American, US Airways take next step toward merger
By Hazel Bradford | August 31, 2012 2:29 pm
American Airlines parent AMR Corp. and US Airways Group Inc. on Friday announced a non-disclosure agreement between the two airlines that could advance potential merger talks.
While pensions and other labor issues would be part of detailed discussions if the airlines merged, the confidentiality agreement “simply means we have agreed to work together to discuss and analyze a merger,” US Airways chairman and CEO Doug Parker said in a letter sent to employees Aug. 31. “It does not mean we are merging.”
In a letter to its managers Friday, Fort Worth, Texas-based AMR said it has also signed confidentiality agreements with other parties, and “there can be no assurance that any transaction will take place” with US Airways. But Bob Mann, an airline consultant and former American executive, characterized Friday's agreements as “a slow walk toward the inevitable. The only question in the final analysis will be which one acquires the other and which management team winds up in control.”
AMR will be back in U.S. Bankruptcy Court on Sept. 4, seeking permission to reject its collective bargaining agreement with its pilots' union, Allied Pilots Association. AMR's other unions covering flight attendants, mechanics and ground personnel have signed labor agreements that call for freezing their defined benefit plans.
The pilots' union rejected the airline's final contract offer Aug. 8 that would have frozen the pilots' pension plan and contributed 14% of pay into a new 401(k) plan. The offer would have also given the pilots a 13.5% stake in AMR after it emerged from Chapter 11 bankruptcy protection. The pilots rejected the offer over work-rule issues. “There is largely agreement on pensions,” said a source familiar with the negotiations.
Mr. Mann said American pilots are interested in the US Airways merger “because there is such a toxic lack of trust with (American's) management team that there is no going back.”
American's four pension plans have $8.3 billion in assets and $18.5 billion in liabilities, both as of Dec. 31, according to AMR's latest 10-K filing. DC assets totaled $9.4 billion, as of Sept. 30, 2011, according to Pensions & Investments data, the most recent available.