American Continues to Slog Through Bankruptcy While US Airways Goes Silent (On Purpose)

It’s been awhile since I wrote about the American Airlines bankruptcy, and there’s a good reason for that. Not much has happened. This thing is really proceeding at a snail’s pace and the pilots are a big reason for that. That doesn’t mean things haven’t been happening. It just means that they haven’t been happening quickly. At least US Airways and American are finally talking, though I imagine the room looks something like this:

Merger Discussions (Not Really)

The last couple of months have just been mired in labor negotiations. In short, here’s how this has gone.

American Mgmt: Hey labor, you don’t work hard enough to earn the money you make, especially when compared to other airline employees. Stop that.
Labor: No way dude. We aren’t the problem here.
American Mgmt: Oh yeah? Well I’ll go tell Judge Lane on you and he’ll make you change your mind.
Labor: Hmm, that sounds not good. Ok, let’s talk.

American Mgmt: Great. We want you to work for free.
Labor: No, we want a billion dollars per hour to work 1 hour per month.
American Mgmt: Let’s meet somewhere in the middle.
Labor (minus the pilots): We hate you but if we don’t agree, it could be a lot worse. Besides, we need to get this over with so US Airways can take over.
American Mgmt: Hooray, let’s hold hands and pretend we love each other.
Labor: No, I hate you so much.

American Mgmt: How about you, pilots?
Pilots: Suck it. We’ll take our chances with the judge.
Judge Lane: You sure about that? I’m going to accept nearly every argument American makes except for a couple minor ones to give you a chance to change your mind.
Pilots: Not interested.
Judge Lane: Ok, fools. Here it comes.

And that’s where we are now. All the labor groups came to consensual agreements except for the pilots which voted its agreement down. I understand the rationale for the vote. After all, they want to show management that they have no faith and want something better. But this vote actually just delays the process even further.

Judge Lane has now approved American’s request to break the pilot contract. Now the airline and the pilots are still supposed to be negotiating while the airline works on the terms that it will try to impose via the bankruptcy court. This thing is taking freakin’ forever and it’s not going to speed up until the pilot deal is done… someday.

US Airways Muzzles Itself
Meanwhile, what you all want to know is what’s happening with the potential merger with US Airways, right? Well not much can really happen until the labor mess is finished, but there has been some movement. American, as promised undoubtedly due to pressure from creditors who think there’s a better option, has finally started to talk about merging. The airline is really trying to spin this whole thing by saying that CEO Tom Horton was the first one to talk to US Airways about a merger, but this all sounds like a bad PR campaign to me. Horton doesn’t want to merge but he has no choice to make it look like he’s now interested.

So American sent out non-disclosure agreements (NDAs) and we know that two have been signed: US Airways and British Airways. This means you aren’t going to hear much from US Airways for awhile. Part of this deal means that US Airways won’t be able to talk publicly in nearly the same way it has been. That doesn’t mean nothing is happening – it just means they can’t talk… until there’s a deal or until there definitively isn’t.

With the NDA signed, the books come open and it’s time to figure out how this thing could actually work. British Airways has seemed pretty happy about the idea of a merger since it knows it would keep a stronger American in oneworld while pulling a competitor out of Star Alliance. So they can all sit together, have a nice cup of tea, and see if Tom Horton and friends can be bothered to realize that this is a great idea.

For all of us, that means we still sit here, waiting to see what happens. It seems pretty clear to just about everyone who understands US Airways’ plans outside of American’s management team (and some consultants) that a merger is the way forward, but that doesn’t mean it’s going to happen anytime soon. The wait continues.

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