Could This Labor Agreement Ensure Merger of AMR and US Airways?

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US Airways PlaneCombining workforces in airline mergers can be difficult, and satisfying pilots, who are the most expensive and irreplaceable employees, is the biggest challenge. The proposed merger between AMR’s (AAMRQ.PK) American Airlines and US Airways (NYSE:LCC), has been held up for much of December, as AMR has struggled to develop an interim labor agreement with the board of AA’s pilots union. But after three weeks of confidential negotiations, the union has agreed to a proposal that will pave the way for the two carriers to proceed with their combination.

What does this agreement mean?

While the terms of the agreement have remained confidential, The Wall Street Journal reported that the Allied Pilots Association board approved a plan that set a timetable for further labor negotiations and seniority integration by a vote of 11 to 5 on Saturday. But the viability of the agreement depends on the approval of AMR’s creditors, both carriers, and US Airways’ pilots union…

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