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TheStreet Open House

USAirways Pilots Will Vote on Merger Contract Terms

Stocks in this article: AAMRQ.PK LCC

Updated with newly filed AMR report citing July operating profit.

CHARLOTTE, N.C. -- ( TheStreet) -- US Airways (LCC) pilots are preparing to vote on proposed merger contract terms even as negotiators continue to seek improvements.

It is important for US Airways to have the support of its pilots in its efforts to merge with American (AAMRQ.PK) because a key point in support of a deal is that US Airways has the backing of the American unions. That case would be diminished if US Airways had the support of the American unions but did not have the support of its own pilots.

Last week, negotiators for US Airways and its pilots union, the U.S. Airline Pilots Association, agreed on a memorandum of understanding that could eventually become part of the pilot contract at a new American. But the union's 11-member executive council voted overwhelmingly to send the memorandum out for a vote with a recommendation to reject it.

Subsequently, the union agreed to send negotiators back for more talks with the company and also with the Allied Pilots Association, which represents American pilots, in an effort to mitigate the executive council's objections.

USAPA spokesman James Ray said meetings will take place this week in Dallas. He said a two-week voting period is likely to begin in the second half of September.

Pilots have said repeatedly that their principal concern is to assure job protections even after the US Airways pilots merge into a union dominated by a larger number of pilots from a different carrier.

In a letter to union members, pilot negotiators noted that if US Airways signs a non-disclosure agreement with American, enabling American to share sensitive financial material, the agreement may preclude the carrier from communications with USAPA and APA concerning a merger. That could restrict the ability to negotiate during a 60-day time period.

Also Monday, American reported in a filing with the Securities and Exchange Commission that July was its second consecutive profitable month. The carrier said July net income totaled $135 million, despite $54 million in bankruptcy-related expenses. Operating income was $240 million. Revenue was $2.3 billion.

American maintains that its recent industry-leading unit revenue and its ability to generate operating profits and, more recently, positive net income, indicates that it does not require a merger to operate successfully following its bankruptcy.

-- Written by Ted Reed in Charlotte, N.C.

>To contact the writer of this article, click here: Ted Reed

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