Late last week the pilots at American Airlines ratified the latest contract with the company. The pilots were the last of the labor groups without a new agreement following the company’s bankruptcy filing just over a year ago and now, with all the labor deals finalized, the company is finally in a position to complete their reorganization efforts. But will those efforts include a merger with US Airways?
It is no secret that US Airways is keen to see such a deal nor that American is hoping to emerge from bankruptcy as an independent operation. There was even a formal proposal from US Airways at some point in November, a deal which suggested US would hold 30% of the combined company and AMR 70% valuing the combined company over $8bn. That would be huge, though American executives apparently felt that the offer was a bit light. Then again, the AMR executives are still holding to the line that emerging from bankruptcy as a stand-alone company is the best option. It isn’t clear whether they simply think that is the best option for their job security – Doug Parker, US Airways’ CEO has made it clear he wants to run the combined operation – or for the company as a whole. It is hard to believe they do not see some additional consolidation in the industry as good for their operations.
From the pilots’ perspective this move is very much not an endorsement of the current management. In fact, the Union has come out with the bold statement that "this contract represents a bridge to a merger with US Airways." In other words, just enough to get by until something better can be arranged.
The question is whether American Airlines – and really their creditors, not current management – things that the US Airways offer is that something better. I’ve got my popcorn out, ready to watch the show.