Support grows for American Airlines merger

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by JONATHAN BETZ

WFAA

Posted on April 22, 2012 at 10:00 PM

Updated Sunday, Apr 22 at 10:19 PM

DALLAS — One of Dallas' leading politicians is speaking out in favor of a merger between American Airlines and US Airways.

Dallas County Judge Clay Jenkins announced Sunday he will join American's flight attendants on the picket lines Monday morning as they protest during the carrier's bankruptcy hearings.

Jenkins is one of the first leaders in North Texas to announce support for the proposed merger.

"There’s a clear choice," he said. "One choice is to build the largest airline in the country right here in North Texas, and the other choice is to shrink that airline and send those North Texas jobs to other countries."

American has proposed over $1.25 billion in employee-related cuts — including more than 14,000 layoffs.

As part of its hostile takeover bid, US Airways has proposed merging the two airlines, keeping American’s name and Fort Worth headquarters, and cutting only 6,800 jobs.

"Merger seems to me to be the best plan to protect North Texas jobs and protect the airline," Jenkins said.

American’s three largest unions, representing 55,000 employees, announced their support for the merger on Friday.

"We believe this is a win-win for our pilots, for our fellow employees, and for our corporation," said Tom Hoban of the Allied Pilots Association, which represents American's pilots.

The unions repeatedly praised Tempe, Arizona-based US Airways and were quick to jab American's management, angry at their plan to cut jobs and break contracts.

"For ten years, American Airlines has essentially stood still while the competition has passed us by," Hoban told News 8. "We've gone from first to worst in every respect."

Unlike American, US Airways is profitable, earning $21 million in the last three months of 2011.

In a letter to US Airways employees on Friday, CEO Doug Parker said his airline would trim fewer American jobs — 6,800 — compared to American’s plans to cut 13,000 positions.

Parker wrote that his company has "a unique opportunity" to merge with American and create a carrier big enough to compete effectively and profitably.

American is now the country's third largest carrier behind United and Delta. A merger could again make it the largest airline.

But the proposed merger deeply worries many North Texas leaders.

The Fort Worth Chamber and Dallas Regional Chamber issued a joint statement calling a merger a "damaging distraction." The chambers oppose any merger before the Fort Worth-based carrier exits bankruptcy because it "will disrupt American's thoughtful process already in place to preserve the most jobs in Dallas/Fort Worth."

Fort Worth Mayor Betsy Price agreed, saying in a statement, "We need American Airlines to emerge from bankruptcy intact."

Republican Sen. Kay Bailey Hutchison also has concerns about an American-US Airways combination.

"It's hard to tell if it would be a good deal," she told News 8. "I just want to make sure we keep the most employees, as possible... and that, in the end, its headquartered right here at D/FW."

Thomas Horton, chief executive of American's parent company AMR Corp., has indicated he would prefer his company remain independent. He has supported the idea of a possible merger after American emerges from bankruptcy.

"I suspect in their hearts, American Airlines executives are thinking maybe this is a good idea," said SMU economics professor Mike Davis, "but there are so many details that have to be worked out."

Still, American Airlines released a statement Friday saying that the unions backing a merger "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."

On their own, the unions can't force a merger. However, they hold three of the nine seats on the committee of unsecured creditors in AMR’s bankruptcy case. That committee can ask the judge to review AMR’s current exclusive right to present a reorganization plan to the bankruptcy court, and if the judge agreed, it could open the door to a merger bid.

The outcome of this high-stakes fight could reshape the U.S. airline industry. A merger would produce an airline roughly equal to United Continental Holdings and slightly larger than No. 2 Delta Air Lines, Inc.

The Associated Press contributed to this story.

E-mail jbetz@wfaa.com

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