US Airways has reached an agreement to merge with American Airlines after entering collective bargaining pacts with three of the company’s labour unions. The deal was largely expected after American Airlines’ parent company, AMR, entered bankruptcy and US Airways expressed interest.
US Airways filed an 8-K with the Securities and Exchange Commission that it had won support from flight attendants and pilots representing 55,000 AMR employees to merge with bankrupt carrier.
“Shortly after our disclosure, these three unions issued a public statement announcing their support of a US Airways-American Airlines merger and that they have agreed to terms that would govern collective bargaining agreements for their members at the merged airline,” US Air Chief Executive Doug Parker wrote to employees.
The merger is likely to close after AMR exits bankruptcy protection and sheds certain financial obligations. There are still several key steps that US Airways must take to gain control of AMR — and it is likely any agreement will be subject to regulatory approval.
“To get to an actual merger, many more things must happen including gaining the support of AMR’s creditors, its management team and its Board of Directors,” Parker continued. “But this is obviously an important first step along that path and we are hopeful we can all work together to make this happen.”
Earlier this year US Airways confirmed that it had retained Barclays Capital and Millstein & Co., among others, to explore a possible takeover of AMR, Douglas Parker, the company’s CEO said on US Air’s fourth quarter conference call.
“So while its no longer imperative that our industry consolidate, we are of course always interested in exploring value enhancing deals,” Parker said on the call.
CBS News was first to report on the key advance with labour unions. Business Insider has reached out to both AMR and US Airways for comment.