Is American Airlines finally ready to entertain merger discussions with US Airways?


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.

Never miss another post: Sign up for email alerts and get only the content you want direct to your inbox.


Seth Miller

I'm Seth, also known as the Wandering Aramean. I was bit by the travel bug 30 years ago and there's no sign of a cure. I fly ~200,000 miles annually; these are my stories. You can connect with me on Twitter, Facebook, LinkedIn and .

6 Comments

  1. I’d always hoped my Platinum-for-life with AA could keep me in OneWorld Business Lounges until I retire. Looks like a merger would get rid of this perk so I am pretty disappointed that US wants to merge with AA.

  2. What makes you think that the merger would kill that benefit, Mark? The operations are going to keep the AA branding, loyalty program and most other bits.

  3. The pilots are completely delusional. They won’t come out and say it, but what they really want is industry leading compensation, or even comp like it was 20 years ago, all from an airline that is in bk, and on the backs of other work groups.

    And they hope Parker will get them there! Wake up and smell the coffee…just look at what US pilots are being paid…lowest pay among the legacies and a complete cluster on the labor peace front. Right…that’ll be their savior.

    I am really tired of the selfish, self-righteous and entitled yammering from the AA pilots. They think they ought be be in charge o running the airline to line their pockets.

    Thank goodness, the ultimate decision isn’t made by them, although they have certainly tried to force the issue all along…

  4. The only reason that LCC has made any money is because of their low labor costs. If AA/US merge and the US labor force is brought up to AA’s pay rates, the legacy US part of the business will bleed $$ like an artery.

    1. AA has plenty of reason to impose conditions, Joseph. They basically won this round of fights with the union and they cut their costs dramatically. And they were never really on the brink of insolvency.

Comments are closed.

BoardingArea