American Airlines (Dallas/Fort Worth), through the AMR Corporation, is under continued pressure from the unsecured creditors and the unions to consider a merger option while in bankruptcy court reorganization. AMR has stated it will now “reach out” to five prospective merger partners, namely Alaska Airlines, Frontier Airlines (2nd), JetBlue Airways, US Airways and Virgin America according to this report by Reuters. Is the “reaching out” a genuine gesture or just a stall tactic?
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Meanwhile, the Allied Pilots Association, representing AA’s 10,000 pilots called the announcement “an important milestone”.
The union issued the following statement:
“The Allied Pilots Association (APA), certified collective bargaining agent for the 10,000 pilots of American Airlines, characterized a letter from AMR Chairman and Chief Executive Officer Tom Horton to all employees on potential industry consolidation involving American Airlines as “an important milestone.”
“Mr. Horton’s letter represents an important milestone by acknowledging what we have believed for some time—that consolidation involving American Airlines is essential for all of the airline’s stakeholders,” said APA President Captain Dave Bates. “It’s an affirmation that consolidation represents the most promising path for our airline’s future. The biggest remaining questions center on who manages the new entity and whether a merger occurs during AMR’s Chapter 11 restructuring or thereafter.”
In April, the APA leadership and US Airways management—along with the leaders of the Association of Professional Flight Attendants and Transport Workers Union—jointly announced their support for merging the two carriers. The unions also announced that they had negotiated conditional labor agreements with US Airways management.
Meanwhile, APA and AMR management have been engaged in negotiations throughout the restructuring process, with the APA board of directors voting to approve a tentative agreement with management on June 27. That tentative agreement is now subject to a ratification vote by the APA membership. The tentative agreement includes a 13.5 percent equity stake in the restructured airline.
“The 13.5 percent equity stake is intended to compensate APA as an unsecured creditor on behalf of the pilots we represent,” Captain Bates said. “If our members approve the tentative agreement, this equity stake would give APA significant influence over strategic decisions that will be made in the weeks and months to come concerning American Airlines, including the makeup of the new board of directors and management team.”
The results of the APA membership ratification vote will be announced on August 8.”
Is American now finally serious about a merger? In many ways, AMR still feels it is superior to any of these potential suitors. In some ways, AA management has still not gotten over the fact that they lead the company into bankruptcy. A merger will only work if AA approaches a potential marriage suitor as an equal partner. The “American” name is likely to survive, but like the recent Delta-Northwest and United-Continental mergers, the surviving name does not always equate to surviving management. In essence, current AA and AMR management could be fighting to keep their jobs.
Copyright Photo: Dave Glendinning. How much are the key Oneworld partners influencing AA management?