Is AMR Finally Headed for a Merger?

US Airways PlanePaving the way for a potential merger between AMR’s (AAMRQ.PK) American Airlines and US Airways (NYSE:LCC), a memorandum of understanding has been approved by the Allied Pilots Association, the union that represents AA’s pilots, and the US Airline Pilots Association, the pilot union of US Airways, as well as by both airlines.

The document’s provisions state that pilots of both carriers will be governed by the contract bargained for by the Allied Pilots Association in 2012, reported Reuters on Tuesday. The agreed-upon terms, which will only be effective if the merger is completed, outlined a plan for pilots to reach joint collective bargaining agreements and allowed the unions to make $522 million worth of improvements to contracts over a period of six years.

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In particular, the memorandum “was negotiated to give the parties greater clarity on both the costs and the pilot integration processes associated with a potential merger, as American reviews its strategic alternatives,” American Airlines spokesman Bruce Hicks said in a statement.