American Airlines And Their Pilots Agree To A New Contract

The New York Times is reporting that AA’s pilots union has voted in favor of a new contract.

This wasn’t a huge surprise, but I don’t know that there’s anything that would surprise me with airlines and unions anymore. The reported tally was 74% in favor of the deal. Of course, they soundly rejected a deal I thought they would take the last time they put it to a member vote, then fired their union president.

As I’ve mentioned a number of times, this was almost certainly the last major roadblock to a bankruptcy exit. There’s been plenty of speculation that AA and US Airways will complete a merger before exit, but I believe the airline when it says it would prefer to wait until after. It makes sense right now, since their fundamentals keep getting better. That only gives them more leverage to merge with US Airways in a position of strength.

All of the unions still support a deal with US Airways, thinking they’ll somehow be treated better.

So, what’s next? They’ll tuck up the loose ends and exit bankruptcy early next year. They have tons of technical innovations and new planes on the way, and those will help them win back customers.

And, I do ultimately think they will merge with US and that still terrifies me. The Wall Street Journal is reporting that US Airways offered AA a 70/30 split in favor of AA. That sounds more correct to me than previous proposals, though I suspect a deal may still ultimately close a bit more in AA’s favor if their financial position continues to improve.

I’m sure there’s a bit more drama to come on this in 2013. I’m happy that the AA employees are all largely still very pleasant to deal with. After United and Continental merged, I felt like the employees took the merger (and bankruptcy before that) quite hard. It’s reflected not only in their overall service levels but in the conversations I overhear when I’m on their planes. My hope is that AA has tied things up before their well is as poisoned as United.