Exclusive: American, US Airways in Pilot Talks to Set Up Merger

CHARLOTTE, N.C. (TheStreet) -- Key parties from US Airways (LCC) and American Airlines are negotiating a memorandum of understanding for a pilot contract, which could pave the way for a merger.

"We are negotiating," said Tom Hoban, spokesman for the Allied Pilots Association, which represents American Airlines pilots. "Everybody is at the bargaining table (in Dallas).

"The goal of the four-party talks is to reach a interim agreement between both pilot groups and their respective management teams," he said. "Without that interim agreement, there is chance that a consensual merger while inside bankruptcy would be in jeopardy."

The document would establish the terms for an interim pilots contract if there is a merger, which is expected by some analysts. It has not been reviewed by either airline or union board, but negotiating teams for the four parties are nearing an agreement.

In a Tuesday afternoon e-mail to members of the US Airline Pilots Association, which represents US Airways pilots, President Gary Hummel wrote: "Last week your union entered into discussions in Dallas regarding a potential merger between AMR and US Airways."

Hummel's letter overstated the extent of progress on reaching a deal and has been withdrawn, but a source said a memoradum of understanding with USAPA is close.

Hummel said a memorandum of understanding, when it is reached, will be reviewed by pilot leadership to determine whether to endorse it. He said US Airways CEO Doug Parker and President Scott Kirby, as well as the creditors' lead counsel, Jack Butler, will address the USAPA board in Charlotte on Wednesday.

A merger would create the world's largest airline with major hubs in Charlotte, Chicago, Dallas, Philadelphia and Phoenix and a strong presence in Los Angeles, New York and Washington.

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

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