US Airways Merger with AMR Remains on Front Burner
Even as the labor negotiations proceed, US Airways (LCC), which signed a tentative contract agreement with the Allied Pilots Association in April, continues to pursue an effort to merge with American.
On Aug. 31, US Airways signed a non-disclosure agreement enabling the two carriers to review one another's confidential financial information, which meant a temporary end to its public advocacy for a merger, as well as to its discussions with American unions.
"AMR's analysts and advisors are likely still poring over data relating to the validity of LCC's merger synergy assumptions with scrutiny" wrote Wolfe Trahan analyst Hunter Keay, in a note issued Wednesday. "The slow pace of the process has surprised us, to some degree."Nevertheless, the recent effort by American pilots to fly-by-the-book and take notice of every maintenance anomaly has, if anything, increased the likelihood of a merger, said consultant Robert Mann. "You have a bunch of American employees right now who are very demotivated," Mann said. "There is more than a decade's worth of stuff boiling over right now, even though (CEO Tom) Horton has only been there for 10 months. "If you're a member of the creditors committee, looking at how is this company going to perform under Horton subsequent to reorganization, when almost no employees seem interested in working for him, and the prospect of a much different outcome under US Airways management, that creates doubt about the value of the franchise under the existing team," Mann said. Tom Hoban, spokesman for the Allied Pilots Association, which represents American pilots, said the group remains committed to a merger with US Airways. "The level of anger out there at this group of senior executives is such that the pilots of American want a change in leadership," he said. "We're still firmly behind US Airways, from top to bottom. We've just been focused on our bankruptcy case and the termination of our contract," Hoban said, adding that before the non-disclosure agreement was signed, APA leadership communicated frequently with US Airways management. More recently, he said, "there's been no contact with US Airways management, which people misinterpret as sagging enthusiasm."
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