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US Airways reaches agreements with American Airlines' unions

By Hpanchal on April 23, 2012

After days of rumors about an impending merger between US Airways and American Airlines, three unions representing American workers have come out in support of the idea. The Allied Pilots Association, the Transport Workers Union and the Association of Professional Flight Attendants have all reached conditional labor agreements with US Airways officials.

The Transport Workers Union published on its website a letter US Airways CEO Doug Parker sent to employees explaining the recent developments. In the letter, he wrote that US Airways is simply pursuing its options and that a supposed merger with American Airlines is still a long way off, if it happens at all.

"Today’s news does not mean we have agreed to merge with American Airlines," Parker wrote. "It only means we have reached agreements with these three unions on 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."

With the large hurdle of contract agreements seemingly resolved, a number of steps remain before a merger can take place. Since AMR Corportation, the parent company of American Airlines, is in bankruptcy, the company's creditors have to approve any deal that surfaces. The board of directors and its management team also has to give the go-ahead. Even though many negotiations still have to take place, Parker, in his note, calls the union agreements "an important first step along that path," adding "we are hopeful we can all work together to make this happen."

There has already been one major consolidation in the airline industry this year. Last month, UPS agreed to buy TNT Express for $6.77 billion, a transaction that is expected to close in the third quarter. At the time, Cathy Roberson, a senior analyst at Transport Intelligence, said that the merger had been anticipated for quite some time and that the UPS merger would probably not be the last.

"The airfreight market has been hurting for quite a while," she told Air Cargo World, "and we’re all expecting consolidation to occur."

American Airlines recently posted a $1.7-billion net loss in the first quarter — a drop that occurred mostly because of restructuring costs — but saw consolidated revenues of $6 billion, a 9.1-percent, year-over-year, increase. Excluding reorganization and special items, the company saw a loss of $248 million, compared to a $405 million loss in Q1 2011. US Airways will announce its first quarter results on Wednesday.

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