Airlines are still debating merger

Board meetings postponed as negotiations continue

The boards of American Airlines parent AMR and US Airways delay meetings to consider a final deal, and no announcement is expected today or Tuesday. A key remaining issue is the role of American’s current CEO in a newly combined company.

The boards of American Airlines parent AMR Corp. and US Airways have pushed back meetings to consider final plans for their merger, and no deal is expected to be announced either today or Tuesday, accord- ing to media reports and people close to the negotiations.

Those familiar with the matter said talks are continuing on issues that include American CEO Tom Horton’s title and role in the combined company.

Discussions were centered on Horton being a non-execu- tive chairman of the board while US Airways management, led by CEO Doug Parker, would run the day-to-day operations of the new carrier, which would keep the American Airlines name.

A deal would create the world’s largest airline in terms of passenger traffic. It also would mean Arizona would lose the Tempe headquarters of US Airways, but officials have said the combined airline would maintain a hub at Phoenix Sky Harbor International Airport.

Some financial analysts, including Hunter Keay, with Wolfe Trahan and Co., already

have begun to forecast earnings for a combined airline. In a Friday forecast, Keay projected 2014 earnings for the combined operation lower than what US Airways would earn as a stand-alone company.

“That doesn’t mean we don’t think the companies can’t or shouldn’t merge,” he said. “In fact, we think they will, and should, because of the benefits that address future deficiencies at both airlines.”

Keay expects the creditors of AMR Corp. would own 72 percent of the combined company, while US Airways shareholders would own the rest.

Also on Friday, pilots from US Airways approved a deal that would set their pay under a merged operation. They stand to get raises of 18 to 35 percent should the deal go through. Pilots who flew for the former America West Airlines and former US Airways before they merged in 2005 all would be brought up to the current salary levels of American Airlines pilots, who negotiated their current contract in April.

Board members of the American pilots union approved the so-called memorandum of understanding in December. The union does not require its full membership to vote on the issue.

American pilot representatives have supported a merger because they believe it will create a stronger airline, providing more opportunity and job security. They also have supported putting US Airways CEO Doug Parker in charge.

If a merger is approved, the unions would begin negotiating a deal for all pilots under the new airline.

Having the US Airways pilots’ approval of work rules eliminates one uncertainty for the creditors, who will analyze the deal and must approve it. Ultimately, a merger would be part of American’s exit from bankruptcy, and it must be approved by a U.S. Bankruptcy Court judge in New York.