US Airways Offer to American Airlines Unions ‘Concessionary’
Conditional labor contracts offered to employees of bankrupt American Airlines by its would-be merger partner, US Airways, provide for only marginal improvements over offers they have received through the bankruptcy process, according to US Airways chairman and CEO Doug Parker. Nevertheless, unions representing American Airlines pilots, flight attendants, mechanics and fleet service workers continue to back the US Airways bid.
Parker argued the case for a US Airways-American Airlines merger during a luncheon speech July 18 at the National Press Club in Washington, D.C. He was joined there by representatives of three American Airlines unions representing 55,000 employees: the Allied Pilots Association, the Association of Professional Flight Attendants and the Transport Workers Union. After American Airlines parent company AMR filed for Chapter 11 bankruptcy reorganization last November, the unions had to negotiate new contracts with concessions. In April they signed conditional labor agreements with US Airways.
During a question-and-answer period following his presentation, Parker refused to accept the premise that US Airways would inherit the same high labor costs that weighed down American Airlines by accommodating the demands of its unions. “The US Airways proposal is significantly concessionary versus where the American employees were prior to bankruptcy,” he said. “It does a disservice to the people at American to suggest that they aren’t giving a lot in this transaction because indeed, they’re giving more than anyone else. The contracts that we have offered to the American employees are only better than even more concessionary contracts that American has offered. They’re not that much different now, as American has increased its offers.”
Parker also acknowledged that US Airways continues “working through integration issues” with pilots stemming from its 2005 merger with America West Airlines, which led to conflict and litigation over seniority rules. Federal legislation passed since then requires that unions from separate airlines in a merger submit to binding arbitration. That process would govern any merger of US Airways and American Airlines, he said.
Parker has argued that the combination of Fort Worth, Texas-based American Airlines and Tempe, Ariz.-based US Airways, the third and fifth largest U.S. carriers, respectively, would create a network better able to compete against Delta and United. American Airlines senior management initially opposed that outcome, but has since signaled its willingness to consider merger options.