US Air pushing its plan of merger

By Andrea Ahles McClatchy Newspapers

FORT WORTH, Texas — US Airways Group Inc. said it is focused on showing American Airlines creditors that its merger plan would result in $1.2 billion in cost synergies.

US Airways Chief Executive Doug Parker briefed analysts on its possible takeover bid of American Airlines’ parent company, AMR Corp., which filed for bankruptcy in November.

“We are eager to demonstrate to the creditors of AMR that our plan would result in higher returns than the American standalone strategy would,” said Parker on a conference call with Wall Street analysts discussing the Tempe, Ariz.-based airline’s first-quarter earnings.

After working with advisers for the past three months, Parker said US Airways concluded there is “an opportunity to do something that we think is in the best interest of both companies.”

AMR management made it clear to US Airways that it wanted to focus on a standalone emergence from bankruptcy, so US Airways has instead been working with creditors and employees of AMR, Parker said.

On Friday, American’s three largest unions representing its pilots, flight attendants, mechanics and ground crew workers, announced their support for a takeover bid by US Airways.

“We are extremely grateful for their support and we share their desire to work together,” Parker said.

US Airways executives then addressed the question of how they got AMR labor unions excited about a merger. Without going into details of the agreement, US Airways President Scott Kirby said that employees should benefit from some of the cost benefits of a merged carrier.

“Since the new American will have revenue generating capabilities like United and Delta, it should also have labor costs like United and Delta,” Kirby said. “The synergies created by our merger allows us to set the pay of US Air and AMR employees … better contracts than American can pay individually.”

Kirby said the carrier conservatively estimates that cost synergies if the two merged is over $1.2 billion a year.

“The impact of labor and jobs is far less draconian because some of the synergies have been appropriately given to labor,” Kirby said.