Air- US Airways presses case for merger with American- Star Telegram

Posted: November 14, 2012 in Uncategorized

November 13, 2012

US Airways met with creditors of American Airlines in New York on Tuesday to press its case for a merger with the bankrupt airline, three people familiar with the matter said.

Today, the unsecured creditors committee will hear from representatives of American, which seeks to exit court protection as a stand-alone carrier, according to Bloomberg News, citing sources who asked not to be identified because the talks are private.

US Airways CEO Doug Parker has pushed for a merger since shortly after Fort Worth-based AMR Corp. filed for bankruptcy Nov. 29.

AMR CEO Tom Horton has fought to remain independent but agreed to meet with US Airways representatives to discuss a possible merger after the airline’s unions threw their support behind a combination.

Both airlines signed a nondisclosure agreement to accommodate those discussions.

The nine-member creditors committee, which includes American’s three largest unions, has a say in important decisions as AMR restructures.

“Maybe we are not going to have to wait until the end of the first quarter to find out what the plan is here,” said Fred Lowrance, an Avondale Partners analyst in Nashville. He said the discussions suggest that creditors “want to feel comfortable that they have all the information to make a comparison.”

Jack Butler, an attorney for the committee, didn’t respond to an e-mail seeking comment. Todd Lehmacher, a spokesman for US Airways, declined to comment, as did Andy Backover, an American spokesman.

Last week, U.S. Bankruptcy Judge Sean Lane approved American’s request for an extension until Jan. 28 of the airline’s exclusive right to file a reorganization plan.

A combination of US Airways, the fifth-biggest U.S. airline, and No. 3 American would create the world’s largest carrier by passenger traffic, surpassing United Continental and Delta.

American recently reached an agreement in principle with its pilots union on a new contract. The Allied Pilots Association board is reviewing the deal and will decide by the end of the week whether to send it to pilots for a ratification vote.

According to a copy obtained by the Star-Telegram, the details include:

65- to 76-seat jets can be up to 25 percent of American’s narrow-body aircraft fleet between 2012 and 2014. Those regional jets can make up 30 percent of the narrow-body fleet in 2015 and 40 percent in 2016.

American can enter into an unrestricted domestic code-sharing agreement with Alaska Airlines (this is not specified for JetBlue Airways).

Domestic code sharing in any 12-month period cannot exceed 50 percent of American’s mainline schedule monthly available seat miles.

Pilots will receive 2 percent raises after the first and second years of the contract. After the third year, American will adjust pay based on the industry rates. Two percent raises will be offered after the fourth and fifth years.

Pilots will be required to pay 18 percent of their healthcare premiums in 2013, 19 percent in 2014 and 20 percent in 2015.

Separately, delays at Dallas/Fort Worth Airport lessened Tuesday as American continued to work through issues with its new cabin-cleaning vendor, AirServe, which started last week.

About 80 percent of American’s departures left DFW on time Tuesday, up from 66 percent Monday.

“As is typical when starting a new relationship with a vendor, we had a few issues during the first days; however, things with AirServ have greatly improved since then,” American spokeswoman Andrea Huguely said.

Transport Workers Union Local 513 President Darrin Pierce said about 220 workers in his union were laid off as part of the outsourcing deal.

“The jobs we are talking about, we’ve had for decades so we know how to do it,” Pierce said.

“Unfortunately, we lost those jobs through the bankruptcy process. The new company that is performing this job, at a lower wage, doesn’t know how to do them yet, so American is going to take some lumps as it goes through this.”


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