This week saw American Airlines back in front of the bankruptcy judge in NYC, arguing that their pilot contract should be vacated. Last time around the airline wasn’t successful, being told by the judge that the proposed changes were too far-reaching. The company fixed the filing and, not surprisingly, the judge agreed with them this time around. The pilot contract has been vacated and the new term sheet will be implemented in the near future.
As part of the new terms, American can increase the number of codeshare flights in operation domestically and also increase the number of flights operated by larger regional aircraft. They’re wasting no time in exploring the second of those options; American is already negotiating with Republic Airways to operate some of the 200-ish additional larger RJs the company is permitted to put into operation as a result of the new contract terms.
Neither of these moves is particularly surprising and probably not groundbreaking as a precedent. Still, the move increases the ability of the carrier to proceed in merger negotiations, something they started in earnest last week, signing an NDA with US Airways. Still a ways out from a merger actually being announced, but clearly that is the direction things seem to be moving at this point.
So, not a ton of surprises here, just the wheels of bankruptcy court hearings grinding slowly on.
- American loses a court ruling to the pilots. Sortof.
- US Airways reaches labor agreement…with American Airlines’ unions
- Unions grab a stronghold in American restructuring
- Some more thoughts on today’s bAAnkruptcy filing
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Demanding concessions from all union groups doesn’t clearly point at merger talks. True they’re engaged in them but the fact that the Pilots’ contract is affected is merely a piece of the bankruptcy puzzle.
The vacating of the contract doesn’t lead to merger discussions because management made demands from the union. It leads there because it gets that out of the way as a sticking point in the process. It makes things easier to have the chat with US or others without the ALPA negotiations also an issue.
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