With unions at his side, US Airways CEO renews merger push for AA

With unions at his side, US Airways CEO renews merger push for AA Updated 7/18/2012 6:49 PM 

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WASHINGTON — Doug Parker, the chief executive of US Airways, won't take no for an answer.

Flanked by leaders of American Airlines' three major unions, Parker brought his case Wednesday to the National Press Club to explain the advantages of a merger with a reluctant American, which is reorganizing in bankruptcy court. He said the routes are complementary and would save costs in competition with the larger United/Continental and Delta.

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"We're ready to do this now," Parker told a lunch audience of more than 200 people. "Bankruptcy can't fix a revenue problem" at American.

Parker fielded a question about his airline's inability to complete a contract with pilots after the US Airways-America West merger in 2005.

He acknowledged a "long process" from the problem has been integrating workers by seniority, which is the subject of a federal lawsuit. But he said federal legislation since that merger requires that airline unions now must go to binding arbitration to resolve any disputes after a merger.

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"Had that been in place when we did US Airways-America West, we wouldn't have this problem," Parker said. "If we do this merger with American, that will be the process by which we are governed."

American union leaders sat on the dais with Parker to demonstrate their support for a merger.

David Bates, president of the Allied Pilots Association, which represents 10,000 pilots at American, said contract talks with American "will be resolved in the very near future" and that any seniority issues from a merger would also be resolved.

"I think we will work through those problems very closely," Bates said.

Laura Glading, president of the Association of Professional Flight Attendants, which represents 16,000 workers at American, said her union already has an agreement with US Airways that ends in binding arbitration.

"I'm very confident that we're going to get an agreement because we have a backstop," Glading said. "It's one of the beauties of the merger because we've given them a way to merge seniority and contracts and everything else."

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Tom Horton, CEO at American parent AMR, has argued repeatedly his airline should emerge from bankruptcy independent. However, he released a letter to workers July 10 saying the company is now open to merger options, including the acquisition of US Airways – rather than the other way around.

"Since that time, as we embarked on the restructuring journey, I have held the view that it is best that we first put our own house in order before considering a complex and challenging airline acquisition," Horton wrote in the July 10 memo.

American's parent, AMR Corp., reported Wednesday a second-quarter loss of $241 million, which is an improvement from a $286 million loss a year earlier. But fares rose 7% and revenues hit a record $6.46 billion.

Horton called the second quarter "a time of exceptional improvement."

Parker said at the press club that US Airways would report "strong" earnings next week. He noted the airline flipped from an $800 million loss in 2008 to a $100 million profit last year.

The Associated Press contributed to this report.