The Transport Workers Union of America, last of the three big unions at American Airlines’ parent AMR Corp. (AAMRQ.PK), has reportedly agreed to basic labor conditions in the event of the bankrupt airline merging with US Airways Group Inc. (LCC: Quote).
This union represents around 21,000 workers at American, which includes dispatchers and mechanics. The agreement provides its members a 4.3 percent raise if a merger happens, and has an estimated value of $260 million over the five-year contract period.
With this, AMR has secured the basic labor terms pattern from all three of its major unions if a merger occurs with US Airways.
Earlier this month, unions representing the pilots and flight attendants of American had agreed to provisional terms in the event of a merger. AMR is likely to reach a decision on the merger within weeks.
AMR and some of its subsidiaries, including American Airlines and American Eagle, had filed for Chapter 11 bankruptcy protection in November 2011.
In August 2012, AMR and US Airways entered into a non-disclosure agreement to evaluate a potential merger of American Airlines and US Airways.
AMR was one of the few airlines that averted bankruptcy after the 9/11 attacks and subsequent downturn. However, the company reported losses in the following years even as peers resolved cost issues and returned to profit.
Earlier this month, AMR posted a fourth-quarter profit, turning around from a loss last year, aided mainly by lower costs reflecting its bankruptcy-restructuring activities, and a tax benefit.
Meanwhile, Bloomberg reported, quoting people familiar with the matter, that a group of AMR’s bondholders is supporting a merger with US Airways. The group, which has about $1.5 billion in unsecured debt, is pushing for a deal by February 15.
The bondholders are said to have assessed confidential data related to American Airlines and US Airways.
The ad hoc group does not hold a seat on AMR’s unsecured creditors committee. However, its support will give US Airways an ally in its efforts to merge.
The ad hoc group reportedly includes MatlinPatterson Capital Management LP, JPMorgan Chase & Co., Cyrus Capital Partners LP, Pentwater Capital Management LP and Marathon Asset Management LP.
LCC settled up 0.4 percent on Monday at $15.03.
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by RTT Staff Writer
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