Posterd on 03 Dec 2012
A year ago, American Airlines filed for chapter 11 bankruptcy protection. The historic data of airlines filing and emerging from bankruptcy in one year is not an easy task. The other legacy carriers such as Delta and United took well over a year to emerge from bankruptcy. Today Delta is among the most profitable of the legacy carries after a rocky merger with Northwest in 2008. United has since merged with Continental to create the world’s largest airline so where does that leave American? What can American Airlines do to compete and maintain their spot on the legacy stage as a profitable airline? Merger talks between American and U.S Airways were running strong six months ago but have fizzled out. Are mergers a quick fix to a long term problem among airlines? American didn’t think so. Although the pilots union, along with other American labor unions voted to support the idea of a U.S Airways merger, American parent company, AMR felt they can emerge from bankruptcy on their own.
A judge recently granted American a 6 week extension on their bankruptcy and the airline plans to come out of it mid-March. The reports say American is still weighing the option of a U.S Airways merger.
A merger between the two legacies could spell out disaster if the process concludes like the first U.S Airways merger played out in 2005 when Phoenix based America West took control of U.S Airways as they struggled through a bankruptcy. Both airlines eventually merged into one under the U.S Airways brand, however, the labor unions have yet to work together under one union. Both are split based on east and west. One side makes more than the other and the tensions between the two continue to this day.
Although a merger between American and U.S Airways has the potential to make the American brand stronger, how will it play out behind the scenes? Both airlines have a bad history with their unions that continue to intensify today. Recently the U.S Airways Flight Attendants vote to authorize a strike if a new contract couldn’t be agreed on, meanwhile you have the pilots union at American finally reaching some sort of tentative agreement with AMR management after a very tense standoff.
It seems that neither airline really has a plan on how to make it work or they are at least keeping it on a top secret level. Either way, the American Airlines brand will likely remain, the labor groups will continue to grumble over contracts and profits will always be within reach. Welcome to the continuation of the American airline industry.