Report: Airline merger vote expected Monday

Bloomberg NewsFebruary 9, 2013 

  • US Airways pilots vote ‘yes’ on merger agreement

    Pilots at US Airways voted in favor of a transitional labor agreement that would apply to them if their company merges with American Airlines, the U.S. Airline Pilots Association said Friday.

    The agreement, called a memorandum of understanding, would raise pilots’ pay and set work rules while US Airways and American work to integrate their pilot groups and reach a single contract.

    It would provide for raises of between 13 and 35 percent, according to reports, but would also include negatives such as higher employee contributions for health care.

    In a message to pilots on Friday, USAPA President Gary Hummel said the agreement provides “a clear path forward” in the event of a merger. “The next step is finding out whether there will be a merger with American Airlines in bankruptcy. We expect that answer soon,” Hummel wrote.

    Airline executives hailed the agreement’s passage.

    “We’re pleased USAPA’s pilots have voted to approve the Memorandum of Understanding with American, APA and US Airways,” said Missy Cousino, an American Airlines spokeswoman. American Airlines’ pilot union previously approved the memorandum. Ely Portillo, Charlotte Observer

— The boards of American Airlines parent AMR Corp. and US Airways Group Inc. are prepared to vote on a merger on Monday as executives and advisers work on final terms this weekend, people familiar with the matter said.

The sides have agreed that AMR’s bankruptcy creditors would get 72 percent of the equity in the new carrier, with 28 percent for US Airways shareholders, said two of the people, who asked not to be identified because the talks are private.

US Airways Chief Executive Officer Doug Parker will run the airline as AMR CEO Tom Horton becomes non-executive chairman, the person said.

Horton’s tenure in that post is still being negotiated, and will be limited to one or two years, one of the people said.

AMR’s bankruptcy creditors committee is poised for a vote early next week on any merger accord, with an announcement as soon as Feb. 12, two people said.

Leadership and the division of the equity had been the final major issues in the discussions, people familiar with the talks have said. A tie-up between American, the third-largest U.S. airline, and No. 5 US Airways would create the world’s biggest carrier by passenger traffic.

Representatives for American and US Airways declined to comment on the deliberations.

Jack Butler, an attorney for the creditors committee, didn’t respond to an email or phone call seeking comment.

Besides the split of equity between AMR creditors and US Airways investors, the proposed merger calls for existing AMR stockholders to get shares in the combined company, two of the people said. Details of that plan are still being negotiated, one person said.

A group of AMR bondholders with about $1.5 billion in unsecured debt said last month it was backing a merger and pushing for an agreement by mid-February.

The bondholders concluded after reviewing confidential data that a merger would provide more cost savings and other financial benefits than a stand-alone American, one person said.

US Airways, based in Tempe, Ariz., began pursuing a merger in January 2012, less than two months after AMR’s bankruptcy filing on Nov. 29, 2011.

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