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06-15-2012, 12:06 PM
US Airways CEO: 'Great progress' being made toward American Airlines merger | Tulsa World (

US Airways Group's CEO Doug Parker said it is making "great progress" toward a merger with AMR Corp.'s American Airlines that would cure network failings at its larger rival.

American's push to restructure in bankruptcy as a stand-alone carrier won't be enough to fix weaknesses at the third-largest U.S. airline, including a loss of market share, Parker said Thursday at US Airways' annual meeting in New York.

Parker's comments extended his public pressure for a tie-up with American, which has said it wants to exit Chapter 11 and then consider a combination, with itself as a likely acquirer. US Airways expects American to begin considering alternatives to its own plan after resolving labor concessions, possibly later this month, he said.

"That's all we're asking for - a chance to show our plan against others," Parker said at the meeting. "We're highly confident the benefits of the network would be far superior to any other alternative available to American today."

US Airways has received "tremendous" support from bondholders and analysts for a merger with Fort Worth, Texas-based AMR, Parker said. A combination of American and US Airways would surpass United parent United Continental Holdings Inc. as the world's largest airline based on passenger traffic.

American didn't immediately comment on Parker's remarks.

The merger campaign by US Airways is being watched closely by the 7,000 American Airlines employees who work in Tulsa. About 5,000 of those are mechanics and related workers with the Transport Workers Union, who have been locked in a contract battle with American.

The TWU and other unions covering pilots and flight attendants at American have met with US Airways officials and have endorsed a merger, believing they can get better terms with a new owner.

Right now, AMR officials are trying to negotiate new contracts with the unions. There has been little progress, however, and American is threatening to throw out existing agreements and impose terms it devised earlier this spring.

The judge overseeing AMR's bankruptcy has said he'll rule by June 22 on whether the company can indeed void existing labor contracts, unless concessionary agreements are reached first. The airline wants to cut annual labor costs by $1.25 billion during its restructuring.

American in May reached an agreement with the unsecured creditors committee in its bankruptcy to explore options to its stand-alone plan.

Compared to before American sat out a wave of airline consolidation, the carrier's market share has fallen to No. 4 from third in the western U.S., to fourth from first in the country's midsection and to fifth from third in the East.

"This is a structural weakness the bankruptcy cannot fix," Parker said. A combination of Tempe, Ariz.-based US Airways and American would be first in market share in the U.S. East and midsection and third in the West, he said.

"Put them together and the result is a network that can compete with anyone," Parker said.

US Airways has reached tentative contracts with American's three largest unions, and leaders of those labor groups attended today's shareholder meeting. US Airways is working to build support among AMR's unsecured creditors.