Tue December 4, 2012
Pilots At Bankrupt American Airlines Push For Merger
Originally published on Tue December 4, 2012 6:50 pm
MELISSA BLOCK, HOST:
From NPR News, this is ALL THINGS CONSIDERED. I'm Melissa Block.
AUDIE CORNISH, HOST:
And I'm Audie Cornish. American Airlines has been in bankruptcy for more than a year and looks like it will be there a while longer. The airline has asked a judge in New York for yet another extension to file its restructuring plan. Executives are hoping American can remain a standalone carrier. The company's unions, on the other hand, say they've had it and they want the company to merge with U.S. Airways.
As NPR's Wade Goodwyn reports, American's future is very much up in the air.
WADE GOODWYN, BYLINE: Watching American Airlines go through bankruptcy is like taking an advanced business course in the art of self interest. The airline's executives want 60 million in bonuses. That's what they get if American emerges from bankruptcy as a standalone airline. The transportation workers union wants to merge because that would keep more mechanics working. For the pilots, they've negotiated a deal with American management that would give them a 13.5 percent equity stake in the airline.
And on the sidelines, U.S. Airways waits, hoping to gobble up a former powerhouse and transform itself anew. Greg Oberman(ph) is an American pilot and a union spokesman. The pilots are happy to extend the bankruptcy process.
GREG OBERMAN: It indicates that that process is actually going pretty productively and that the desire is to continue discussion on a potential alternative to a standalone American Airlines.
GOODWYN: The pilots would like to see the bankruptcy end with American merging with U.S. Airways, but as long as they get their equity percentage and the rest of their deal, they're willing to be flexible. For example, the pilots aren't opposing management's $60 million in bonuses.
OBERMAN: If you look at previous airline bankruptcies, it's not unusual for the managers to emerge with an equity stake, just like we have an equity stake of 13.5 percent in the tentative agreement our pilots are now voting on.
GOODWYN: But once American's executives collect their money, the Allied Pilots Association's preference would be for them to go away, like forever.
OBERMAN: If you look at our peers at Delta and United, in particular, those airlines bulked up through mergers, Delta with Northwest, United with Continental. And they've become healthier carriers and as a result, they've been able to afford more remunerative labor contracts and so we are hoping to go down that same path.
GOODWYN: While there is some evidence that Wall Street would smile upon an American/U.S. Airways merger, not everyone loves the idea. The names of carriers that merged as a last, desperate gasp for survival is a roll call of airline royalty brought low. Julius Maldunas(ph), a veteran airline industry analyst, says American should stay independent.
JULIUS MALDUNAS: Thirty-five airlines went bankrupt and disappeared because mergers don't work historically in the airline industry. Look at the difficulties that United still continues to face with Continental Airlines.
GOODWYN: And Maldunas points out that U.S. Airways is in the middle of its own contract dispute with its pilots and flight attendants unions. If federal bankruptcy judge Sean Lane agrees, the exciting conclusion of airline empire won't be until March. Wade Goodwyn, NPR News, Dallas. Transcript provided by NPR, Copyright National Public Radio.