In the News

AMR Said to Take Steps Nearing Merger With US Airways

Bloomberg, December 20, 2012

American Airlines parent AMR Corp. (AAMRQ) and US Airways Group Inc. are moving closer to a merger, and a decision could come early next month, people familiar with the matter said.

Teams from each carrier are discussing how to combine departments, including personnel, compensation and severance, said the people, who asked not to be identified because details are private. AMR’s board will meet Jan. 9 to decide whether to go ahead, with an announcement possible within days, said the people. The talks may yet be scuttled or delayed, they said.

The push follows AMR’s efforts to reorganize in bankruptcy before a merger and US Airways’s quest to lead a takeover that would create the world’s largest airline. The chief unresolved issues pending with AMR’s unsecured creditors committee, which must approve any exit plan, are how to divide the equity in a new company and who would run it, three people said.

US Airways President Scott Kirby and Denise Lynn, senior vice president for people at American, have been involved in talks with pilots from each carrier, along with Jack Butler, the attorney for the creditors’ panel, two people said.

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Parker, Kirby and Butler to meet with USAPA

By Terry Maxon
Dallas Morning News, Airline Biz Blog

We understand that the US Airline Pilots Association will meet Wednesday with US Airways chairman and CEO Doug Parker and president Scott Kirby and an even more special guest — Jack Butler, lead counsel for the unsecured creditors committee in the American Airlines bankruptcy case.

Now that USAPA has signed a non disclosure agreement, it can hear details and enter discussions about how a possible merger between US Airways and American would be structured and how it would affect pilots at the two carriers.

The Allied Pilots Association met last week with AA chairman and CEO Tom Horton, and had hoped to hear from Parker and Kirby this week. We had heard that AA wasn’t pleased with that idea.

Butler has played a key role in the case, such as acting as a go-between in the final stages of the APA-AA talks that led to the contract approved by pilots on Dec. 7.

US Airways Pilots First to Investigate PBGC-Trusteed Pension

By Edward Siedle, Contributor
Forbes.com

Captain Dave Westberg, Chairman of the Pension Investigation Committee at the US Airline Pilots Association, says the airline’s pilots won’t be satisified until they get answers to serious questions about their failed pension. Believe it.

Recently my firm, Benchmark Financial Services, Inc., was retained by the USAPA to investigate potential conflicts of interest, undisclosed fees, and wrongdoing involving firms providing investment-related services to the Retirement Income Plan for Pilots of US Airways. The pilots’ pension fund sponsored by US Airways was terminated in 2003 and since then has been overseen by the Pension Benefit Guaranty Corporation, a federal agency created to protect private pension benefits.

While my firm has investigated over $1 trillion in pension plans, this review represents the first-ever fiduciary breach investigation undertaken of any of the thousands of terminated pensions (including mega-plans such as United Airlines, Delphi, Delta Air Lines, Bethlehem Steel, and Delphi), trusteed by the PBGC. Never before has a terminated pension trusteed by the PBGC been examined for potential abuses.

To view the entire 65-page Fiduciary Breach investigation click here: http://www.benchmarkalert.com/US_Airways.pdf

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U.S. Airways Flight Attendants Vote to Authorize Strike

(Reuters) - Flight attendants at US Airways Group Inc voted by a 94 percent margin to authorize a strike, ramping up pressure on the carrier to reach a contract agreement, their union said on Tuesday.

The workers, represented by the Association of Flight Attendants-CWA, twice this year voted down a proposed contract with US Airways, which is in talks with bankrupt American Airlines parent AMR Corp about a potential merger.

The union's negotiating committee said it would take its proposal for better economic terms, backed up by the strike vote authorization, to the U.S. National Mediation Board, which has been assisting in talks with the airline, and press for additional mediation dates.

The present US Airways, which has about 6,700 flight attendants, was formed from a 2005 merger with America West Airlines. Flight attendants at the combined carrier have been working under separate contracts for years as their union has negotiated to reach a joint agreement.

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US Airways Pilots Want Seat at Table in AMR Bankruptcy

US Airways pilots have filed a motion in the American Airlines bankruptcy case, seeking to be involved in the process that could lead to a merger that would shape their careers.

The motion filed by the U.S. Airline Pilots Association would “give us access to critical testimony and information presented during the closed bankruptcy hearings,” said USAPA President Gary Hummel in a letter to members.

“Our motion recognizes that pilots of US Airways are equal partners in negotiations for a plan of reorganization that merges American Airlines and US Airways,” Hummel wrote. “It allows us to determine our own future, instead of waiting for our future to be determined for us.”

During the summer, Hummel wrote, USAPA negotiated a preliminary memorandum of understanding with US Airways, addressing wages and working conditions that would take effect if a merger occurs. But two months ago US Airways and American signed a non-disclosure agreement, bringing an end to the information flow and to discussions about the memorandum of understanding.

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US Airways Pilots Seek Information Tied to AMR Deal

By David McLaughlin, Bloomberg News

US Airways Group Inc. (LCC) pilots are seeking a court order to gain access to information they say they need to evaluate a possible merger with bankrupt American Airlines.

The US Airline Pilots Association, the union representing US Airways pilots, wants to question the airlines about the merger talks and obtain documents, according to papers filed today in U.S. Bankruptcy Court in Manhattan.

The union has “not been provided critical information about the terms of the proposed combination and USAPA needs such information to ensure a fair and effective merger,” it said.

US Airways has been pursuing a merger with Fort Worth, Texas-based AMR Corp. (AAMRQ)’s American Airlines. Tempe, Arizona-based US Airways this week made its case for a merger to AMR’s unsecured creditors committee, according to people familiar with the matter.

The case is In re AMR Corp., 11-15463, U.S. Bankruptcy Court, Southern District of New York (Manhattan).

US Airways Flight Attendants: “What About Our Contract?”

US Airways flight attendants staged demonstrations at four airports on Thursday, making the point that they work under eight-year old contracts but the carrier has already reached tentative deals with flight attendants at merger target American.

“Doug Parker has his eyes on (a contract) with American, but he needs to finish this one first,” said Cathy Campbell, president of the Charlotte chapter of the Association of Flight Attendants, at the demonstration at Charlotte/Douglas International Airport. “His employees have brought him record profits.”

About 200 people participated in the spirited airport demonstration, chanting and displaying signs sayingOur Merger Comes First – Contract Now.” Campbell reminded members to participate in a strike vote that ends Tuesday, Nov. 20. One chant was “We’ll strike, shut it down.” The union also staged demonstrations in Philadelphia, Phoenix and Washington D.C. In Charlotte, about three dozen members of the U.S. Airline Pilots Association, including President Gary Hummel, joined the flight attendants.

A strike is possible, of course, but seems unlikely. The 6,700 flight attendants have voted twice on a new contract. In March, 75% of those who voted were opposed. In the second vote in September, 51% were opposed and a swing of 49 votes would have resulted in contract approval.

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US Airways Said to Detail Merger Plan to AMR Creditors

By Mary Schlangenstein, Bloomberg

US Airways Group Inc. (LCC), pressing to take over AMR Corp. (AAMRQ)’s American Airlines in bankruptcy, made its case for a merger to the company’s unsecured creditors committee, three people familiar with the matter said.

The panel’s session yesterday with US Airways will be followed by a meeting today with representatives of American, which seeks to exit court protection as a stand-alone carrier, said the people, who asked not to be identified because the talks are private. The meetings are in New York.

American Chief Executive Officer Tom Horton has advocated waiting to evaluate merger options after leaving Chapter 11, while US Airways CEO Doug Parker has championed a merger since shortly after AMR’s Nov. 29 bankruptcy filing. The creditors committee has a say in important decisions as AMR restructures.

“From the creditors committee perspective, whatever the two parties are proposing has to be finalized at some point, and the sooner the better,” said Bob Mann, president of aviation consultant R.W. Mann & Co. in Port Washington, New York.

American reached an accord with the nine-member panel in May to study strategic alternatives against which the carrier’s stand-alone plan would be vetted. The committee represents some of those owed money by AMR and is charged with maximizing the amount of debt recovered. The members include American’s three largest unions as well as bondholder representatives.

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US Airways, Pilots May Restart Contract Talks

The Street -- The National Mediation Board wants US Airways and its pilots to negotiate a contract, whether or not the carrier merges with AMR.

Resolving the contentious seniority issue, which has divided pilots since a 2005 merger between US Airways and America West, would be put off until every other contract issue has been resolved.

"The NMB has asked that USAPA and US Airways devise a process under which there will be negotiations and tentative agreement on all other sections of the contract prior to discussing seniority," said Gary Hummel, USAPA president, in a letter to pilots on Thursday.

"Everyone understands that the seniority issue has caused us years of delay," Hummel said. "It is time to complete the other 29 sections of our contract first, and when that process is complete, USAPA will present a comprehensive proposal for section 22 of the contract which deals with seniority.

The union and the airline should establish a negotiation process by Nov. 21, the NMB said, after which negotiations could be scheduled, according to Hummel's letter.

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