Terms Of The Preliminary Agreement Not Disclosed By The Union

In a move that could have implications for the emergence of AMR Corp, the parent of American Airlines and American Eagle, from bankruptcy, the board of the Allied Pilots Association (APA) voted to approve a preliminary labor framework that would be put in place should American merge with US Airways as it comes out of Chapter 11 reorganization.

The 11-5 vote came after three weeks of behind-the-scenes talks facilitated by AMR's creditors committee, according to a report appearing in the Wall Street Journal. Approval by the APA board is just one step in the process. The framework would also have to be approved by the US Airways pilot union, as well as both airlines. "If these other parties agree to the terms of the MOU (Memorandum of Understanding) that APA has approved, the MOU would serve as a framework for an agreement if American Airlines and US Airways proceed to merge," the APA said in a news release. "If there is no merger between the two carriers, the MOU would be rendered null and void."

Since filing for Chapter 11 reorganization over a year ago, American has said that it hopes to emerge from bankruptcy as a stand-alone airline. The pilots' union has for several months vocally supported a merger, with US Airways most often mentioned as the carrier with which American would combine. US Airways has also been pushing for a merger with AMR's creditors.

AMR's board will next meet January 9th, though it is not likely that a full merger plan could be presented at that time.

In the news release, the APA said "We recognize that our members are understandably interested in being briefed on the specifics of the MOU. Due to a judicially enforceable non-disclosure agreement and relevant Securities and Exchange laws, APA cannot disclose the terms that our Board has approved at this juncture. We are in discussions with the other three parties to the MOU process and the Unsecured Creditors’ Committee about the timetable for their review, and when we would be permitted to divulge specific details if the MOU is approved by the respective parties. We will continue to provide regular updates as MOU-related developments warrant."

FMI: www.alliedpilots.org