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American Airlines Unions Back US Airways Takeover Bid

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(credit: KTVT/KTXA) Jack Fink
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aabank American Airlines Unions Back US Airways Takeover Bid

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Click here to read more about AA's bankruptcy on CBSDFW.COM.

FORT WORTH (CBSDFW) – CBS 11 News has learned that US Airways has made an offer to American Airlines pilots. Sources say the offer calls for American’s pilots to receive the same pay scale as Delta Airlines pilots, plus three percent. It would also freeze their pensions and guarantee their seniority for seven years. The pilots union hasn’t returned calls seeking comment.

A few years ago, the pilots may have laughed at US Air’s plan. But an employee who doesn’t want to be identified said that the growing opinion is “why not give US Air a chance” — because they have no confidence in American’s current leadership.

Sources say that US Airways is having discussions with all of American’s labor unions and creditors.

All three of American Airlines’ main unions have agreed to support a takeover offer from US Airways. The unions will make an announcement Friday morning, but Dallas attorney Randy Ray said that may be early, as no action can be taken right now. “You can’t cut short the process.”

Update: 4/20/12 8:35 a.m.
A press release issued by the Allied Pilots Association, the Transport Workers Union and the Association of Professional Flight Attendants on Friday morning confirmed that nearly 55,000 American Airlines frontline employees support the possible merger between American and US Airways.

Ray said that’s because American is still in control of its reorganization plan. “It’s got the exclusive right to prevent a plan of reorganization to the bankruptcy court. It’s got that six month extension from the judge to do that.” That extension expires in late September. Ray said that means no other airline or entitity can propose business plans to the court through that date. He says American has “the exclusive right to prevent a plan of reorganization to the bankruptcy court.”

Ray added, “Unless American decides to engage directly with US Air in a cooperative way to present something to kind of change its focus.”

But that doesn’t seem to be the case. In a letter that went to employees and investors, American’s CEO Tom Horton said that he expects the takeover speculation to continue. He added, “Surprisingly, our competitors have even been encouraged by a few within our own ranks. I believe the best way for us to achieve the best outcome for our company, our people and our stakeholders is to proceed quickly with our restructuring.”

All along, American has said that it wants to leave bankruptcy on its own. Analysts say American’s unions are shopping for a better deal than the one American has proposed.

Pilot Gavin Tade, a 14-year veteran at American, said that employees accepted deep pay and benefit cuts nearly 10 years ago. “I would just say that the stomach for another concessionary deal, being where we’re at, is not where the 8,000 pilots of American Airlines want to be.”

The airline has asked the bankruptcy judge to throw out the unions’ existing contracts. A court hearing takes place Monday in New York.

In the midst of the takeover talk, American announced some good news. The airline’s on-time performance last quarter was the best in 10 years. Its maintenance delays and cancellations were the best in five years. And baggage performance was its best on record.

Despite the good performance, the unions are very unhappy. The unions are not commenting. American says it’s focused on its restructuring plan. US Airways said that it doesn’t comment on rumors.

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