggressively protecting their stand-alone plan and ability to retain control. In your APA leadership’s estimation, if US Airways management needs a few more weeks to make a deal that results in a reinvigorated American Airlines, that would be time well spent.

In the face of continued uncertainty, your APA leadership’s priorities remain unchanged: an industry-standard contract and an American Airlines that will sustain us for the balance of our careers.

In unity,

Keith Wilson
APA President

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Comments

casual observer

Sounds like the APA is using more bullying tactics to get what they want. It is highly doubtful that AA pilots are excited about entering the "merger-mire" at US Airways. They know full well how Parker rolls. No one in their right mind would look forward to years of subpar negotiations, union infighting, and total stagnation.

RL

Casual Observer -

It is evident you have not been paying too much attention to what has been happening at American for the past decade.

DS

Nice bit of propaganda on APA's part; Wilson et al and Parker / USAir are the only clear winners from a combined workforce. Larger workforce = more dues and bigger bonuses for union bosses, and this is USAir's last chance to merge into a substantial carrier.

Raf

Casual Observer, your comment is so out of touch with the reality on the ground that it almost does not deserved to be replied to. I got on a bus full of AA employees (pilots and flight attendants) and when I touched the subject about what is going on with AA, they all unanimously, every single one of them, chimed in to say they are fed up with Tom Horton and his management team and that they want to push for a merger for US Airways and American Airlines to compete on equal footing with United and Delta Airlines. Horton is one of the most polarizing hated management figure since Frank Lorenzo. Casual Observer you also failed to mention that the pilots have already publicly voted a no confidence vote on Tom Horton and his management team. You really need to stick to the facts and stay away from repeating AMR's management's silly self delusional talking points.

Donald

Casual observer makes an astute obesevation. Why would AA pilots be so gung ho about US Airways after seeing the turmoil its pilot have endured these past several years? This statement is most likely a bargaining chip as the APA is clearly still interested in forging an industry standard contract on par with Delta and United and not US.

The sad part is that the only group that stands to gain from a merger is Doug Parker, Scott Kirby, and the like. They will certainly reap the rewards while labor struggles to integrate and fights on for years with no unified contract in sight. It is not like it hasn't happened before. This time it would just be a bigger payout.

Gary

Raf, you are the one out of touch dismissing the observations of the general public. The APA has already made it obvious that they don’t care about the airline’s best customers with their Mickey Mouse slow down to regain the leverage they tossed away.

Since when is it the union’s job to pick management or to promote a ridiculous merger with US Airways, an airline that brings too much baggage and very few real assets to the table?

There wasn’t a single industry analysis, newspaper reporter, or paid advisor to the APA that recommended rejection of the TA. The pilots foolishly voted it down because of this US Airways sideshow and a general ignorance of the BK process.

I can’t believe I am forced to pay dues to a dysfunctional corrupt union that doesn’t even begin to properly represent its members.

DG

The more we learn of Mr. Parker and Mr. Kirby and the way they have handled the labor groups at US Airways, the more many of us want to run far, far away. What is most infuriating is how our union leadership continues to throw us under the bus, basically using us like pawns in a giant chess match of egos.

The longer this goes on, the more it becomes evident that the only few that stand to gain big from a merger are Laura Glading, Keith Wilson, a few union officers, and Mr. Parker. Everyone is quick to point fingers at our own management and scream about greed. But has anyone taken the time to do their homework on the never ending saga at US Airways and the despicable way Mr. Parker has taken a passive approach in the way he settles contracts? It has been seven long years since he merged America West with US Airways, but both East and West groups are separate and working at bottom of the barrel wage levels. This could very well happen to us if we are thrown into the mix.

Has anyone even investigated the payout Mr. Parker will receive if he does merge his airline with ours? We get so bent out of shape about management making money off of our backs. Mr. Parker has been doing that for years. Seriously, look at his history with America West, swooping in and grabbing US Airways, and then leaving labor contracts unsettled for years while his airline starts to make money. He made desperate attempts to grab Delta and United twice. Now he is after AA. Bigger companies mean big CEO payouts. And with his track record, labor will be tossed aside and told to figure it out.

It is quite sad to think that instead of being excited about becoming a new AA ready to compete on any level, we have been sold out to a man who has a pretty solid history of not bothering to do the hard work of managing an airline and would rather move on to the next best thing that will make him richer.

Jorge

You all seams to be very well informed but at the end the only option that AA has to survive is......a buyout by US Airways, AA need this managment and their skills to make money, rest asure that all labor issus will be solved when this buyout is done! Trust Mr. Parker and team they know what to do! And ask Mr. Horton to step aside along with his team of gready arrogant managers in full!
This will happend eventually :-)

US PHL

Jorge, you are looking at US Airways management through some seriously strong rose colored glasses. Doug Parker is nothing but a light weight corporate raider. If he was such a great airline leader, then why does he continue to operate US Airways as two separate airlines? If he is so trustworthy, then why are US employees working under pre-merger bankruptcy contracts or have not had a pay raise since 1998 in some cases?

Doug Parker turns out to be nothing like he presents himself to be. He told HP folks that they should pause negotiations because once he merges with US, there will be more money in the pot for everyone. He promised US folks that their concessionary contracts would be no more once he married the two airlines. After seven long years, this still hasn't happened.

But Parker could care less. You see, this is how he realizes his big profits and costs savings. This is what he means by synergies. You AA people need to do your homework on this and realize that this is going to be you if you are not careful.

Parker talks a good game and makes big promises. Look no further than the infighting and lack of serious contract offers at US, what happened to PIT and LAS after big promises never to downsize any hub or close a base, and the layoffs that are inevitable after any merger... especially one that will put AA/US combined a good 20,000+ employees over United.

Parker really knows how to stir up excitement though. He feeds off of desperation and depression. He is the ultimate snake oil salesman. He should have been a politician. Take it from this old US employee who has been so "blessed" to work under Parker's leadership and see his "skills" first hand.

Raf

Gary, I am amazed by your attempt to quote airline industry analysts as a reason to oppose the merger between US Airways and American Airlines. If you even remotely follow the airline industry as a whole you would have been very much aware that most of the airline industry experts agree that American Airlines should merge with US Airways in for the sake of it's long term survival. The Wall Street Journal listed American Airlines as a business brand that will disappear in 2013 mainly because of AMR's management plan to emerge from bankruptcy as standalone airline. All one need to do is look at the $800,000,000 Delta Airlines made in profits the last quarter to recognize that a standalone American Airlines will never remotely come close to competing with the second most largest airlines, let alone compete with the two megagiants that United And Delta Airlines have become. The future of American Airlines looks very bleak if it stays the course for a standalone airline. That is why the Wall Street Journal listed American Airlines as one of the "Ten Brands That Will Disappear In 2013". American Airline pilots and the Flight Attendants are trying to save American Airlines from the mismanagement of Tom Horton and management team

Raf

I love when people talk about who is going to make money out of a merger between US Airways and American Airlines. In reality it is very easy. It is really a no brainer! If American Airlines mergers with US Airways, everyone wins. All the employees for American Airlines will benefit from a merger with US Airways. American Airlines and US Airways pilots have already agreed to merge their seniority lists (which to me sound fair and equitable). Everyone will be making more money. Bigger airline, bigger profits. Everyone happy! Without the merger we might have another bankruptcy in the near future. Tom Horton and his management team smiling all the way to the bank with the up to $600,000,000 in bonuses when AA exits bankruptcy as a standalone and the ultimate revenge on their discontented and unhappy employees for being disloyal to him because they complained about him and his friends paying themselves lavishly while the rest of American Airlines had to sacrifice.

Flyer

The folks at US have merged 8 labor groups since the HP merger with the exception of Flight Attendants and Polits. The Tempe group is letting them fight it out among themselves, thus allowing an entire workfore to not be paid on par with the other half...saves money in a volitile indusrty. The only thing blocking the full merger is two workgroups that are not willing to make things work like the other 8 did.

airlinerealist

Very interesting. Doug has tried a hostile bid before (Delta) and he fell on his face in front of the entire airline industry.

Would he really fare any better this time?

Doug's Achilles Heel is that he has promised too much to AA's unions. His own unions are going to expect at least that much, and it's more than a combined AA-US Airways would be able to afford and still be competitive.

Essentially Parker has talked himself into a corner trying to get merger support, and now he's stuck there.

Former Flyer

The people of American need to run fast and far from USAirways.
Foot dragging and a quagmire of unsettled, contracts
while management reaps record setting profits,
So a ceo that cant legally drive sober(arrested for DUI)
can play the emperors new clothes routine can make even
More money makes me nautious.
Please do not. Do not merge with US.
Disaster waiting to happen.

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