Unions back US carriers' merger

Say would save at least 6,200 jobs of 14,200 American Airlines says it will cut. Labour groups at bankrupt American Airlines said on Friday they support a potential merger with rival US Airways Group in a deal they say would save more jobs than a plan by parent AMR to reorganise as a stand-alone carrier. The unions representing American's pilots, flight attendants and ground workers said they struck a deal with US Airways that would preserve 6,200 of the 14,200 jobs American says it would cut if it pursues its current plan. Their joint statement supporting a merger is an unusual and dramatic twist that comes ahead of a showdown this week with AMR over the company's request in bankruptcy court for permission to void labour contracts and impose new terms. Airline consultant Robert Mann, a former AMR executive, said he cannot think of another occasion when airline unions actively supported a merger, because those deals usually mean job cuts. "For the American unions, it's a real indictment to the company's plan. In fact, they are casting their lot with the devil they don't know rather than the devil they do," Mann said. He added none of the posturing by unions ahead of this week's hearing necessarily moves AMR any closer to a merger. "We're not yet even to the point where an alternative plan has been presented to the court," he said. US Airways CEO Doug Parker cautioned his employees in a letter on Friday the union deal does not mean a merger is in the works. He noted a deal would need support from the AMR creditors management team and its board of directors. "But this is obviously an important first step along that path and we are hopeful we can all work together to make this happen." AMR spokesman Bruce Hicks dismissed union support for merger talks, noting the company's right in bankruptcy court to create its own reorganisation plan without interference at least until September 28. "These statements do not in any way alter the company's commitment to pursue our business," the airline said in a statement. Parker has been a vocal proponent of airline consolidation as a means to cut excess capacity on unprofitable routes. He said a deal with AMR would create a "preeminent airline with the enhanced scale and breadth required to compete more effectively and profitably." Although AMR has tried for months to blunt speculation, US Airways has hired advisers to explore merger options with AMR, but has not issued a proposal. In a statement on Thursday, Horton said recent merger talk is "fuelled by those who seek to serve their own agendas, including the circulation of misleading information." David Bates, president of the Allied Pilots Association, which represents the pilots, said in a letter to members that a combined carrier would be branded American Airlines and be based in Fort Worth, Texas, which is where AMR is based. US Airways has its headquarters in Arizona. ‘Pleased' The new carrier would remain in the One World global airline alliance and would be comparable in scope and size to rivals United Airlines and Delta Air Lines, which overtook AMR in size after their own mergers, Bates said. He said American's orders for narrow-body aircraft would proceed and the former US Airways system would be aligned with the American Airlines routes to add more cities. AMR's three labour unions are members of the company's unsecured creditors committee, which has nine members and gets a say in how AMR restructures. "We are pleased to confirm our support of a possible merger between our airline and US Airways," the unions said on Friday in a statement. Typically, a company cannot exit bankruptcy without the support of its unsecured creditors committee. AMR also needs the support of the large investors that hold their secured debt, although their claims are guaranteed and are the first to be repaid. AMR management has said it may consider a merger with another airline only after it emerges from bankruptcy as an independent company. People familiar with the airline's thinking have said that management wants to negotiate a merger on its own terms and could set its sights on different targets, ranging from JetBlue Airways to Alaska Air Group to US Airways. Aside from the unions, the committee includes the Pension Benefit Guaranty Corp, the government agency that protects under funded pension plans; Boeing, Hewlett Packard and the banks acting for AMR bondholders — Wilmington Trust, Bank of New York Mellon and Manufacturers & Traders Trust. 13,000 union jobs on the block New York: AMR filed for Chapter 11 last November, citing labour costs that were uncompetitive with profitable rivals such as United Airlines and Delta Air Lines that restructured in bankruptcy and later took on merger partners. AMR has pursued deals with unions on concessions, drawing outrage by workers, who point to sacrifices they made to keep the company afloat in 2003. The airline still wants negotiated deals, but frustrated with the pace of talks, has asked the US bankruptcy court in Manhattan for permission to void labour contracts. A hearing on the matter is set to begin this week. Labour costs American wants to cut 13,000 union jobs, or roughly 15 per cent of its workforce, as part of a plan to save $1.25 billion (Dh4.5 billion) in annual labour costs. The airline said on Wednesday it intends to cut another 1,200 non-union jobs to reach its goal of trimming 15 per cent of the workforce. AMR shares closed 4.6 per cent down at 55 cents. UA Airways shares were down 1.8 per cent at $9.34 on Friday. From: Gulfnews