US Airways Rushes to Sign Contracts in Advance of Merger

CHARLOTTE, N.C. ( TheStreet) -- As the merger watch continues, US Airways ( LCC) is busily wrapping up contract issues with its labor unions, with three key events early this month.

Flight attendants begin voting Thursday on a revised contract agreement, the third time in a year that members will vote on a contract after they rejected deals in March and May. On Friday, the U.S. Airline Pilots Association will count votes on a memorandum of understanding for a temporary contract if a merger with bankrupt AMR ( AAMRQ.PK) occurs.

US Airways on Feb. 1 announced a tentative contract agreement with pilots at wholly-owned subsidiary Piedmont Airlines.

Getting deals in advance of a merger is apparently a management goal, said Bruce Freedman, a 29-year Piedmont pilot who is chairman of the airline's ALPA chapter, which represents about 350 members. "I would suspect it would ease a lot of management concerns if they could get these agreements in place," he said.

The deal followed four years of negotiating a contract that became amendable in May 2009. "It is a very respectable agreement given today's industry environment," Freedman said. "It is one that Piedmont pilots can be proud of."

Meanwhile, flight attendant contract voting begins at noon Thursday and concludes three weeks later on Feb. 28. The 6,700 flight attendants, members of the Association of Flight Attendants, have twice rejected a new contract.

In March, 75% of those who voted were opposed. In May, 51% were opposed and a swing of 49 votes would have resulted in approval. Union leaders are in Charlotte, the airline's largest flight attendant base, explaining contract details to members.

The third tentative deal was reached in a status conference with the National Mediation Board in late January. It improves on previous deals by offering flight attendants a $1,700 ratification bonus as well as a $40,000 early-out payment for flight attendants who choose to leave. Additionally, it provides that negotiations on a tentative merger contract would begin immediately upon ratification, and it incorporates all of the previously negotiated $45 million in contract improvements.

"The NMB wanted to resolve this one way or the other," said a flight attendant leader who asked not to be named. "They told both parties, 'you are at the end of the road'" as far as contract negotiations.

While previous deals include a side letter saying the terms of a buyout would be negotiated in event of a merger, this one sets a $40,000 payment. Also, previous deals didn't include a signing bonus, but now the delay in implementation enables the airline to offer a signing bonus that will cost less than it would have spent on earlier implementation, which in both cases would have come soon after ratification.

In a recent letter to members, AFA leaders wrote: "All available information indicates a merger with American Airlines is highly likely to be announced in the near future. This contract was negotiated to place US Airways flight attendants in the best position for a potential merger, whether it is with American or another partner, as part of industry consolidation."

"In the unlikely event this merger does not happen, the east and west flight attendants will likely continue to operate under their existing contracts indefinitely," the letter said. The contract agreement, like its two predecessors, provides significant wage and benefit improvements for the two groups of flight attendants who have been working under separate contracts that were in place before the 2005 merger of US Airways and America West.

As for the pilot's memorandum of understanding on a temporary contract that would take place in the event of a merger, voting concludes at 2 p.m. Friday. Passage is expected, even though Charlotte pilots have overwhelmingly defeated an effort to recall the three Charlotte base leaders, whose support for the MOU was lukewarm.

Some observers view securing pilot approval as a key step in concluding the preparations for a merger announcement that is now expected in mid-February, after previously being expected on various dates in January.

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

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