CHARLOTTE, N.C. (TheStreet) -- US Airways (LCC) President Scott Kirby said a merger with AMR (AAMRQ.PK) would resolve the pilot seniority battle that still simmers following the 2005 merger between US Airways and America West.
"The solution to that issue is if we are able to get this deal done," Kirby said Thursday, speaking at the Bank of America/Merrill Lynch investor conference in Boston. "I think this is the way out of the box (because) this is a way to have a fresh beginning."
A merger deal between US Airways and AMR would involve pay raises for US Airways pilots as well as a better deal for American pilots than what AMR management has offered. A merger would create incentives for pilots on both sides to back the deal, especially given that one would be expected to produce more than $1 billion in revenue synergies, enabling American to better compete with Delta (DAL) and United (UAL).
As for the seniority issue, Kirby said what Dave Bates, president of the Allied Pilots Association, already has said: The 2007 McCaskill-Bond statute creates a path to a resolution because it mandates binding arbitration."Our union and APA will have a joint contract and we will have that on the day we close the merger," Kirby said. "Then more than likely, seniority will go through the process, go through arbitration." The 2005 merger deal stalled, he said, because of a requirement that the two pilot groups negotiate a joint contract. That has not happened because the two groups could not agree on seniority despite a ruling by an arbitrator. "The side that didn't like it could prevent a joint contract," Kirby said. In the current effort, by contrast, the process would produce "a joint contract in advance" of the merger, he said, with the seniority details to be resolved later, but with an agreement to resolve them firmly in place. The 2007 seniority ruling by arbitrator George Nicolau was so controversial that it resulted in US Airways pilots voting to leave the Air Line Pilots Association, their union for 57 years, to create USAPA.
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