US Airways makes move to take over American

(MoneyWatch) US Airways (LCC) has filed an 8K with the SEC to begin the process of a takeover of American Airlines, which is currently in Chapter 11 bankruptcy.

According to the SEC, Form 8-K is the 'current report' companies file with the SEC to announce major events that must be disclosed to shareholders.

American Airlines has said it wants to emerge from bankruptcy as a standalone carrier. American Airlines parent AMR, which filed for bankruptcy protection on Nov. 29, 2011, is trying to slash its annual labor costs by $1.25 billion and emerge from court supervision. Next week, the struggling airline will try to convince a bankruptcy judge to let it void existing union contracts and impose new ones to secure those spending cuts.

American Brat Pack: Where airline CEOs got their wings
American Airlines seeks to cancel labor contracts
AMR wants to emerge from bankruptcy quickly

A letter to employees by US Airways CEO Doug Parker reads in part:

Today, we filed a statement (a form called an 8-K) with the Securities and Exchange Commission disclosing that we have signed agreements with the three unions that represent nearly 55,000 American Airlines employees. These unions are the Allied Pilots Association (APA), the Association of Professional Flight Attendants (APFA) and the Transport Workers Union (TWU), which represents all of American Airlines' mechanics and fleet service employees. Shortly after our disclosure, these three unions issued a public statement announcing their support of a US Airways-American Airlines merger and that they have agreed to terms that would govern collective bargaining agreements for their members at the merged airline. I want to explain to you why we have done this and what it means.

First of all, today's news does not mean we have agreed to merge with American Airlines. It only means we have reached agreements with these three unions on what their collective bargaining agreements would look like after a merger, and that they would like to work with us to make a merger a reality. To get to an actual merger, many more things must happen including gaining the support of AMR's creditors, its management team and its Board of Directors. But this is obviously an important first step along that path and we are hopeful we can all work together to make this happen.

The agreement with American's three labor unions and the 8K filing with the SEC are the first major steps in a potential hostile takeover bid. It is hostile in the sense that if the merger were to happen -- and that's still a big if -- it would happen without the agreement of American's leadership.

Thus far, American CEO Tom Horton has resisted merger overtures and so going directly to unions is an end-run around AMR management, which would be forced out if the effort is successful.

In a letter to American Airlines pilots the president of the Allied Pilots Association, Dave Bates, wrote: "The combined carrier will be branded American Airlines, based in Fort Worth Texas and headquartered at CentrePort. It will be comparable in size and scope to Delta and United."

What would a US Airways-American merger mean for you?
Rumors flying of US Airways, American Airlines merger
AMR unions plan to back takeover bid by US Airways

A joint statement issued Friday by The Transport Workers Union (TWU), the Association of Professional Flight Attendants (APFA) and the Allied Pilots Association (APA) read in part:

"A merger between American Airlines and US Airways is the best strategy and fastest option to complete the restructuring of American Airlines, enabling it to exit the Chapter 11 bankruptcy process..."

According to the labor group statement, the merger "provides the best path for all constituencies, including employees of both American Airlines and US Airways."

American Airlines issued the following statement on Friday: "American Airlines is moving steadily through the Court supervised restructuring process and the Court has granted American the exclusive right to create its plan of reorganization at least until September 28, 2012. We are making substantial progress in our efforts to return American to industry leadership, profitability and growth and maximize its value for all of its stakeholders. Our immediate next step is to pursue vital modifications to our collective bargaining agreements through the 1113 process that begins on Monday, April 23rd. We believe statements of non-binding support from union leaders for alternative proposals are no coincidence given the timing of the 1113 process. These statements do not in any way alter the company's commitment to pursue our business plan or our focus on moving steadily through the court supervised restructuring process to create a profitable, growing industry leader. For American's outstanding employees and loyal customers, business continues on track, as we continue to provide the safe, reliable travel experience our customers expect."

[stphinkle]

These mergers usually result in higher fares, fewer flights, more fees, and lower quality customer service and inflight experiences. But at the same time, it may be a good deal for the people that work there.

What is more of concern in the AA / US Airways merger is this would put a lot of hubs too close together. For example, Philadelphia is very close to New York Lagaurdia. Charlotte and Miami are very close. The same is true with Phoenix and Los Angeles. A hub at DFW would be a very good addition to the combined route network, though. If this goes through, I see vacant gates if not some concourses in the future at the other hubs though. I can't say for sure, but I think Phoenix (some flights would probably shift to LA), Miami (might shift some to Charlotte) and Philadelphia (may flights may shift to NYC) would probably lose the most, and probably some downsizing at Charlotte as well.

I think more people might be into flying if they stopped nickel-diming, and brought back quality in-flight amenities like movies, good food, and well mannered flight attendants.

[garydpdx]

I would like to see AA remain independent, and probably the best partner for them to work with is US Airways (not merge, not sell/buy; but work with).

US Airways is already having a hard time integrating itself (the former America West) with the Old US Airways, adding AA into the mix would compound the chaos. US is better off to move out of Star Alliance, where is it the forgotten junior sibling to the new United (and before that, third wheel with the arrival of CO), and into OneWorld where it can work to revive AA and help themselves in the process.

[reaganredux]

i wrote a letter to American Airlines years ago, advising them to sell their planes and get out of the business. Dirty old planes, lousy service, overpaid union employees that remind you of Amtrak. They know they cant get fired so they dont give a **** about you or the company. They need to go broke and go away.Let some smart guy come in and make an airline that makes sense. Put the pension fund to work for all the fired employees instead of stealing it for Obama campaign contributions.

[retm-w]

How do you know those union employee's are overpaid? What's to much pay for a licensed FAA mechanic? How about management aren't they way overpaid and the ones that put American where it is with they're decisions.

[Russ_in_OR]

As of now, there is only one airline I absolutely refuse to fly. No, it is not Aeroflot or Lot. If US Airways buys American, it will go up to two. US Airways has the rudest staff I've ever encountered. They over-book every single flight then spend the last 30 minutes before departure begging for people to volunteer to be bumped. Combine their 'customer service' with TSA and Greyhound begins to look attractive!

[Russ_in_OR]

As of now, there is only one airline I absolutely refuse to fly. No, it is not Aeroflot or Lot. If US Airways buys American, it will go up to two. US Airways has the rudest staff I've ever encountered. They over-book every single flight then spend the last 30 minutes before departure begging for people to volunteer to be bumped. Combine their 'customer service' with TSA and Greyhound begins to look attractive!

[shalee_the_elder]

The last time I flew it was on US Air and not by choice. My airport was fogged in and I was transported, via cab, to another airport. There I was put on US Air. The worst experience I've ever had. Never again! Rude, rude employees.

[valinor1]

So American Airlines will be headed by a drunk driver?

[sonofscab]

Let's see now, it's all karma coming back to haunt American. When they bought Eastern's South America, they didn't take any employees. When they bought TWA, they forced every one of them to the bottom and to the STL base, no other. If USAirways takes them over, I hope the employees of AA get screwed, shove every one of them to the bottom. They deserve it.

[Molly-Pchr]

Honk if you remember "Is this any way to run an airline? You bet it is!"

[CarribeanJack]

Here I sit on the Isla del Encanto just waiting for AA & Am Eagle to pull out of all its gates at SJU. The problelm is $$$. AA, the rest of the airlines, and in fact most US companies have abandoned good customer service and quality product in the name of the all mighty buck. To h*** with the customer, making profit for upper management & the stock holders is the name of the game. I've flown KLM, BOAC (now BA), and Pan Am back when flying was flying, not a trip on a cattle car with wings. The merger 'tween AA and US Scare....is a symtom of a much bigger problem.

[glossman]

Check out Southwest. They will be the only airline because of flexible work rules and turning planes around in 30 min. They changed my life of flying