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) - Get Delta Air Lines, Inc. Report

and

United

TheStreet Recommends

(UAL) - Get United Airlines Holdings, Inc. Report

.

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.

Meanwhile, all three of AMR's largest unions have negotiated tentative contract agreements with US Airways, even though AMR employees do not work for US Airways. "The airline seems to prefer to negotiate with employees it doesn't even have yet," Joe Tiberi, spokesman for the International Association of Machinists, has said. The IAM, the largest union at US Airways, is currently negotiating contracts for US Airways fleet workers and mechanics and is "not going to waste time entertaining somebody's merger fantasy," Tiberi said.

Nevertheless, Kirby said the three principal American unions see the wisdom of a merger, which "would create a company that is sustainable and can compete with United and Delta." He said there is nothing wrong with American, but a merger would give it a route network that would produce higher revenues, thereby enabling better compensation. He said the issue in the AMR labor contracts is not so much pay rates as productivity and pension issues, and "these are places where the unions stepped up."

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

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

Ted Reed

>To follow the writer on Twitter, go to

http://twitter.com/tedreednc

.